Case Study ECONOMICS MERGER Staples, Office Depot and Office Max

Executive Summary The The esse essence nce of the the pres presen entt case case is rela relate ted d to impac impactt of a prop propos osed ed merg merger er betw betwee een n two 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 From the pro-m pro-merg erging ing perspe perspecti ctive, ve, this this merger merger would would bring bring an end to destr destruct uctive ive price 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 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 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.