Slashdot Mirror
Staples To Buy Office Depot For $6.3 Billion
An anonymous reader writes: Today Staples announced plans to buy Office Depot in a deal worth $6.3 billion. This is a huge consolidation within the office supply industry. Office Depot and OfficeMax were the second- and third-biggest suppliers when they merged in 2013. Adding those to the enormity of Staples would effectively bring the U.S. under a single office supply chain. "The move is expected to draw scrutiny from the Federal Trade Commission, though regulators have been increasingly willing to approve retail mergers in light of burgeoning e-commerce competition. ... This isn't the first time Staples has tried to buy Office Depot. In 1997, the FTC derailed Staples' acquisition of its rival as anticompetitive. By 2013, though, the agency's view had shifted. When the FTC allowed Office Depot to buy OfficeMax, it said the advent of online retailing ensured competition in the market for office supplies. Consumers today also rely more heavily on big-box chains such as Wal-Mart Stores Inc. for office products, the commission said."
Apparently 'no one' bought $22.7B worth of stuff last year, with EBITDA of $1.46B.
A Staples store is a warehouse for their office supply delivery business. The retail presence is more there for brand awareness and a showcase.
To contrast, Radio Shack is a cellphone kiosk that once sold electronics.
This is about like wondering how Bank of America can stay in business if nobody uses safety deposit boxes anymore.
Huh? They merged. The new company is called Office Depot. Office Max no longer exists. What is so hard to understand?
I think if someone were to create a simulation model of a truly free market with no regulation, and seed it with hundreds (thousands) of little businesses to start with, given enough time, you'll end up single monopoly that controls every industry, service, and product.
It seems to depend on what the business is. If a business is capital-intensive, commodity-based and can benefit from economies of scale chances are that, yes, a positive feedback loop will be established and, as the old maxim goes, "nothing succeeds like success".
On the other hand, not all businesses are driven solely on price. Multiple big players exist in such things as fast food and pizza joints, but within the big chains, I'll avoid MacDonalds and hit Burger King because to me McD's milkshakes taste like library paste. And the local neighborhood pizzaria beats Papa John's 20 ways from Sunday. Because what they're selling is a commodity only in broad terms.
There exist also Natural Monopolies where it's essentially a Buyer's or Seller's Market. A classic example is a product that requires laying down underground cables to individual residences. It's simply not tolerable to have 37 different companies rooting around in the dirt all the time, so the "last mile" belongs to a chosen few.
Stuff like this is why auto-quacking that The Market Solves Everything makes one look like an idiot. There are so many exceptions even before the big mean government steps in. In fact, a true Free Market is a pretty rare (and often short-lived) bird.