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Many years ago, before the turn of the millennium, Staples and Office Depot sought to merge forces to create what would be the Costco of office supplies. Their efforts were stymied by the Federal Trade Commission, which voiced anti-competition concerns.
Today, the two companies are still angling for US federal approval. But just recently the European Commission, the EU's cousin to the FTC, greenlit the companies' plans to merge. Is this the turnaround Staples and Office Depot have been waiting for?
The Shareholders Have Spoken
Just a hair over a year ago, Staples announced publicly that Office Depot's shareholders had voted and approved of Staples acquisition of Office Depot's outstanding shares and control of the company. The price tag tipped the scales at around $6.3 billion and shareholders would receive cash and Staples shares.
The FTC Returns to Spoil the Party
Of course, it couldn't have been that easy. Once again the FTC sued to stop the deal in its tracks before too much enthusiasm built up. It again cried "anticompetition" but this time highlighted that the deal would have a significant impact on choices of large business buyers who buy pens, paper, toner, paper clips and stress relievers in bulk. The companies balked at the FTC claim and said that the agency's conclusion was based on a flawed analysis.
EU Approval With Provisions
Fast forward a few months and the European Commission approved the deal noting that even though there were only three companies even remotely suited to meeting the large and specific needs of supply contracts with large business customers. Thus, it almost appears that from the EC's point of view, it's just good business sense.
Still, the deal was not simply rubber-stamped. The Commission noted concerns that the merger would impact existing and future supply contracts with businesses in Northern Europe and northward to Scandinavia. Office Depot nipped this in the bud and offered to shutter all locations in Sweden and sell off one of its distribution arms.
Back Across the Pond
Who can say what effect the EC's decision will have the FTC -- it will either come to view the merger in the way that the EC did, or it will simply dig in its heels. The EC and the FTC are separate entities that have no bearing on each other. Regardless, the merger has already been OKed, in Australia, China, and a handful of other countries. Thus, Staples already is winning, if not back at home.