Attorney General's Office Joins Federal Filing to Block Proposed Merger of Staples and Office Depot

HARRISBURG — Pennsylvania Attorney General Kathleen G. Kane's office today announced it has joined the Federal Trade Commission and the District of Columbia in a legal filing that challenges the proposed merger of Staples and Office Depot.
The filing, a complaint for temporary restraining order and preliminary injunction, was made today in the U.S. District Court for the District of Columbia.

It seeks to prevent the two office supply companies from consummating their proposed merger. Both companies sell and distribute consumable office supplies such as pens, staples, notepads, folders and copy paper.

Staples and Office Depot are two of the nation's largest vendors providing office supplies to large businesses that annually purchase more than $1 million in such products for their own use. These large businesses are often referred to as "business-to-business" customers.

The filing asserts that competition between Staples and Office Depot yields substantial benefits for "business-to-business" customers in the form of lower prices and better service. The merger would allegedly eliminate that competition and significantly harm "business-to-business" customers, as the combined Staples/Office Depot would control approximately 80 percent of the market for sales of consumable office supplies to large “business-to-business” customers. These customers include many large Pennsylvania businesses and the Commonwealth itself, which spends approximately $11 million annually on office supplies.

If the court grants the complaint for temporary restraining order and preliminary injunction, the proposed merger would be put on hold. Meanwhile, the FTC intends to pursue an administrative proceeding that will determine the legality of the merger. The result of that proceeding would be subject to judicial review by a federal Court of Appeals.

According to today's filing, Staples is a publicly traded corporation with headquarters in Framingham, Mass. In the 2014 fiscal year, it generated $22.5 billion in sales, with 54.8 percent of that revenue coming from office supplies.

During the same period, Office Depot had $16.1 billion in revenue, with 47.2 percent coming from the sale of office supplies. Office Depot is also a publicly traded company with headquarters in Boca Raton, Fla.

Staples and Office Depot in February of this year entered into an agreement and plan of merger. Either party may terminate the merger agreement if the merger is not consummated by February 2016.

Attorneys for the Pennsylvania Office of Attorney General's Antitrust Section worked on the investigation that led to today's filing. The Antitrust Section is tasked with protecting the free enterprise system by detecting anti-competitive practices and taking legal action to stop them.

Information posted from AG Office's Press Release

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