The FTC Gets it Right with its Injunction Against a Staples and Office Depot Merger

Staples Office Depot merger

The Federal Trade Commission announced Monday that it is filing an injunction to prevent the planned merger by Staples and Office Depot. Simultaneously, the Canadian Competition Bureau also filed to block the transaction with Canada’s Competition Tribunal.

“The commission has reason to believe that the proposed merger between Staples and Office Depot is likely to eliminate beneficial competition that large companies rely on to reduce the costs of office supplies,” FTC chairwoman Edith Ramirez said. “The FTC’s complaint alleges that Staples and Office Depot are often the top two bidders for large business customers.”

Well said, Ms. Ramirez. It’s not just likely but all but assured. It doesn’t take a brain surgeon to recognize that going from two national-level mega vendors to one is going to limit competition. For CPOs and category managers, this announcement brings some level of opportunity. Staples and Office Depot will undoubtedly try to provide yet another remedy to the FTC and maybe even tactically conduct business as if the merger will eventually take place.

However, Wall Street has voted generally that it won’t, with both Staples and Office Depot stocks taking a hit. By the end of trading Monday, Staples had fallen as much as 14%, ending down $1.70 at $10.66 per share. Office Depot plunged 15.8%, to $5.59 per share from $6.64. It actually makes sense that Office Depot dropped more than its would-be suitor, since the consensus view with practitioners I’ve spoken with is that Office Depot is generally the weaker of the two and won’t fare as well.

So, for CPOs and category managers, especially those who’ve found that both parties are not engaging fully with sharpened pencils, now is a good time to re-engage. But, you should have a strategy not just for the short term. The time for creative unbundling may indeed be at hand. For those procurement organizations with more automated purchase-to-pay (P2P) and supplier management capabilities, including supplier viability risk monitoring for any weakened vendors, your ability to manage this higher level of orchestration will pay off. And if you’re really good, your:

  • category management strategy is integrated with P2P
  • supplier enablement and self-service will help greatly reduce costs and manage risk
  • market intelligence on the "sub lots" of this mega market basket will let you create compelling options for your stakeholders
  • ability to creatively use expressive bidding (also known as sourcing optimization or advanced sourcing) will be leveraged if you choose to do it — too many firms are simply not using these techniques and tools well enough and office products is a great place to apply it

Anyway, today’s event is just another stop on the Staples and Office Depot saga, but for the modern procurement professional, it’s just another opportunity to add more value and prove your worth. Now get to work!

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