Office Depot, Staples Merger Under Scrutiny In Europe

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The $6.3 billion merger between the top two office supply chains has hit yet another bump: the European Union opened an “extensive” investigation into the would-be union of Staples and rival Office Depot.

Reuters reports that EU antitrust regulators are probing the possibilities of price hikes should the two chains walk down the aisle.

The EU said on Friday that the deal could hurt business customers with international contracts in Europe and those with national contracts in the Netherlands and Sweden.

“The transaction could eliminate an important competitor and reduce the choice of suitable suppliers in already concentrated markets, which could lead to price increases,” the EU said.

Sources told the Boston Globe weeks ago that such concerns were mounting, including in the United States, as FTC’s investigations now focus on how a combined mega-office supply store could restrict competition when it comes to commercial customers restocking paper, pens and other necessities for the workplace.

Staples and Office Depot are currently the top two office suppliers in the U.S. contract business, with the next closest company being W.B. Mason which serves only select regions of the U.S.

Analysts believe that in order for the Staples/Office Depot merger to gain approval, the larger of the two chains – Staples – would have to divest a significant portion of its contract division, including distribution centers and certain client contracts.

Reuters reports that the EU will decide by Feb. 10 whether to clear or block the merger.

A spokesperson for Staples tells Reuters that the company will “work cooperatively with the European Commission regarding the acquisition of Office Depot.”

Staples and Office Depot first announced their plans to walk down the aisle back in February, after receiving significant pressure from shared investor Starboard Value in December.

The two companies – which have faced significant competition for office supply sales from online companies like Amazon – previously tried to tie the knot 17 years ago, but those efforts were thwarted by the federal regulators.

UPDATE 1-EU launches extensive probe into Staples’ bid for Office Depot [Reuters]

by Ashlee Kieler via Consumerist