## Facts

- The Federal Trade Commission, the Commonwealth of Pennsylvania, and the District of Columbia challenged Staples, Inc.’s proposed $6.3 billion acquisition of Office Depot, Inc.
- The challenged competition centered on business-to-business sales of consumable office supplies to large customers purchasing under national contracts.
- Plaintiffs alleged a national, customer-specific “cluster” market for large B‑to‑B contract customers and excluded ink, toner, and “beyond office supplies” items from the relevant product market.
- Staples and Office Depot were alleged to be the only firms able to provide, at scale, low prices, nationwide distribution, and services required by many large contract customers.
- Defendants argued for a broader market that included additional products and customer segments, and contended that online retailers (including Amazon), other vendors, entry/expansion, efficiencies, and divestitures would prevent competitive harm.
- The FTC authorized a federal court action under § 13(b) of the FTC Act to enjoin the merger pending the FTC’s administrative adjudication under § 7 of the Clayton Act.
- After discovery and an evidentiary hearing, the district court considered whether to preserve the status quo through preliminary injunctive relief.

## Issues

1. What is the relevant product and geographic market for assessing the merger’s competitive effects, including whether a customer-specific cluster market for large B‑to‑B contract customers is appropriate and whether ink, toner, and BOSS items should be excluded.
2. Whether the merger is likely to substantially lessen competition in violation of § 7 of the Clayton Act, including whether market concentration supports a structural presumption of illegality.
3. Whether asserted competitive constraints (especially online retailers), entry/expansion, “leakage” to other channels, efficiencies, or proposed divestitures rebut a showing of likely anticompetitive effects.
4. Whether the equities and public interest under § 13(b) of the FTC Act favor a preliminary injunction.

## Decision

- The court granted the plaintiffs’ motion for a preliminary injunction and enjoined the merger pending completion of the FTC’s administrative process.
- The court found the relevant market to be the sale and distribution of consumable office supplies to large B‑to‑B customers under national contracts, with the United States as the geographic market.
- The court accepted excluding ink, toner, and BOSS items from the relevant product market.
- Based on market shares and concentration, the court found the merger presumptively unlawful and supported by evidence indicating likely higher prices and reduced quality for large contract customers.
- The court held defendants did not show that online rivals (including Amazon), entry/expansion, efficiencies, or divestitures were sufficient on this record to offset the likely competitive harm.
- The court concluded the public interest in preserving competition and preventing difficult-to-remedy harm from consummation outweighed defendants’ claimed private harms.

## Legal Principles

- Under § 7 of the Clayton Act, a merger may be enjoined when it is likely to substantially lessen competition in a properly defined relevant market.
- At the preliminary-injunction stage under § 13(b) of the FTC Act, the court assesses the likelihood of success on the merits and weighs equities and the public interest in maintaining competition pending administrative adjudication.
- A customer-specific cluster market may be used where evidence shows a distinct set of customers with specialized requirements and limited practical substitutes.
- High post-merger concentration and substantial increases in concentration can create a strong structural presumption that a merger is anticompetitive.
- Predicted competitive constraints from future or developing rivals must be supported by evidence showing they are timely, likely, and sufficient to replace lost competition.
- Efficiencies and remedies must be merger-specific, verifiable, and adequate to counter likely anticompetitive effects; speculative claims do not rebut a strong prima facie showing.

## Conclusion

The court preliminarily enjoined Staples’ acquisition of Office Depot after finding a national, large-customer B‑to‑B consumable office-supplies market in which the merger would create very high concentration and was likely to raise prices and reduce service quality, and concluding that asserted online competition, efficiencies, and proposed remedies did not adequately counter that risk or outweigh the public interest in preserving competition.


Fed. Trade Comm’n v. Staples, Inc., 190 F. Supp. 3d 100 (D.D.C. 2016)