The requested came from the Federal Trade Commission (FTC), which opposed Staples (SPLS)` plan to acquire Office Depot (ODP) for USD 6.3 billion.The FTC argued in December 2015 that the merger would mean too much of a supply retail market share – a violation of the antitrust law, money.cnn.com reports. It`s the second time the FTC has blocked a merger of the two office suppliers, the first one being in 1997.
Staples and Office Depot have faced intense competition from retail stores that are not traditional office suppliers, such as Amazon and Walmart. The industry is also reeling from a decline in printing activities among young consumers, many of whom don`t even own printers. Therefore, in 2015, Staples announced plans to shut 225 stores in North America.
Nevertheless, the FTC wasn`t focused on competition over dwindling shoppers for office supplies. Instead, the agency pointed to the market for large business customers, where Staples and Office Depot are often the top two bidders. By eliminating competition between Staples and Office Depot, the transaction would lead to higher prices and reduced quality, the FTC said in a statement in December 2015.
The NASDAQ halted trading of both companies` stock around 6:30 PM ET on 10th of May 2016. The companies had hoped the merger would help create over USD 1 billion in annual savings.
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