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FTC won't block Office Depot's merger with OfficeMax

Office Equipment and SuppliesMergers, Acquisitions and TakeoversRestructuring and RecapitalizationOffice Depot Inc.OfficeMax Inc.

The Federal Trade Commission said Friday it has unanimously voted to close its seven-month investigation into the proposed $1.2 billion merger of office supply superstores Office Depot and OfficeMax.

The closing date for the merger is now on Nov. 5, the companies said.

Analysts expected that the FTC wouldn’t block the merger between the No. 2 and No. 3 office-supply companies in the nation. The companies argued that they were competing against both Staples, which is No. 1 in the market, as well as online and discount retailers.

While the FTC challenged the proposed merger of office supply superstores Staples and Office Depot in 1997, the Commission said its latest investigation, “has shown that the market for the sale of consumable office supplies has changed significantly in the intervening years.”

As a result, office supply superstores “today face significant competition and . . . the proposed merger is unlikely to substantially lessen competition in the retail sale of consumable office supplies.”

The Commission’s statement describes differences in the competition faced by office supply superstores in 1997 and today, saying that customers now look beyond office supply superstores when buying office supplies.

Non-office supply superstores such as Wal-Mart and Target, along with club stores like Costco and Sam’s Club, have expanded their office supply product offerings and now compete with office supply superstores, the Commission said.  Amazon and other internet retailers of office supplies also have grown quickly and significantly, and compete with office supply superstores, the FTC said.

The staff’s investigation focused on contracts for large multi-regional or national customers, which typically have the most demanding purchasing requirements and, as a result, fewer potential suppliers capable of meeting their needs. The Commission concluded that the merger was unlikely to substantially lessen competition in the contract channel, and, “there was little concern from contract customers about the proposed merger.”

The vote to close the FTC’s investigation and issue a Commission statement was 4-0.

Copyright © 2014, The Baltimore Sun
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