Quite some time ago, we asked whether the Office Depot/OfficeMax merger was going to be able to overcome the concerns that led the FTC to sue to block the Staples/Office Depot transaction back in 1997. Now we have our answer. Yup.
The FTC released a statement last week announcing that it was closing its seven-month investigation into whether the proposed transaction would substantially lessen competition in any relevant market.
It seems that “the internet” was a more persuasive argument than “big box retailers” back in the 1990s, although the commission statement also credits those big box retailers as being more relevant to competition to the office superstores than during its prior investigation.
As you may recall, the last time around the FTC found that office superstores were a separate market, based on strong evidence that they priced differently when a competing superstore was present. According to the Commission, things have changed. Customers apparently now look beyond office superstores for office supplies and do more of their brick-and-mortar office supply shopping at large retailers, which have themselves expanded both their footprints and their office supply product offerings. So maybe the lawyers defending Staples/Office Depot were right but just ahead of their time.
And then, of course, there is the internet. Why get in a vehicle and drive to a store when you can just pop on the internet and order the exact No. 10 envelopes you always use and have them delivered right to your door? Especially because one generally does not need to browse to refill a needed item, it makes sense that the office superstores would both be keenly aware of internet competition and losing business to internet retailers.
Taken together, the Commission decided there was “overwhelming evidence” that today office superstores face significant competition beyond other office superstores.
