Proposed Merger Between Staples And Office Depot

Staples and Office Depot Inc. are both office supply chains. Today both companies are doing great considering where they came from and their competitive market. It is safe to say Staples has more than 2000 stores while Office Depot has above 1600 stores throughout the world. According to the case they were both originated in 1986 and while being founded early on over the next decade they and additional office supply chains have contended belligerently in order to provide a suitable, unfailing and inexpensive supply of office materials to smaller industries or businesses along with other persons who have home offices. Staples and Office Depot have been extremely victorious in the field of office supplies. They have kicked out hundreds and thousands of individual privately owned businesses out of selling and abolished even few competitors in the office supply market by getting hold of their business or economic failure of their business. By 1996 they had only one existing contestant which even till today I remember and that is OfficeMax. Office Depot has been very insistent, in addition, Staples and OfficeMax are to participate more assertively as well. The office supply prices for staples are the cheapest in the cities that all three of the nationwide office supply chains staples, office depot, and office max compete. Prices reach higher in the markets that only the additional competitor is OfficeMax. Office Depot incriminates drastically with increased prices that comes

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.

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

This article is about the threat of merger and the influence of a monopolistic media. The

It is necessary for a firm to expand in order to gain profits or leverage in a market place. One of the ways firms can do this is by executing a merger. There are two types of mergers, horizontal and vertical mergers. There are many incentives for companies to perform either type of merger; however, both types of mergers will always raise suspicion when being executed because they are usually perceived as anticompetitive. In order to prevent an anticompetitive environment, our government established a federal agency called the Federal Trade Commission. Their job is to review the activity of any given firm and decide whether or not to allow them to continue. Presently, CVS and Etna are currently undergoing a vertical merger to gain profits and

The predominant view in the United States is that The Sherman Antitrust Act of 1890 was passed with the intent to protect consumers from inefficient market forms, and predation by large corporations. The specific provisions of the Sherman Act, as well as the later Clayton Act of 1914, prohibit acts that are considered to be anti competitive such as cartels, monopolies, price discrimination, and predatory pricing. Mergers and acquisitions are also individually reviewed to ensure they won 't have an anti competitive effect on the market. We will look at each of these acts to try to determine their actual impact to the consumer. We will also

Generally, an industry consolidation can generate concerns regarding monopolistic tendencies and negative affects on market trends. In a monopoly, companies maximize profits, control prices, place prohibitive barriers to entry, and minimize competition. As expected, this PBM consolidation did raise similar concerns by the NCPA (2011) and encouraged the FTC to block the consolidation based on monopoly power and market domination. However, the NCPA is incorrect when describing this merger as a monopoly. Monopolies typically occur in a supply chain market. PBM’s are sellers of goods and services. As such, this consolidation is in fact an oligopsony, describing a market with many sellers and few buyers. An oligopsony market allows for competition and compliments consumers. The anti-trust concern, however, may be whether competition will remain strong enough to pass any cost savings to the PBM’s customers, i.e. employer plans, health plans, and other client markets.

Through the cumulative abnormal returns (CARs) that a company receives from the merger, we were able to see the effects of second requests and complaints on the company’s stock price over time. This methodology of using event studies to gauge the effects of mergers and the antitrust agency involvement was first applied by Eckbo (1983), and most recently by Filson, Olfati, and Radoniqi (2015). The event studies used in both of these journals and the others mentioned within the review of literature give us a good understanding of how accurate event studies are for predicting the effects that second requests or complaints given out by antitrust agencies can have on merging firms and within their

The Federal Trade Commission has taken the first step toward blocking the proposed $6.3 billion merger of Staples and Office Depot, saying the deal would hurt competition in the market for office supplies sold to large corporations. They made the complaint that the merge violated antitrust laws. "The Commission has reason to believe that the proposed merger between Staples and Office Depot is likely to eliminate beneficial competition that large companies rely on to reduce the costs of office supplies," said FTC Chairwoman Edith Ramirez. The FTC has blocked the merge of these companies since 1997. The companies have released a joint statement saying that they think the FTC vision of the market is "based on a flawed analysis and misunderstanding

On the first hand, we formulated a pre-merger analysis in order to have a better understanding of the deal. We identify the state of the Canadian economy and the industry trends of grocery-retailing and pharmaceutical-retailing, as well as Loblaw and Shoppers financial and operational situations prior to the announcement of the deal. The macro and micro analysis helped us identify the true motives

After the consolidation of the OfficeMax with the Office Depot, the merger resulted to a strong revenue growth of 43.2% reaching $16.1 billion. However, the merger incurred $354 million loss in the same year which is mainly attributed to supply chain mismanagement, restructuring costs, and higher operational expenses.

Pre-merger filing requirements have a potentially significant impact on the cost and timing of closing a transaction, and even the very likelihood of closing. Parties anticipating the prospect of intensive antitrust review may choose to allocate antitrust risk in their merger agreement, selecting appropriate obligations of mutual cooperation, apportionment of expenses, termination rights, or break-up fees. No one size fits all in allocating antitrust risk in merger agreements. Where appropriate, the parties to a transaction should identify and retain local and/or regulatory counsel to assist them with evaluating the state and regulatory law issues raised by a potential acquisition and developing a plan to address such

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.

Intensity of rivalry among competitive firms. In the past, Staples has been successful in fighting against its competitors with its low prices and brand loyalty, but recently against Amazon there are bigger obstacles to overcome. The rivalry with Amazon, Walmart, Target and wholesale clubs is intense as they have more resources to use against Staples, such as the range of its customers and a thriving business line. Therefore, seeing that the rivalry is intense, it presents a threat to their profitability (Hill et al., 2015, p. 51). From this perspective, the competitive rivalry will be considered as high for Staples.

The General Electric (GE) and Honeywell International (HI) case illustrates the complexities of structuring mergers and acquisitions when the combined firms are capable of exerting market influence that threatens the competitive landscape. While General Electric's CEO, Jack Welch, characterized the deal as, "This is the cleanest deal you'll ever see," European anti-trust regulators were not so inclined to view the transaction as harmless to competition (Elliot, 2001).