EU Opens Probe of Staples’ Deal for Office Depot

With U.S. regulators close to a decision on the merger, it now faces an in-depth antitrust review by the European Commission.
Katie Kuehner-HebertSeptember 25, 2015

Staples’ pending $6.3 billion acquisition of Office Depot is facing another obstacle as the European Union announced Friday it had opened an “in-depth investigation” of whether the takeover could lead to price increases and less consumer choice.

In the U.S., the Federal Trade Commission has indicated it may be gearing up to file an antitrust lawsuit. The regulator has until mid-October to decide whether to approve or challenge the merger.

Now the European Commission has expressed concerns, saying its initial investigation had shown that the tie-up could eliminate competition and “reduce the choice of suitable suppliers in already concentrated markets.”

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Staples and Office Depot, together with their largest European competitor Lyreco, are the main suppliers of office products to business customers, the commission noted.

“All companies and organizations, big or small, need office supplies for their daily work,” EU Competition Commissioner Margrethe Vestager said in a news release. “We are opening this in-depth investigation to make sure that the merger of two of the main suppliers of office products will not have a negative effect on competition.”

The merger, which was announced in  would create a retail chain with about $39 billion in revenue and thousands of stores, Bloomberg said. The two companies agreed to the transaction in February following pressure from activist investor Starboard Value.

The European Commission also said it had possible competition concerns related to wholesale of office products in Sweden, where Staples and Office Depot “appear to have no significant competitors offering a wide portfolio of products.”

The Commission will now investigate the proposed acquisition in-depth, with a final decision due by Feb. 10.

Staples’ Chief Executive Ron Sargent said in a statement that the company was working “cooperatively” with EU regulators and the deal would “enable Staples to better serve customers around the world and to compete in a rapidly evolving global marketplace.”