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Staples' $6.3 billion Office Depot takeover is in trouble

Staples' $6.3 billion Office Depot takeover is in trouble

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Staples' $6.3 billion plan to buy rival office supplies chain Office Depot has hit a stumbling block. The Federal Trade Commission has filed an antitrust lawsuit that aims to block the acquisition, on the grounds that a deal between the last two major office supply chains is "likely to eliminate beneficial competition that large companies rely on to reduce the costs of office supplies."

Office Depot merged with OfficeMax in 2013

This is the second time the FTC has filed a lawsuit in a bid to stop Staples and Office Depot joining forces. Its previous suit, filed in 1997, was successful when a federal court judge agreed to block a planned merger between the firms. Staples' decision to attempt a move for Office Depot now may have been influenced by the FTC's acceptance of a similar deal in 2013, which saw second-place Office Depot consume third-place OfficeMax. The trade commission said that there was evidence to show that deal wouldn't harm consumers, but also allowed the deal in part because the combined forces of Office Depot and OfficeMax would have competition from an independent Staples.

All four current FTC commissioners voted for the new lawsuit, specifying that a purchase of Office Depot would give Staples unfair access to lucrative business contracts with huge corporations that both companies currently hold. Staples offered to transfer some of these contracts last month, but the FTC apparently didn't consider the concession to be sufficient to counterbalance the stranglehold on the industry a merged Staples and Office Depot would have. In their own joint statement, the companies said the FTC's lawsuit was "based on a flawed analysis," and that they would show that the commission "underestimates the disruptive effect of new competitors in the digital economy and ignores the vigorous competition Staples faces from numerous competitors."