The Federal Trade Commision (FTC) is giving the green light to the $1.2 billion merger of office supply retailers OfficeMax and Office Depot. After a seven-month investigation, the agency determined that combining the two stores wouldn’t present a threat to competition. The unanimous vote means the companies have cleared the final hurdle towards a merger, and in a statement, they said they expected to close the deal on November 5th. At that point, they’ll release more details about how the newly unified organization will operate.
The FTC has essentially decided that the office supply niche has eroded to such a point that stores like Walmart, Costco, it says, and Amazon are now significant options for American consumers and formidable competition for traditional office supply business. “Online retailers stock a vast array of office supply products and can deliver them quickly anywhere in the country at nominal cost,” it writes.
“Company documents show that [office supply stores] are acutely aware of, and feel threatened by, the continued growth of online competitors, most notably Amazon,” the filing continues. “[Office supply stores] have lost, and continue to lose, substantial in-store sales to online competitors.” That assertion is borne out by both companies’ financials. OfficeMax reported a slight operating loss in August, and while Office Depot is reducing its operating expenses, it recorded decreasing overall profit margins and a larger loss for the same quarter.