ACCC raises doubts about Staples and OfficeMax merger

Originally written by Andy Braithwaite and published at opi.net

According to Opi, the Australian Competition and Consumer Commission (ACCC) has delivered a preliminary view that raises doubts over the proposed merger by Platinum Equity of office supplies resellers Staples and OfficeMax in Australia.

Platinum acquired Staples Australia (shortly to be rebranded as Winc) earlier this year and has agreed with Office Depot in the US to acquire Depot-owned OfficeMax in Australia subject to regulatory approval.

In a Statement of Issues document dated 24 August 2017, the ACCC stated: “The ACCC’s preliminary view is that the proposed acquisition may substantially lessen competition in the supply of traditional office products to large commercial and government customers in Australia.”

“The ACCC’s primary concern is that the loss of competition between Staples and OfficeMax could result in higher prices and lower levels of service,” ACCC Commissioner Roger Featherston elaborated in a press release.

“We are considering the extent to which other competitors will have the ability to compete with a combined Staples/OfficeMax for large customers after the acquisition,” he continued.

The ACCC approved a merger of Staples and OfficeMax in 2015 as part of the antitrust investigations that took place when Staples Inc attempted to acquire Office Depot in 2015/2016, but is taking a much closer look at the deal this time round.

“In our 2015 review, very few concerns were expressed by market participants and the ACCC considered that Officeworks was likely to be a credible competitive threat in the future,” said Featherston. “The current ACCC review takes into account changes to the market and a higher level of concern from market participants. In addition, Officeworks does not appear to have expanded significantly into supplying large customers or to have any intention of doing so.”

The ACCC is inviting further submissions from interested parties by 7 September 2017, in particular on three key issues:

1. The closeness of competition between Staples and OfficeMax, and between Staples and OfficeMax and other suppliers in the sale of traditional office products to large companies and government customers.
2. The extent to which large customers have viable alternatives, such as Complete Office Supplies (COS) or Lyreco.
3. The extent to which existing suppliers could expand or new entrants enter if the combined Staples-OfficeMax attempted to increase prices and/or decrease service levels.

The competition authority said it expects to make its final decision on the acquisition on 16 November. That is about two months after it plans to make an announcement on COS’s offer to acquire OfficeMax – either by not opposing the COS/’Max tie-up or by publishing a Statement of Issues as it has just done with Staples/OfficeMax.