Members of the Advocates for Independent Business (AIB) voiced concern about the recently approved merger between office-supply chain Staples and the wholesale office supply company Essendant in joint comments submitted to the Federal Trade Commission (FTC) on Thursday, February 28. Essendant is one of just two national wholesale companies upon which independent office supply dealers rely, and the merger will give control of the wholesaler to one of their largest competitors.
The letter, which was signed by the American Booksellers Association, the Independent Office Products & Furniture Dealers Association, Brixy, the Running Industry Association, and the American Specialty Toy Retailing Association, outlines AIB’s argument that “this merger should not have been approved. It imperils independent office supply dealers (including those represented by one of our member organizations), harms competition and consumers, and furthers a dangerous pattern of approving vertical mergers that allow large corporations to foreclose their smaller competitors.”
One of AIB’s concerns is that the merger may permit Staples to access data on its competitors. As the letter explains, “Essendant is privy to sensitive information about independent office supply dealers, including customer information; details of their contract bids, including pricing; and other data that Staples can now easily use to gain an unfair advantage.”
Further, AIB’s letter points out that Staples will now have the power to raise Essendant’s prices to dealers in order to steer customers away from independent dealers and to its own commercial division.
In response to the decision, AIB called on the FTC to “aggressively police” the firewall between Staples and Essendant, to monitor and review the impacts of this merger and be prepared to intervene if it harms competition, and to review its approach to vertical mergers “and adopt stringent guidelines for reviewing these deals.”
The FTC approved the merger on Monday, February 4, in a 3-2 vote. Commissioners Rebecca Slaughter and Rohit Chopra issued dissenting opinions. In her dissenting statement, Commissioner Slaughter expressed concerns that the FTC’s decision does not address “Staples’ control over Essendant prices to its independent reseller competitors or its enhanced incentives to hamper independent reseller competitiveness.” She called on the FTC to commit to a retrospective investigation to monitor for anticompetitive conduct by Staples.