Markets Wired

The Federal Trade Commission has unanimously voted to close its seven-month investigation into the proposed $1.2 billion merger of office supply superstores Office Depot, Inc. and OfficeMax, Inc. and has issued a Commission statement detailing the basis for its decision.

While the FTC successfully challenged the proposed merger of office supply superstores Staples, Inc., and Office Depot in 1997, the Commission observes in today’s statement that its investigation, “has shown that the market for the sale of consumable office supplies has changed significantly in the intervening years.”  As a result, office supply superstores “today face significant competition and . . . the proposed merger is unlikely to substantially lessen competition in the retail sale of consumable office supplies.”

The Commission’s statement describes differences in the competition faced by office supply superstores in 1997 and today.  It states that customers now look beyond office supply superstores when buying office supplies.  Non-office supply superstores such as Wal-Mart and Target, along with club stores like Costco and Sam’s Club, have expanded their office supply product offerings and now compete with office supply superstores. Additionally, Internet retailers of office supplies, most prominently Amazon, have grown quickly and significantly, and compete with office supply superstores.

The Commission statement also discusses the potential impact of the proposed merger on the sale of consumable office supplies to large businesses and other large customers on a contract basis, a market not at issue in 1997.  In particular, staff’s investigation focused on contracts for large multi-regional or national customers, which typically have the most demanding purchasing requirements and, as a result, fewer potential suppliers capable of meeting their needs.  Based on the evidence collected, the Commission concluded that the merger was unlikely to substantially lessen competition in the contract channel, and, “there was little concern from contract customers about the proposed merger.”

The vote to close the FTC’s investigation and issue a Commission statement was 4-0.

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action.  To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust{at}ftc{dot}gov, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 601 New Jersey Ave., N.W., Room 7117, Washington, DC 20001.  To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.