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Office Depot/Staples Merger off: FTC entirely wrong on antitrust definition

A federal judge has backed the Federal Trade Commission in a ruling over the merger of Office Depot and Staples, which means that merger is now not going to take place.

Office Depot/Staples Merger off: FTC entirely wrong on antitrust definition

It will not be wrong to say that everyone should be wary of the creation of monopolies, even of excessive market power and the government is always right in intervening in such matter to safeguard the interests of consumers.

But the Federal antitrust law, and the FTC itself, must use the correct definitions of market power and monopoly when dealing with such matters. They must look into the potential competition that any particular combination might face.

We should not be looking at "monopoly" as such, we should be looking at "contestable" monopoly. This affects the country's economy in a significant manner and this Staples/Office Depot case shows that the FTC has got he basic analysis wrong on this point.

The decision itself:

"Staples Inc. and Office Depot Inc. abandoned their merger after a federal judge sided with U.S. antitrust officials who challenged the combination of the two largest office suppliers, saying it would create an unrivaled giant. U.S. District Judge Emmet Sullivan in Washington blocked the $6.3 billion deal late Tuesday, a victory for the Federal Trade Commission, which argued that uniting the national suppliers of pens and printer paper would harm buyers."

Stopping a merger that would harm consumers is indeed the correct thing to do. But it's the analysis which leads to that conclusion which is erroneous in this case:

"U.S. District Judge Emmet G. Sullivan sided with the Federal Trade Commission, which in a December lawsuit alleged the combination of the office superstores would lead to higher prices for large corporations that buy office supplies in bulk."