In the Matter of Staples/Essendant, Inc., File No. 1810180 #02561

Submission Number:
02561
Commenter:
Marc Devokaitis
State:
New York
Initiative Name:
In the Matter of Staples/Essendant, Inc., File No. 1810180
Hello - Vertical mergers and consolidation among wholesalers increasingly threaten the ability of independent businesses to compete, harming competition and consumers. It is these types of corporate maneuvers that have contributed to this nation's extreme wealth divide, under which more and more people are experiencing economic hardship with each passing day. Please reconsider the recent decision, and prevent the merger between Staples and Essandent. "Mergers like this make it hard for independent businesses to survive and compete on a level playing field. Independents provide distinct market and consumer benefits that are not matched by larger companies. Their decline harms the economy and deprives consumers of the option of these distinct benefits. Between 20 and 25 percent of office supplies are sold by independent dealers. These dealers are highly competitive. Most have offered next-day delivery for 30 years or more. They routinely win contracts to supply government agencies and mid-sized businesses, demonstrating that they can and do compete with the big chains and Amazon on price and service. There are just two wholesalers in the office supply industry, Essendant and S.P. Richards. These wholesalers are a lifeline for independent office dealers. With this merger, the FTC is allowing a major competitor to control one of these lifelines. Through this merger, Staples will gain access to highly sensitive data that Essendant has about independent dealers, including the pricing and terms that they are offering when bidding on competitive contracts that Staples is also bidding on. The proposed "firewall" to be established between Staples and Essendant is insufficient to address this clear conflict-of-interest. Among other things, it is unenforceable with regard to the verbal sharing of information between Staples and Essendant. Staples has a significant incentive to raise the prices that Essendant charges independent office dealers, thus increasing the prices they charge and helping to steer more customers to Staples. Staples has been trying to increase its share of the market that independent dealers serve (mid-sized businesses and government agencies) and this merger gives them way to do that through actions that harm competition. Independent dealers that rely on Essendant cannot easily switch to S.P. Richards and this is an inadequate safeguard to prevent anticompetitive conduct by Staples. Staples is owned by Sycamore Partners, a private equity firm with a track record of buying retailers only to gut them by selling off their most valuable pieces. Should Sycamore do this to Essendant, it would result in deep harm to independent office supply dealers and consumers. The FTC did not consider this in its decision. By approving this merger, the FTC is setting a dangerous precedent for future mergers involving the suppliers that independent businesses depend on." Source: The Institute for Local Self-Reliance