Staples-Office Depot merger approved in Europe, with concessions
LONDON — The European Commission said Wednesday it had signed off on a $6.3 billion merger of Staples and Office Depot after the companies agreed to sell some of Office Depot’s operations in Europe to ease competition concerns.
The approval comes just over two months after the U.S. Federal Trade Commission sued to block the transaction over similar competition issues.
European regulators and the FTC both raised concerns that the combination of the office supply companies would significantly reduce competition for office supply contracts sold to large companies. In 1997, the FTC blocked plans by the two to merge.
On Wednesday, antitrust officials at the European Commission said the companies had agreed to sell Office Depot’s contract distribution business in the European Union and in Switzerland to address competition concerns. Office Depot also will sell its entire business in Sweden, the commission said.
“The substantial remedies package offered will ensure that effective competition is maintained, in particular on the EU’s international office supplies market,” Margrethe Vestager, the commissioner in charge of European competition policy, said in a news release. “This will allow European companies to continue to benefit from the single market by procuring their office supplies internationally and to reduce costs.”
In its review, the commission found that Staples and Office Depot are two of only three suppliers of items like pens and paper capable of entering into the international supply contract market for large business customers in Europe.
“Customers do not consider switching to several national contracts as a sufficiently attractive alternative because of the lower prices achieved under international contracts and the savings in administrative costs,” the commission said. “Moreover, the competition from specialist suppliers, such as companies supplying only printer cartridges, is limited as they offer a smaller product range and typically cannot provide the same services as those offered by contract stationers.”
The commission said it was satisfied the divestitures of Office Depot would “remove the entire overlap between the merging companies in all markets where concerns were raised.”
“This is a significant step, and we’re very pleased that the European Commission has approved this transaction,” Ronald L. Sargent, the Staples chairman and chief executive, said in a news release.
Sargent noted the deal also had been approved in Australia, China and New Zealand.
“We look forward to a full, impartial judicial review in the United States,” he said.
In an administrative complaint filed in December, the FTC said Staples, based in Framingham, Mass., and Office Depot, based in Boca Raton, Fla., are each other’s closest competition for office supplies and are often the top two bidders for the business of large companies.