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The real reason Staples and Office Depot are merging: Amazon

AP Photo/Paul Sakuma
Staples sees writing on the wall.
By Shelly Banjo
Published Last updated This article is more than 2 years old.

We’ve seen this movie before.

The office megastore Staples, which today agreed to buy Office Depot for $6.3 billion, tried to tie the knot with its rival nearly two decades ago, only to be thwarted by the Federal Trade Commission. That was before Wal-Mart’s meteoric rise across the US and just three years into Amazon’s existence, when the e-commerce behemoth was only selling books.

At the time, the FTC argued that a merger between two of the three biggest office-supply stores (years before Office Depot scooped up Office Max) would be anti-competitive and result in higher prices of pens, printer toner, and fax-machine paper. During its investigation, the FTC found that average prices at Staples were higher in towns such as Charlottesville, Virginia, where its nearest competition was 65 miles away.

The world of retail has drastically changed since then. Two decades later, the rise of online shopping and the spattering of thousands of superstores has ushered in a much-needed and long-overdue marriage of the office chains.

Already, more than half of Staples’ sales are online, making the office chain the third-largest online retailer in the US after Amazon and Apple. And while Staples and other companies can still vary prices based on the zip codes where online shoppers are located, Amazon has forced price competition to become a national, if not global, exercise.

The FTC will certainly still take a long look at the merger before approving a deal, but competition from Amazon has made it an easier pill to swallow.

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