Tom Lang in Law360: FTC Reprises Winning Strategy In Staples Merger Challenge

12/09/2015

The Federal Trade Commission's lawsuit Monday challenging Staples' $6.3 billion bid for rival Office Depot took a page from the antitrust enforcer's playbook in a successful challenge to a merger of two major food distributors, focusing again not on consumer prices but on what the deal means for large businesses that buy office supplies by contract...

The administrative complaint makes the same kinds of claims the FTC used to challenge Sysco Corp.'s bid to merge with rival broadline food distributor US Foods Inc., in part by focusing on a market of nationwide customers. But here, instead of restaurants and hotel chains, the FTC is telling the story of businesses that pit the country's two largest office supply vendors against each other to keep prices down....

"In both cases, the staff is looking at how the transaction will affect larger customers that require what I would call nationwide supply," Haynes and Boone LLP's Thomas Lang said. "There are some very close similarities there. This is not really protecting consumers in this transaction, but it is protecting larger businesses who purchase through these contracts that often have bidding through the parties that keeps prices down and service quality high."

... "It is a bit surprising that two years later they're coming at it from a different perspective, but I think everyone has to remember that part of the reason that the commission ... allowed that deal to go through was that there was sort of an insurance policy in that there was still one of these two companies to compete," Lang said. "That was a 3-2 ... and this is a 2-1 at least for the large Fortune 500 companies that the FTC seems to be particularly concerned about now."

"And it doesn't have that backup competition that it had two or three years ago," Lang added.

Excerpted from Law360. To read the full article, click here (subscription required).

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