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Judge agreed with U.S. regulators' qualms over Staples merger

Published 17/05/2016, 22:44
© Reuters. A shopping cart is seen outside a Staples office supplies store in the Chicago suburb of Glenview, Illinois
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By Diane Bartz

WASHINGTON (Reuters) - The U.S. judge who stopped Staples Inc's (O:SPLS) proposed merger with Office Depot Inc (O:ODP) last week agreed with antitrust enforcers that the deal would have meant higher prices for big business customers and that Amazon.com Inc's (O:AMZN) entry into office supplies would have done little to counter that.

Judge Emmet Sullivan's opinion, released in redacted form on Tuesday, closely followed the Federal Trade Commission's arguments and took swipes at Staples' decision not to present a defence.

The two companies scrapped the $6.3 billion (£4.4 billion) merger on May 10 after Judge Sullivan issued an order temporarily stopping the deal.

    The judge at least twice noted a decision by Staples' attorney, Diane Sullivan, to scrap plans to present a defence after saying that the FTC failed to prove its case.

    Judge Sullivan wrote: "Defendants could have presented expert testimony to support" their position.

The Staples attorney took issue with an FTC witness' reasoning to support the government's case, but Judge Sullivan noted that "defendants produced no expert evidence during the hearing to rebut that methodology."

The FTC had stopped a previous merger attempt between the two companies in 1997. Since then, Amazon and other online sellers exploded onto the scene, while megastores such as Costco Wholesale Corp (O:COST) and Wal-Mart Stores Inc (N:WMT) further crowded the market.

© Reuters. A shopping cart is seen outside a Staples office supplies store in the Chicago suburb of Glenview, Illinois

Staples was more recently emboldened to offer to buy Office Depot after the smaller chain succeeded in buying No. 3 OfficeMax in November 2013 with no divestitures.

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