FTC v. Staples, Inc. and Office Depot, Inc.

Facts

Staples and Office Depot, the two largest office supply vendors in the United States, announced their intent to merge in February 2015, with Staples proposing to acquire Office Depot for $6.3 billion. The Federal Trade Commission conducted an extensive year-long investigation involving over fifteen million pages of documents, more than seventy depositions, and five expert reports. The investigation focused on the market for sale and distribution of consumable office supplies to large business-to-business customers, defined as companies spending $500,000 or more annually on office supplies, encompassing approximately 1,200 corporations nationwide. Evidence showed that Staples captured 47.3 percent and Office Depot captured 31.6 percent of this market, totaling seventy-nine percent combined market share. Large business customers typically engage in competitive Request for Proposal processes to establish multi-year contracts with primary vendors, receiving prices approximately half those paid by average retail consumers, along with value-added services including sophisticated information technology capabilities, dedicated customer service, nationwide desktop delivery, and detailed utilization reporting. The defendants consistently competed head-to-head for these contracts, with seventy-eight percent of Office Depot’s bid losses going to Staples and eighty-one percent of Staples’ bid losses going to Office Depot. Defendants argued that Amazon Business and regional competitors like WB Mason would replace any competition lost through the merger, but the evidence showed Amazon Business had never won a primary vendor contract despite fourteen years in the office supply business, lacked experience with the RFP process, could not guarantee pricing due to its marketplace model with independent third-party sellers, and projected only a small market share by 2020.