Another Awful Antitrust Ruling Damages Another U.S. Industry

Investor's Business Daily ^ | 5/11/2016 | Terry Jones

[IBD editorial writer]

Acting on a Federal Trade Commission lawsuit, a federal judge has rejected the planned $6.3 billion merger of Office Depot and Staples. It’s yet another example of why our nation’s antiquated antitrust law should be either reformed or repealed entirely.

The ink wasn’t even dry on the judge’s order when, as CNBC.com noted, “analysts called into question the office-supply chains’ ability to effectively compete in the market as stand-alone companies.”

Specifically, Jefferies analyst Daniel Binder advised his investor clients that Office Depot and Staples “will continue to face secular declines and each company’s business is vulnerable to competition from online and non-office-supply retailers,” such as Costco and Wal-Mart.

Both companies are deeply troubled, suffering from revenue and profit declines in recent years. So we wonder: What, exactly, was gained by disallowing this merger?

[2001convSVT]

Very good question. “What, exactly, was gained by disallowing this merger?”

[imardmd1]

The fact is that Staples and Office Depot and Best Buy, etc. no longer offer many common in-store items that are commodities, forcing purchasers to go to Amazon or eBay to get them. Is this because of eliminating costly local floor space for consumer inspection and selection? Is merging just to be larger going to keep a local storefront?

[MichaelCorleone]

-—Specifically, Jefferies analyst Daniel Binder advised his investor clients that Office Depot and Staples “will continue to face secular declines and each company’s business is vulnerable to competition from online and non-office-supply retailers,” such as Costco and Wal-Mart.-—

I know office supply small business owners who once did very well until Staples put them out of business, as they couldn’t compete on price. Families broken; lives shattered.

I don’t remember the IBD Editorial Board getting too upset about that.

[fruser1]

Staples - founded 1986.
Office Depot - founded 2003.

So when Staples first opened Office Depot was not even around. Was it violating anti-trust rules just by opening its doors?

[Terry L Smith]

What anti-trust??

Staples went out of business, and closed the store in town, leaving Office Depot as the ONLY office supply store in Alexandria, Louisiana. Any other town large enough to support an office supply store is a nice 3 hour drive, either north, west, or south.

[stylin19a]

?? but the Office Depot\Office Max deal was ok ?

[usconservative]

“What, exactly, was gained by disallowing this merger?”

Easy: the hastened demise of both.

Let's face one basic, economic fact: combining two companies that are already failing separately, on their own, will only prolong the pain experienced by their shareholders, employee's and creditors as the "new" company just swirls the drain longer driving up more debt.

Seen this act before, it never ends well.

[2001convSVT]

Perhaps, but I still would have like to let the merger go thru to let the new management team, try to save their drowning enterprises.

[1Old Pro]

They act like these are the only two stores people can buy office supplies.

[LibertarianLiz]

no longer offer many common in-store items that are commodities, forcing purchasers to go to Amazon or eBay to get them.

I have found this for many items I used to buy at a local store. I use an Oil of Olay face cream for sensitive skin (no perfume). All of a sudden, a few years ago, I could no longer find it at any store. So, I just bought the regular OofO face cream. My entire face swelled up.

Now, I get the sensitive type over the internet, same with toothpaste, and, recently, shoes.

I would shop at the local stores, if they still carried stuff I had been buying there for years. But, they don't.

[Grams A]

At least you could find the product you wanted somewhere. Some of the things I like, particularly wearing apparel such as shoe styles, underwear and household items, are no longer available anywhere. I find this particularly true with household cleaning products. Because of the greenies, the FDA and the EPA, the new formulas they are coming out with simply do not work or clean as well as the old ones. Really aggravating.

[catnipman]

“Another Awful Antitrust Ruling Damages Another U.S. Industry”

Which “industry” would that be? The “industry” of selling grossly overpriced office supplies from clone-like retail chain stores of one sort or the other that seem to be on every corner staffed by clueless high-school dropouts? Is THAT the “industry” that would be damaged?