In the Matter of Staples/Essendant, Inc., File No. 1810180 #01182

Submission Number:
01182
Commenter:
Kim Leazer
State:
North Carolina
Initiative Name:
In the Matter of Staples/Essendant, Inc., File No. 1810180
The FTC, by agreeing to allow Staples to purchase Essendant, has allowed Staples to buy their way into the mid-market on the backs of the small independent dealers(ID)in the US. This is a market Staples has struggled to penetrate through three different initiatives over the past decade. It is this market that has helped grow the small business community throughout the US and the decision to approve will cause irreparable harm to their growth and viability. Here is a list of reasons why. 1.Essendant will now be overseen by a combined purchasing department with Staples that will allow and control access to pricing information provided to the ID. This does not bode well for the claim of better pricing for the ID.By having the combined purchasing department, Essendant will have access to information from RFP's being bid on across the country. 2.While there is a required firewall,the combined purchasing department renders it ineffective as far as protecting the ID. 3.Formation of multiple house brands used for ID's as well as Staples will dilute the ID value as they will be seen as the same as Staples and it is probable that the Staples sales team will encourage that concept. 4.The FTC implemented a stipulation that should Staples consider buying over 10% of another entity in the OP industry they must seek FTC approval. Through conversation, our understanding is that Essendant is operating as a separate entity under Staples and as such retains the ability to make purchases of dealers in whole or part to gain control of the independent dealer community (without FTC approval) by squeezing them out and forcing closure or a fire sale. This has the potential to devastate privately held companies throughout the US. 5.Staples is owned by Sycamore Group who will now own Essendant. Having recently viewed the results of Sycamore's purchase of Belk's, I have seen the drastic decline first hand of Belk's service levels and commitment to the community and increase in unwillingness to adhere to government requirements ex. two years after the federal mandate, chip readers are still unavailable at their stores. If they are willing to ignore something that huge, I have doubts the Sycamore Group has any serious plans to provide a firewall that would ever suffice under the FTC's specified requirements. I don't think they care. Sycamore Group wants dollars pulled out of the acquired company not spent on infrastructure on those they acquire. I am also a Talbots shopper and experienced very similar problems when Sycamore Group acquired them. 6.We anticipate the merger resulting in a push on manufacturers to provide additional tier discounts or backend dollars to Staples/Essendant, money that will be recouped for manufacturers from the ID channel not participating in the Staples/Essendant offering. Weakening the ID's ability to compete locally or regionally. While I realize that all of these comments are mainly for the record and the decision isn't considered changeable, there is still time for some corrections and changes by the committee to the stipulations for the merger's completion. I would ask that the following be considered. 1.That separate purchasing teams be required that are also separated by a firewall. 2.That the firewall be vetted closely before the two can operate as one and that it receive an annual scheduled review for compliance by the FTC, which would include a survey to the independent dealer community for assessment on possible breeches. This should be paid for by Sycamore Group, the parent company. 3.That Essendant(and by extension, Sycamore Group) also not be allowed to purchase in whole or part any dealer under the same terms that Staples operates under. 4.That any purchase of any other OP entity by either Staples or Essendant or Sycamore Group receive approval by the FTC no matter what percentage the purchase represents. Respectfully, Kim G. Leazer