Staples, FTC stalled on settlement talks

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

WASHINGTON (Reuters) - The U.S. Federal Trade Commission is looking for office supply store Staples SPLS.O to improve its offer to divest assets to further its bid to buy rival Office Depot ODP.O, the agency said in court on Thursday.

Arguing for Staples, Diane Sullivan said that the company had made a “significant and substantial” offer to the FTC. The company said earlier this month that it had offered to divest $500 million in commercial contracts.

Arguing for the FTC, Tara Reinhart said at a pre-trial hearing that the FTC had rejected that as inadequate. “We have actually asked them to come back,” she said.

The FTC filed a complaint on December 7 aimed at stopping Staples from buying Office Depot, saying that the deal would hurt big customers who want nationwide contracts to buy their office supplies. The $6.3 billion deal had been announced in February.

Canada’s Competition Bureau has also said that it would challenge the proposed transaction.

The FTC is asking the court for a preliminary injunction so that it can try the case in an internal process. The trial on the preliminary injunction is expected in March with a decision in May, said Judge Emmet Sullivan.

The agency stopped a merger attempt between the same two companies in 1997 but in the 19 years since then, Amazon AMZN.O and other online sellers, which deliver across the United States, have emerged as competitors, while chain stores such as Costco COST.O and Wal-Mart Stores Inc WMT.N have further crowded the market.

Staples was emboldened to try again for Office Depot after that chain succeeded in buying No. 3 OfficeMax in November 2013 with no divestitures.

The case at the U.S. District Court for the District of Columbia is Federal Trade Commission v Staples, Inc. It is case No. 15-2115.

Reporting by Diane Bartz; Editing by Susan Heavey and Alan Crosby