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Staples, Office Depot surprisingly conclude case

Staples, Office Depot surprisingly conclude case

April 6, 2016

The US Federal Trade Commission's headquarters

The US Federal Trade Commission’s headquarters

The retailers surprised observers by refusing to present a defence in their merger case.

Nasdaq reported on the “unusual high-stakes move” by the retailers in their case against the Federal Trade Commission (FTC), noting that the two “wouldn’t present a defence” with the justification that the FTC’s case “was so weak that a judge should simply rule in their favour”. Staples’ lawyer Diane Sullivan told Judge Emmet Sullivan that the court proceedings had shown the FTC’s case was “fatally flawed” and “unable to carry its burden of proof that the merger was likely to harm competition”.

The lawyer added that “based on the evidence, they’ve fallen woefully short”, with onlookers said to have been “surprised” by the “bold legal move”, and Judge Sullivan commented he “did not anticipate this”. The retailers and the FTC were asked to return on 19 April for “a final round of arguments” before a decision is made, and Judge Sullivan also “encouraged the parties to try to find a way to settle the case if they can”, despite previous discussions being unsuccessful.

The news outlet pointed out that the FTC “has struggled from the start of the case and has faced sceptical questions from the judge throughout the proceedings”, but warned that while the case “appeared to be going well for the companies”, skipping a defence presentation “could prove risky because it places Judge Sullivan in the position of having to make a ruling without hearing all of the evidence he had expected to consider”.

Judge Sullivan himself pointed out that the FTC “doesn’t need much” to establish its case against the merger, but Diane Sullivan retorted that the commission “couldn’t even get over that low hurdle”. She continued that the FTC “had not properly defined the market”, referring to the earlier focus on inkjet and toner cartridges, and that the FTC had “left out” the two key products “when assessing the competition”.

She also believed that the FTC had “also ignored the growing competitive threat of Amazon”, though Judge Sullivan responded that it “may have had a legitimate reason” to treat cartridges differently due to MPS contracts offered by OEMs and other companies. Further analysis saw Nasdaq point out that the companies “were choosing to leave unrebutted” any FTC evidence against the merger.

The news source concluded that by not calling its own CEOs to the stand, the retailers “avoid exposing them to cross-examination” from the FTC, which is a “potentially significant setback” for the government body as it “didn’t call the executives to the witness stand” during its time in the case.

Recently, the case took a dramatic turn towards approval after Judge Sullivan highlighted the FTC’s attempts to pressure Amazon “to lie” about the challenge a combined company might pose. 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, while the case last saw Staples’ and Office Depot’s CEOs testify. A decision is expected from Sullivan before 10 May, six days before Staples and Office Depot’s merger agreement expires, while Staples has also offered to freeze prices for approval.

 

 

 

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Categories : City News

Tags : Office Depot Staples USA

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