Comparison Between Staples-Office Depot Merger (1997)

Comparison between Staples-Office Depot proposed merger (1997) and Office Depot-OfficeMax merger (2003)

Abstract: Both of Staples-Office Depot merger in 1997 and Office Depot-OfficeMax merger in 2003 are horizontal mergers between leading office supply stores, while the Federal Trade Commission denied the Staples-Office Depot merger in 1997 and approved the Office Depot-OfficeMax merger. The changes in the Federal Trade Commission’s decisions are derived from the significant changes in the office supply market, such as the stiff competition in the office supply market and the technology impact. This article compares these mergers from three respects in the Federal Trade Commission’s decision: relevant product market, anti-competitive effect

However, after seven-month investigation, the Federal Trade Commission (FTC) blocked this merger in awe of the great market power caused by the proposed merger. At that time, Staples was the second-largest office superstore company in the United States and Office Depot was the largest one. And Staples was the first company which invented “Office Superstore” (OSS). Staples did not possesses 550 stores in 28 states until 1996. At the same time, Office Depot had more than 500 stores in 38 states.

In 2013, Office Depot decided to pay $1.2 billion for acquiring OfficeMax. The FTC approved this merger in the same year because there was increasingly competition in the office supply industry with the development of electronic commerce. And the FTC believed that the merger between Office Depot and OfficeMax would not cause the anti-competitive effect.

Given that all of Staples, Office Depot and OfficeMax are major office supply companies in the United States, these mergers are horizontal mergers. Faced with the mergers acquisition from top three OSS companies, the judge gives total different attitudes towards these horizontal mergers. The comparison between these two horizontal mergers are essential for investigating the reasons that why the FTC changes

Firstly, the FTC states that OSS firms are different from Non-OSS firms even though both of them provide same categories of goods,office supplies. OSS firms are able to provide a wide variety of office supplies and to possess considerable amount of stock. But Non-OSS firms generally maintain an extremely limited number of goods which is unable to cater for the huge demanding from office managers. On the other hand, OSS is famous for one-stop shopping. Consumers do not need to waste time on gathering information concerning products, price and visiting different kinds of stores to purchase products because they can buy what they need on a single visit in an OSS company, which it saves their time cost. Not only can people buy a notebook but also a laptop in the Staples or Office Depot, which it cannot occur in the CVS, a Non-OSS company. As a result, customers preferred OSS to Non-OSS. For this matter, OSS are so unique that consumers are loyal to OSS companies instead of Non-OSS