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Staples-Office Depot merger to go ahead?

Staples-Office Depot merger to go ahead?

March 29, 2016

The judge in charge may dismiss the FTC’s case this week, after the government agency reportedly “pressured Amazon to lie” in court.

The US District Court in Washington DC

The US District Court in Washington DC

The New York Post reported that Staples was “closing in” on its merger with Office Depot, and “could be on the brink of winning its case” against the Federal Trade Commission (FTC), according to sources. Judge Emmet Sullivan is said to be “entertain[ing] a motion” to “dismiss the case” after the FTC concludes its arguments, with such a move made when a judge “believes the plaintiff or prosecutor has failed to make its case”.

One lawyer told the newspaper that “I’ve seen such motions, but never when the plaintiff is the government […] the judge is either playing games […] or the FTC is really in big trouble”. This came after a revelation last week that the FTC “pressured Amazon to lie and say its business-supplies efforts would not be ready to compete until 2017, when they have already launched in the space”. Sullivan had previously called the FTC’s conduct “disturbing” in the early days of the trial.

Retail  reported on Sullivan’s unsealing of documents showing the FTC “told Amazon to falsely testify”, though Prentis Wilson, Vice President of Amazon Business, “chose not to do so”, with the judge questioning Wilson himself. Sullivan was said to not be “a fan of the tactics” undertaken by the FTC, with the unsealed transcript showing Amazon claimed the FTC “coached it to lie”.

The New York Post’s anonymous lawyer added that the FTC has won nine of its last 10 merger cases, making this “even more surprising”, while Retail Dive stated that “in its zeal to protect competition in office supplies retail, the FTC may have gone too far”. While Amazon did not undertake the FTC’s position, Sullivan “took issue with the FTC’s action”, and stated that “my comments, I want them public, also, and the exchange I just had with Mr. Wilson because that shouldn’t be kept from the public.

“The public ought to know that the government wanted Amazon to say some things that weren’t true, and that’s going to be public”. Wilson was seemingly “reluctant to answer”, and was “concerned about being factual”, with the revelations causing Staples’ and Office Depot’s share prices to “soar” by seven and nine percent respectively. FTC lawyer Tara Reinhart responded by claiming the agency “certainly never asked” Wilson to make false statements.

Fortune added that Amazon’s affidavit showed line edits made that stated “the FTC has asked us to insert” sentences saying Amazon “would not be able to offer office supplies contracts and next-day delivery to large business customers […] for the next two years”. Amazon disagreed and “struck out” the proposed language, Wilson commenting in court that “we were unwilling to say that, because we weren’t sure if that was going to be true. We cannot commit to not having these available in two years”.

Amazon earlier became embroiled amid rumours of it helping out the merger, while further settlement talks were revealed that came to nothing. The FTC filed a lawsuit to block the $6.3 billion (€5.8 billion) merger last year, with a divestment offer rejected. Both companies extended their merger agreement to May in January, while the EU recently approved the merger after concessions.

Categories : City News

Tags : Office Depot Staples USA

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