Staples and Office Depot delay their merger plans Judge weighs FTC bid to block the deal


WASHINGTON -- Staples Inc. and Office Depot Inc. said yesterday that they will hold off on their merger plans for now while a federal judge considers the Federal Trade Commission's request for a court order to block the proposed $4 billion deal.

During a federal court hearing, the companies asked U.S. District Judge Thomas Hogan to decide on the court order by the end of May.

The merger agreement between the companies expires on May 31, after which either firm could back out.

If the judge blocks the merger, permitting a full-scale antitrust trial, that would spell the end of the proposed combination of office-supply superstore chains, a company lawyer said.

"It will be the death knell for this transaction," Office Depot lawyer Donald Kempf told Hogan.

The agreement gives the companies the right to go ahead with the merger before Hogan rules only if Staples and Office Depot first give the FTC seven days' notice.

After reaching the agreement with the companies, the agency withdrew its request for a shorter, temporary restraining order. That would have blocked the transaction until Hogan could hold hearings and decide whether to issue an order prohibiting the merger for the duration of a full antitrust trial before an FTC administrative law judge.

The FTC filed suit Wednesday to block the acquisition, saying it would hurt competition in the office supply-superstore market and raise consumer prices.

The suit followed a vote by the agency's commissioners last week to reject a proposed compromise involving the sale of 63 stores to rival OfficeMax Inc. Staples and Office Depot argued that the divestiture proposal would have resolved FTC concerns that the merger would eliminate superstore competition in a number of metropolitan markets.

Hogan told lawyers for the company and the FTC that he hopes to rule Monday on a schedule for hearings on the preliminary injunction request.

He scheduled another status conference with lawyers for 9: 30 a.m. Monday.

Staples and Office Depot asked the judge to set a 10-day hearing that would permit them to take testimony from company executives, economic experts, analysts, competitors and other witnesses. The FTC argued for a shorter proceeding, focused on documents and legal briefs.

Pub Date: 4/12/97

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