Judge blocks Staples' merger with Office Depot

WASHINGTON -- A federal judge halted Staples Inc.'s proposed acquisition of Office Depot Inc., effectively ending a bid to unite the two biggest U.S. office suppliers into what the government argued would be an unchallenged giant.

U.S. District Judge Emmet Sullivan in Washington blocked the $6.3 billion deal. Sullivan's ruling is an injunction that puts the deal on hold while the Federal Trade Commission challenges the merger in its administrative court. The companies have said they would walk away from the deal rather than continuing to fight the case.

The FTC had said the combined national supplier of pens and printer paper would negatively affect consumers.

The FTC met its "burden of showing that there is a reasonable probability that the proposed merger will substantially impair competition in the sale and distribution of consumable office supplies to large business-to-business customers," Sullivan wrote in a three-page order issued Tuesday.

The decision marks the second time the FTC has blocked a merger between the two companies. In 1997, the commission successfully sued to halt their proposed merger on similar grounds.

Antitrust officials are grappling with a record wave of mergers that are combining some of the biggest companies across industries. Earlier this month, Attorney General Loretta Lynch warned about the risks to consumers from consolidation and vowed that the Justice Department, which shares antitrust jurisdiction with the FTC, would oppose problematic deals.

The FTC sued Staples and Office Depot late last year, contending that a single national office-supply seller with no obvious rival would undermine the ability of large corporate clients to bargain for better prices by playing the two firms off one another in negotiations.

Defense lawyers argued that the companies needed to combine to contend with looming competition from Amazon.com Inc. and its year-old Amazon Business unit.

The case is Federal Trade Commission v. Staples Inc.

Information for this article was contributed by Tom Schoenberg of Bloomberg News.

Business on 05/11/2016

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