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Economists From Charles River Associates (CRA) Provide Antitrust & Competition Analyses In Office Depot/OfficeMax Merger

Stocks in this article: CRAI

Charles River Associates (NASDAQ: CRAI), a worldwide leader in providing  economic, financial, and management consulting services, today announced that the Company assisted Office Depot with securing antitrust clearance from the US Federal Trade Commission (FTC) for its merger with OfficeMax. On November 1, 2013, the FTC announced it had unanimously voted to close its seven-month investigation into the proposed $1.2 billion merger of the office supply superstores (OSS), and concluded that the merger is unlikely to lessen competition in the sale of consumable office supplies.

In its decision, the FTC noted how event studies demonstrated that Office Depot and OfficeMax retail prices do not respond to the closing or opening of one another’s stores. The event studies conducted by CRA’s economists showed that Office Depot and OfficeMax pricing is not uniquely constrained by competition with one another, even in locations where Staples does not have a store nearby. CRA’s econometric analysis demonstrated that post-merger prices will be constrained by broad competition, including competition with other retail formats, such as mass merchants, club stores, and online commerce. In closing its investigation, the FTC concurred that “[a]ll of the econometrics … indicate that the merger is unlikely to lead to anticompetitive price increases.”

The FTC also investigated the potential competitive effects of contract sales. CRA economists conducted empirical analyses of the two companies’ bid and win/loss data for contract sales to businesses, which showed that both companies compete against a broad set of competitors other than office superstores, including national and regional, brick-and-mortar, and internet suppliers. In addition, CRA’s analyses of the data showed that customers have many options in procuring contract office supply services. In its decision, the FTC concurred that “[n]on-OSS competitors are growing in number and strength and have demonstrated the ability to win large, multi-regional and national customer contracts.” CRA economists also assisted Office Depot with its responses to the FTC’s Second Request.

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