Staples is “still open to any discussions” that will bring its dispute with the FTC over the proposed acquisition of Office Depot to a “successful conclusion”.
That was the message to OPI from Staples CEO Ron Sargent following the decision by Staples’ legal team to rest its case this week without calling any witnesses in the preliminary injunction hearing versus the FTC in Washington (DC).
Sargent was basically echoing what Staples had already told Judge Emmet Sullivan and the FTC in the courtroom as the hearing came to a close on Tuesday. He said he wouldn’t be able to provide any more comments until the judge issues his ruling on 10 May.
Staples and the FTC will reappear before Judge Sullivan on 19 April, but this is in order for them to present final arguments or – who knows – even details of a proposed settlement.
The chances of a settlement being agreed would appear to depend on the stance of the FTC. Until now, it has rejected Staples’ proposals and demanded a sell-off of standalone assets that could compete with a combined Staples/Depot in the enterprise contracts arena.
Will the FTC now be more open to a compromise agreement with Staples following the hearing? Or will it be prepared to lose the preliminary injunction decision rather than being forced to accept a remedy that it deems as inadequate?
Staples’ decision to rest its case shows that it is confident that the judge will deny the FTC’s request for a preliminary injunction. However, one antitrust expert I spoke to this week called the move “extremely surprising”, even though Judge Sullivan criticised the FTC for how it handled the Amazon Business testimony and was sceptical of other areas of its case.
There is certainly no guarantee that Staples will prevail, but its chances certainly look a whole lot better than before the hearing began.
The FTC could still pursue its challenge to the merger even if it does not get the preliminary injunction. However, doing that would take time and Staples and Office Depot could potentially have already closed the deal even if the FTC did win on appeal.
I say ‘potentially’, because even if Judge Sullivan does deny the FTC its preliminary injunction there are a couple of other loose ends. Firstly, the deal has not been approved in Canada. While the Canadian competition authorities (CCB) have been following the FTC’s lead, a case schedule was drawn up in March by the CCB that takes things into 2017.
Secondly, the approval by the European Commission for the deal is dependent on the Commission’s agreement over the sale of Office Depot Europe.
The deal isn’t going anywhere unless these two issues are resolved, even if Staples is successful in the hearing against the FTC.