This week, the U.S. District Court for the District of Columbia will hear a case called Federal Trade Commission v. Staples, Inc. and Office Depot, Inc. The Clinton FTC is suing the two companies to block their proposed merger as a violation of federal antitrust law. The government alleges that the merger will reduce competition and raise consumer prices.
That allegation is almost mind-bogglingly stupid. Staples and Office Depot, of course, are two of the major pioneers in office-supply “superstore” marketing, which has dropped consumer prices throughout the office- products industry rather dramatically. And yet, put together, the two companies still control only 5 percent of that market. So how exactly can this merger pose an antitrust problem? We don’t know.
We do know that the FTC has behaved badly in this case. In one particularly egregious instance, the FTC drafted an affidavit about office-products competition in Tampa, Florida, and then somehow persuaded Cindy Callaway, the business manager of a local company, to sign it. Callaway’s FTC affidavit says: “I can purchase all my office supply needs at the office supply superstores without having to go from store to store. . . . Other retailers . . . do not carry all the items that I need.” And if the proposed merger takes place, the FTC document continues, “prices may increase” because there would remain “no satisfactory alternatives” in the area.
Well. Attorneys for Staples and Office Depot interviewed Callaway. She told them, and swore in a subsequent affidavit, that she makes 80 to 90 percent of her company’s purchases at a place called Viking Office Supply. Viking, she says, is “more convenient” and “sometimes cheaper” than either Staples or Office Depot. In any case, “There are many places in the Tampa Bay area to shop for general office supplies. It is a hotbed of competition.”
The FTC appears to have manufactured its feeble evidence from thin air, in other words. But they’re going to court anyway. And they’re probably going to lose. And taxpayers, in whose name the FTC claims to be working, will foot the bill.
