EU probes Staples buyout of Office Depot

EU regulators on Friday opened an anti-trust probe into the planned $6.3 billion buyout of US office supplies giant Office Depot by American rival Staples.

Staples announced in February that it will buy rival Office Depot, but the deal immediately rose eyebrows on fears it would leave only one major actor in the sector.

"We are opening this in-depth investigation to make sure that the merger of two of the main suppliers of office products will not have a negative effect on competition," said EU Competition Commissioner Margrethe Vestager in a statement.

"The Commission has concerns that the takeover could lead to price increases and less choice," the statement added.

The EU said an initial investigation "indicated potential competition concerns in the market for the supply of office products to business customers through international contracts" in Europe.

It expressed concern that "several smaller players have a more limited geographic presence and may not be able to exercise a sufficient competitive constraint on the merged company."

The blockbuster deal is receiving extensive scrutiny from antitrust regulators, most crucially by the Federal Trade Commission in the US home market.

Shares of Staples Inc. and Office Depot Inc. both tumbled this week, hurt by news reports that the US will block the merger plan.
The two companies, which together have more than 4,000 retail outlets worldwide, argue the deal would better position them to compete with online vendors and big-box retailers.

Both chains focus on selling office stationery, computers, printers and printing supplies.

The computerisation of data has reduced demand for traditional office supplies, and online and volume retailers have also challenged the two chains.

In 2013 Office Depot paid $1.2 billion for another competitor, OfficeMax, and subsequently closed about 400 stores in the United States.

Staples has also announced plans to close 225 stores in 2014.

Vestager, a former Danish finance minister, has launched other high-profile probes against US companies including Google and the tax affairs of Apple, Amazon and Starbucks.