Center for Popular Democracy
In the Matter of Staples/Essendant, Inc., File No. 1810180
This public comment is being submitted by the Center for Popular Democracy, a national network of 53 grassroots community organizations in 131 cities across 34 states, Puerto Rico, and Washington, DC. We request the FTC review the attached letter which provides a detailed overview of our concerns about the proposed merger between Staples, Inc., owned by the private equity firm Sycamore Partners, and Essendant, Inc. We are opposed to this proposed merger for several reasons: 1) This transaction breaks the law, violating both the Federal Trade Commission Act and the Clayton Act; 2) The proposed consent agreement, which places certain conditions on the merger, is insufficient; 3) Mergers and acquisitions are not in the interest of the American public, consumers, or workers. The FTC must do further due diligence to assess the consequences of this merger. A shrinking number of powerful companies are controlling large sectors of our economy. Corporate concentration poses a significant threat not only to consumers but also workers. We urge the FTC to more fully consider the implications of corporate concentration while assessing this proposed merger. More broadly, it is vital for the FTC to fully factor in the private equity business model when evaluating mergers and acquisitions. In particular, the FTC must analyze Sycamore's past track record and future business incentives. This Staples deal is part of a rapid acceleration of private equity-backed mergers and acquisitions. We believe this type of M&A activity requires close attention from the FTC, given private equity's business model differs significantly from publicly traded companies. The private equity model creates a moral hazard which leads to excessive risk-taking by private equity firms and high rates of bankruptcy. When businesses falter, private equity does everything it can to extract value at the expense of creditors. This can violate firewalls and lead to anti-competitive practices in markets where the business operates. Mergers may increase the risk of bankruptcy and that threat may lead Sycamore to mine assets for the failing company. In light of these considerations, the Center for Popular Democracy calls on the Federal Trade Commission to use the full extent of its regulatory powers to prevent this merger and protect the interests of the American public.