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Competition Bureau challenges Staples acquisition of Office Depot

OTTAWA – The Competition Bureau is challenging a proposed merger between Staples and Office Depot, saying the country’s office supplies industry is becoming too concentrated.

The federal agency joined the U.S. Federal Trade Commission in denouncing the proposed merger on Monday.

The Competition Bureau filed an application with the Competition Tribunal that raises concerns over how dominant Staples would be if its proposed US$6.3 billion acquisition of Office Depot, which operates the Grand & Toy retail and supplier in Canada, is given approval.

Also Monday, the U.S. Federal Trade Commission filed a lawsuit seeking to block the Staples transaction. It’s the second time the FTC has attempted to block a merger of the two companies after a successful ruling in 1997.

Staples and Office Depot said they will show that the FTC’s decision is based on “a flawed analysis and misunderstanding” of the competitive landscape the companies deal with.

The pair argue that competition has become even tougher since Office Depot and OfficeMax merged in 2013 and that the FTC is contradicting itself because it said that the office supply market was highly competitive two years ago.

Office Depot chairman and CEO Roland Smith says Staples and Office Depot plan to pursue legal options in order to complete the deal.

The Competition Bureau says the acquisition would give Staples more than 80 per cent of office product sales in Canada, which would “substantially lessen competition” and likely drive prices higher.

It says the impact wouldn’t just hit consumers, but also for-profit and not-for-profit businesses, governments, health care organizations and educational institutions representing more than $500 million in sales each year.

— With files from The Associated Press