Protecting Consumers: Naperville Business Attorney on the Blocked Office-Supply Merger

merger, Naperville business law attorneyOnce a company reaches a certain size and market share, its influence over the industry as whole is often substantial. In today’s business landscape, it is not uncommon for competition to such companies to erode over time, in many cases, leaving as a few as two major players to fight for dominance over a particular business sector. As long as the two companies remain in direct competition with one another, consumers tend to enjoy lower, competitive prices, and advancements in available products. When the leaders in a given industry decide to join forces in a merger, they are often looking for increased revenue and sustainability. In some cases, however, such a merger would be detrimental that sector’s customers, leaving them at the mercy of the new combined company, and often paying much higher prices.

In my practice as a business law attorney, I recognize the importance of healthy competition in the marketplace. I also understand how important it is for regulatory bodies like the Federal Trade Commission and the United States court system to take action when necessary to protect American consumers. This was exactly the goal of a federal judge who, earlier this week, blocked a merger between two major office-supply brands.

Competition Concerns

United States District Judge Emmet Sullivan ruled this week that a proposed merger between Staples and Office Depot was likely to “substantially impair competition in the sale and distribution of consumable office supplies to large business-to-business customers.” The case before him was a result of a challenge by the Federal Trade Commission to the proposed deal that would have united the remaining two national suppliers of pens, paper, and other office-related goods.

“The deal would eliminate head-to-head competition between Staples and Office Depot, and likely lead to higher prices and lower-quality service for large businesses that buy office supplies,” said Debbie Feinstein, the head of the FTC’s competition bureau. She went on to observe that Sullivan’s decision is a welcome development for business consumers.

Staples and Office Depot, respectively the number one and number two large-scale office-supply chains in the country, announced that they would not appeal the judge’s ruling, effectively ending their pursuit of a merger. Both companies acknowledged that would need to work hard to improve their products and services, but both chains’ stock took a hit in the wake of the decision.

Help With Mergers and Acquisitions

If you are considering an agreement with a competitor about a prospective merger, it is important to work closely with a Naperville business law attorney along the way. Contact The Gierach Law Firm to learn more about how such a transaction could affect your company and your industry. We can also help you address any concerns raised by the FTC or other regulatory bodies. Call 630-756-1160 to schedule a consultation today.

 

Sources:

Chicago Tribune

The Wall Street Journal

CNBC