FTC Weighs Challenge to Staples-Office Depot Merger

The Federal Trade Commission is considering a challenge to Staples Inc.’s $3.4-billion acquisition of Office Depot Inc. unless the companies can convince antitrust enforcers that the combination of office-supply giants won’t raise consumer prices.

Lawyers for the companies and the FTC staff have been in intensive talks to resolve government concerns, and the firms have tentatively set meetings next week with the five FTC commissioners, a person familiar with the negotiations told Bloomberg News.

During more than four hours of talks with Staples executives Friday, FTC staff lawyers argued that consumer prices have fallen in regional markets where both companies have stores. That led to their fears that prices will rise if one chain disappears, a person familiar with the talks said. If the companies can’t persuade the FTC that the merger won’t harm competition, the agency could sue to block the acquisition or press for a negotiated agreement to sell some stores.

A newsletter reported Wednesday that the FTC staff told the agency’s commissioners that they may recommend a preliminary injunction to block the acquisition.

Concern about the merger sparked heavy trading in both companies’ shares. Delray Beach, Fla.-based Office Depot shares fell 62.5 cents to close at $19.625 on the New York Stock Exchange. Westboro, Mass.-based Staples gained 56 cents to close at $20 on Nasdaq.