European Commission Opens Investigation into Staples’ Proposed Takeover of Office Depot
The European Commission has opened an in-depth investigation under the EU Merger Regulation into the acquisition of office supplies distributor Office Depot by its competitor Staples.
The commission has concerns that the takeover could lead to price increases and less customer choice.
The commission’s preliminary investigation indicated potential competition concerns in the market for the supply of office products to business customers through international contracts in the European Economic Area (EEA), as well as in the market for the supply of office products to business customers through national contracts in the Netherlands and Sweden.
“All companies and organizations, big or small, need office supplies for their daily work,” said Margrethe Vestager, commissioner in charge of competition policy. “We are opening this in-depth investigation to make sure that the merger of two of the main suppliers of office products will not have a negative effect on competition.”
Staples and Office Depot are both publicly held US-based company, listed on the Nasdaq.
The commission’s initial investigation showed that Staples and Office Depot, together with their largest European competitor Lyreco, are the main suppliers of office products to business customers. Several smaller players have a more limited geographic presence and may not be able to exercise a sufficient competitive constraint on the merged company. The transaction could eliminate an important competitor and reduce the choice of suitable suppliers in already concentrated markets, which could lead to price increases.
The preliminary investigation has also indicated possible competition concerns with regard to the wholesale of office products in Sweden, where the merging parties appears to have no significant competitors offering a wide portfolio of products.
The commission now has 90 working days, until February 10, 2016, to make a final decision.