Executive Summary

The essence of the present case is related to impact of a proposed merger between two
Companies Staples and Office Depot dealing in the Office Superstore market. These companies deal in
an existing highly competitive triopoly market where the three players are Staples, Office Depot and
Office Max. Because of this competition consumers are enjoying a benefit of competitive lower prices.
Statistically there is almost zero probability of any other player entering the market owing to the large
scale-low cost operations of the existing players.
If the proposed merger of the two bigger players ultimately materializes, there will be a virtual
monopoly. This is because all other players will be reduced to non-existing minorities owing to
resulting gigantic size of the merged entity in terms of market share. The same is reflected by the
resulting market concentration of these firms calculated in terms of the HHI index which is expected to
be 10000 in 15 markets where they will have absolute monopoly, 5003-9049 in 27 metropolitan areas
and 1800-5000 in 42 geographical areas where the marginal players are already competing. Added to
this will be the elimination of planned competition between the two.
From the pro-merging perspective, this merger would bring an end to destructive price
competition – not reason enough, we anlayse, in the face of resulting in no competition era. The second
projected benefit is to generate significant cost savings - still in our analysis this is rather speculative
one and can be achieved through other means without any anticompetitive effect. Finally the third plus
point speculated is that of avoiding even the remotest possibilities of the acquisition in the long run -
the reality though is otherwise as other retailers catering to small businesses are unable to reposition in
markets where these Companies operate.
The anti-merging views suggest that the resulting massive entity will have a free will to set its
own rules in terms of uncontrolled price setting, increased consumer suffering due to sustained demand,
suggested by the current facts that the entity may increase price where they do not face any competition
and reduce the price so low, where they face competition, that any potential competitor will be driven
out of the market.
This clearly shows that the proposed merging will lead to a duopoly-The merged entity and
OfficeMax, which will be ineffective in every aspect and fast giving away space for monopoly to set in
and the Consumers will be bound to face a steep price rise in the new set-up. This justifies every way
for the regulatory authorities to interfere and affect an injunction to the proposed merger to preserve the
benefits of a free and open competition for the public.