EU Gives Thumbs Up to Staples-Office Depot Merger

The FTC is opposing the $6.3-billion merger of Staples and Office Depot.

FRAMINGHAM, MA—The contested $6.3-billion merger of office supply giants Staples, Inc . and Office Depot got a shot in the arm as the European Union approved the deal. The EU approved the $6.3-billion acquisition of Boca Raton, FL-based Office Depot by Framingham, MA-based Staples on the condition that if the merger is approved the company would divest itself of Office Depot’s European business. Staples reports that the EU approved the acquisition on the condition that Staples divest Office Depot’s European contract business and all of Office Depot’s operations in Sweden. Staples adds that it agrees to those conditions and decided that if the deal closes it would also divest Office Depot’s retail, online and catalog operations in Europe. “This is a significant step, and we’re very pleased that the European Commission has approved this transaction,” states Ron Sargent , chairman and CEO of Staples. “The acquisition has been approved in Australia, New Zealand, China, and Europe. Regulatory agencies around the world understand that this acquisition will allow Staples to provide increased value and service to customers of all sizes. We look forward to a full, impartial judicial review in the United States.” The merger deal is facing considerable opposition from United States and Canadian regulators. The Federal Trade Commission filed suit to block the deal in December 2015 charging that the merger of the two largest office supply chains would violate the antitrust laws by significantly reducing competition nationwide in the market for “consumable” office supplies sold to large business customers for their own use. The Canadian Competition Bureau is also legally challenging the Staples-Office Depot merger. In announcing its court challenge of the merger, FTC Chairwoman Edith Ramirez stated, “The commission has reason to believe that the proposed merger between Staples and Office Depot is likely to eliminate beneficial competition that large companies rely on to reduce the costs of office supplies. The FTC’s complaint alleges that Staples and Office Depot are often the top two bidders for large business customers.” Staples and Office Depot responded quickly to the FTC’s decision to legally challenge the merger deal, stating the commission undertook “a flawed analysis and misunderstanding of the intense competitive landscape” in which they operate. The administrative trial on the FTC suit is scheduled to begin on May 10. Earlier this month, Staples and Office Depot announced the completion of financing arrangements and the extension of their merger agreement from Feb. 4 to May 16. The extension the companies stated allows for the completion of ongoing federal district court litigation with the Federal Trade Commission. The merger deal was announced by the two retailers on Feb. 4, 2015.