U.S. judge in Staples fight with FTC pushes back at firm's arguments

Tue Apr 19, 2016 6:12pm EDT
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By Diane Bartz

WASHINGTON (Reuters) - The judge hearing a fight between the U.S. government and Staples Inc over whether the No. 1 office supply store may merge with a smaller rival expressed doubt on Tuesday over several arguments made by the company.

The Federal Trade Commission was in U.S. District Court for the District of Columbia seeking a preliminary injunction to stop the proposed $6.3 billion deal pending a decision by an FTC administrative judge. Winning the injunction would likely kill the deal since companies struggle to hold mergers together during lengthy litigation.

In closing arguments for Staples, attorney Diane Sullivan argued that the FTC incorrectly described the office supply market to exclude ink and toner, a central issue in the case. She pointed to a 1962 case called Brown Shoe Co, Inc v. United States which gives guidance on appropriate tests for establishing a merger is illegal.

Judge Emmet Sullivan responded that her description of the case "is somewhat incorrect."

The lawyer for Staples also said that the FTC's expert economist, Carl Shapiro, had been told by the agency to make certain findings, and that he was less credible because of it.

Again, Judge Sullivan pushed back: "In fairness, he did say it's part of the collaborative process."

At another point, the Staples lawyer criticized the FTC and the judge said, "Why do you assign such nefarious motives?"

The Staples lawyer responded, "Maybe it was a mistake (by the FTC) your honor. The truth is that they don't have the data or the analysis (to stop the merger)."   Continued...

A shopping cart is seen outside a Staples office supplies store in the Chicago suburb of Glenview, Illinois, February 4, 2015. Inc . REUTERS/Jim Young