Last week, the FTC blocked the proposed merger of the companies by filing an administrative complaint. The Commission argued that the proposed merger between Staples and Office Depot violated antitrust laws because it will reduce competition in the consumables office supplies market.
Staples and Office Depot said the decision of the FTC to block the merger was based on “flawed analysis and misunderstanding of the intense competitive landscape” wherein both companies compete. The management of both companies vowed to challenge the Commission’s decision.
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Staples offered to divest $500 million in commercial contract
During the court hearing, Dianne Sullivan, the attorney representing Staples, argued that the company submitted a “significant and substantial” divestment proposal to the FTC.
Earlier this month, Staples offered to divest $500 million in commercial contracts to obtain the Commission’s approval for the merger. The FTC did not provide a counter-offer to the companies, according to Sullivan.
On the other hand, Tara Reinhart, the lawyer representing the FTC argued that the divestment offered by Staples was rejected by the Commission because it was inadequate. According to her, the FTC “actually asked them to come back” with a better divestment offer.
The Commission is requesting the court to issue a preliminary injunction in the proposed merger to be able to try the case in an internal process. U.S. District Judge Emmet Sullivan said the trial on the preliminary injunction was scheduled for March. The court could issue a decision in May.
The FTC in-house court is scheduled to hear the administrative complaint on the proposed Staples-Office Depot merger in May.
Staples-Office Depot merger cannot survive the FTC process
Matt Reiley, the attorney representing Office Depot said the company is “in limbo” during a court hearing on Tuesday. He added that going through an administrative process is not an option, and the “merger cannot survive” if the judge in the FTC process would rule against Staples and Office Depot.
Both companies agreed not to close the deal until the U.S. District Judge decides on the FTC’s request for an injunction.