Opening arguments begin in merger hearing

The first day of the federal court hearing in which Staples and Office Depot are making their cases about whether a proposed merger of the two companies would be beneficial to or terrible for consumers began on 21 March.

Both sides made their opening arguments. The FTC is concerned about possible price hikes for consumers, and the two office supply companies are concerned that Amazon is going to crush them.

The argument hinges on an important question: are Fortune 500 companies likely to go shopping for their office supplies on Amazon? While we think of the stores and consumer-facing websites when we think about these two chains, their commercial supply businesses are a lot more lucrative. They are the FTC’s main concern in preventing this merger, not necessarily the retail part of the office-supply business.

In today’s opening statements, an attorney for Staples shared e-mails from representatives of companies, who were concerned that that might face higher prices if one mega-Staples monopoly had control over the supply business pretty much nationwide.

The two companies have proposed selling some of their commercial business to a smaller competitor, Essendant, or what’s called “divestiture” in a merger like this.

The attorney for Staples and Office Depot, meanwhile, compared the companies to a couple of penguins on a rapidly-melting iceberg. She argued that the two companies need to team up to keep Amazon at bay, since the Everything Store decided to go after office supply business more aggressively last year.

By Laura Northrup for www.consumerist.com

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