Office Depot Merger

There is also the question of national sovereignty. The US government officials and Boeing executives expressed their view that “what authority a European body would have over a merger between two US companies that did almost all of their manufacturing in the US and had a few assets in the EU ” On the one hand, it is reasonable that once the FTC made its decision on the

On particular piece of evidence that can be shown to the FTC is in that the elasticity of demand either remained unaffected by this merger or that it increased. Taking this into consideration, if a comparison of price elasticity was done before and after the merger, there would be proof that consumers still had a large amount of substitutes available in the market. Depending on the type of market present, such as a Global Market, it would be relatively simple to prove the wide array of substitutes that were available to the consumers. This particular merger may have been done for what every company is looking for, which is cost savings. One other form of evidence to be provided to the FTC is a statement of costs, which should show costs before and after the merge.

On Friday, January 23, 2004 Union Planters Corporation and Regions Financial Corporation announced they would merge. This will create the twelfth largest holding company in the United States. This merger was deemed the merger of equals (Hillard, 1/26/2004, para. 2). The stockholders of both companies overwhelming voted for the merger on June 8, 2004 (Morgan, 6/17/2004, para. 2). On June 17, 2004 the merger received approval from the Federal Reserve, the last of the governmental approvals needed (Morgan, 6/17/2004, para. 1). The merger effective date was July 1, 2004, when the Union Planters stock symbol ceased to exist (Morgan, 6/17/2004, para. 5).

A relevant market is defined as a market where “sellers, if unified by a hypothetical cartel or merger, could raise prices significantly above the competitive level”. The main focus here is not whether other office retailers have anything in common with office superstores, but whether a sufficient number of customers will continue buying from them despite of significant price increases. The relevant market in the case includes only Office Depot, Staples, and Office Max in some areas. The proposed merger will most likely create a monopoly and significantly reduce competition. The evidence shows that even if the new monopolist raises the prices by more than 5%, the majority of customers will not consider such retailers as Wal-Mart, BestBuy, Target, Kmart as substitutes for

Vertical integration is a business growth strategy for economics of scale. It is typified by one firm engaged in different parts of production example; growing raw materials, manufacturing, transporting, marketing, and/or retailing to expand business in existing market for the firm. It can function in two directions both forward integration and backward integration.

Through the application of the “Rule of Reason”, a methodology used by courts to interpret US antitrust laws and analyze relevant

In Standard Oil Co. v. United States, 221 U.S. 1 (U.S. 1911) Standard oil and 37 other corporations were alleged to have engaged in conspiring to restrain the trade in petroleum and monopolize the petroleum industry. The Supreme Court ruled that combining the defendants oil companies’ stock to be a restraint of trade and an attempt to monopolize the oil industry and maintain dominance and therefore a violation of the Sherman Antitrust Act.

The grounds for any merger depend on the competitive nature of both firms. If one firm is highly competitive and tries to

After a five-year investigation costing millions of dollars, the Antitrust Division found little that could be characterized as anti-competitive. But that did not stop the government. Not only did DOJ file an antitrust suit that caused Microsoft to cancel its planned

This preliminary strategic assessment of Walgreens will describe the company’s current corporate strategy and business model. Walgreens’ acquisitions and mergers will be examined as well as the company’s globalization and competitive frame. A brief overview of how the company is performing and its cost-based business strategy will also be examined. This is the first of four reports that make up the strategic assessment for Walgreens.

Office Depot is a supplier of office products and services. The company's selection of brand name office supplies includes business machines, computers, computer software and office furniture, while its business services encompass copying, printing, document reproduction, shipping, and computer setup and repair. An S&P 500 company, Office Depot generates revenues of over US $14 billion annually and has 42,000 employees worldwide. It is headquartered in Boca Raton, Florida. Office Depot is one of the biggest office supplies retailers, but its sales revenue decreased dramatically 26% from 14.5 billion dollars in 2008 to 10.7 billion dollars in 2012.

Section 1 of the Sherman Antitrust Act, in part, states that “every contract, combination… or conspiracy, in the restraint of trade or commerce… is declared to be illegal.” (Sherman Act, 2006). This law provides “a comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade (Northern Pacific Railway Company vs. United States, 1958; Reiter vs. Sonotone Corporation, 1979). It relies on a fundamental belief in supply and demand (Baum Research & Development Company vs. Hillerich & Bradsby, 1998).

When it comes to the impact of the Five Forces of Competition and its effect on the performance of Staples and Office Depot, there does not appear to be a strong threat of new entrants in the big-box retail office supply segment of the industry. It seems unlikely that anyone will want to open a new office supply store. While there is a level of service differentiation between the two companies, there is little product differentiation between the two. Likewise, there would be little product differentiation from a new competitor. The threat of substitutes comes into play between Staples and Office Depot in that both companies offer basically the same products. If the customer can’t get what he wants at one store, he can go to the other. Likewise, if the customer becomes disenfranchised with one company for whatever reason, he can easily go to the other company. There doesn’t seem to be much bargaining power of customers or suppliers. There does seems to be a strong industry rivalry which, as with most industries, is the major determinant of the competitiveness of the industry.

Office Depot achieves its strategy by offering products that are less expensive than its competitors. This allows Office Depot to make sales to the largest possible consumer base and yet, at the same, still differentiating itself by providing more of the problem solving, and innovativeness desired by many corporate and some retail customers. Over the past twenty five years, Office Depot has been able to enter into various global locations and develop or maintained its competitive advantage by following this strategy. In fact, this strategy has paid off well over the past several years. Office Depot consistently ranks high in terms of customer recall of office supplies and business solutions. This quantitative measurement may be used by Office Depot to quantify the Company’s growth in this area.

FTC claimed that based on various analysis and evidence, proposed merger between Staples and Office Depot will harm competition in office superstore chain market and raise market price which will lessen customers’ welfare. Nevertheless, two parties of merger casted doubt on every detailed statement, and interpreted that this merger will reduce costs, broaden scale of economies, improve economic efficiency, and optimize resource allocation, and then lower market price efficiently. Finally, the Court chose to agree with FTC’s contention.