Economics of Strategy

 

19 25.37 10.63126611 18.89 50
20 15.22 7.251446949 26.99 53

Table 3: Soft Drink Data for the Entire United States by State
State Cans/Capita/Yr 6-Pack Price ($) Income/Capita ($1,000) Mean Temp. (F)
Alabama 200 2.19 11.7 66
Arizona 150 1.99 15.3 62
Arkansas 237 1.93 9.9 63
California 135 2.59 22.5 56
Colorado 121 2.29 17.1 52
Connecticut 118 2.49 24.3 50
Delaware 217 1.99 25.2 52
Florida 242 2.29 16.2 72
Georgia 295 1.89 12.6 64
Idaho 85 2.39 14.4 46
Illinois 114 2.35 21.6 52
Indiana 184 2.19 18 52
Iowa 104 2.21 14.4 50
Kansas 143 2.17 15.3 56
Kentucky 230 2.05 11.7 56
Louisiana 269 1.97 13.5 69
Maine 111 2.19 14.4 41
Maryland 217 2.11 18.9 54
Massachusetts 114 2.29 19.8 47
Michigan 108 2.25 18.9 47

7

Minnesota 108 2.31 16.2 41
Mississippi 248 1.98

9 65
Missouri 203 1.94 17.1 57
Montana 77 2.31 17.1 44
Nebraska 97 2.28 14.4 49
Nevada 166 2.19 21.6 48
New Hampshire 177 2.27 16.2 35
New Jersey 143 2.31 21.6 54
New Mexico 157 2.17 13.5 56
New York 111 2.43 22.5 48
North Carolina 330 1.89 11.7 59
North Dakota 63 2.33 12.6 39
Ohio 165 2.21 19.8 51
Oklahoma 184 2.19 14.4 82
Oregon 68 2.25 17.1 51
Pennsylvania 121 2.31 18 50
Rhode Island 138 2.23 18 50
South Carolina 237 1.93 10.8 65
South Dakota 95 2.34 11.7 45
Tennessee 236 2.19 11.7 60
Texas 222 2.08 15.3 69
Utah 100 2.37 14.4 50
Vermont 64 2.36 14.4 44
Virginia 270 2.04 14.4 58
Washington 77 2.19 18 49

8

West Virginia 144 2.11 13.5 55
Wisconsin 97 2.38 17.1 46
Wyoming 102 2.31 17.1 46

The Office Depot/OfficeMax merger and the changing retail landscape

First published on the GCR USA website, 25 November 2013

The US Federal Trade Commission’s decision last month to clear a merger between office supply
superstore rivals Office Depot and OfficeMax shows just how much the competitive landscape for
retail mergers has changed in the 15 years since the FTC blocked a nearly identical deal. Now, a
team of lawyers from Simpson Thacher & Bartlett and economists from Charles River Associates
who advised on the merger explain what convinced the FTC to let the deal through.
Sixteen years ago, the US Federal Trade Commission won a landmark merger victory by
successfully blocking a proposed deal between two retail office supply giants, Office Depot and
Staples. In the 1997 FTC v Staples, Inc decision, the district court adopted the FTC’s proposed
relevant market of the sale of consumable office supplies (pens, paper, file folders, ink and toner
cartridges, and so on) through what it called office supply superstores, of which there were three
in the US – Staples, Office Depot and OfficeMax.

 


In limiting the market to office supply superstores only, the court relied in part on econometric
evidence showing that Staples and Office Depot had significantly higher prices in areas with only
one superstore than in areas where all three rivals competed.
Moreover, the court found that Staples’ and Office Depot’s prices were not lower in areas where
nonoffice
supply competitors, such as Wal-Mart, were present. In light of that evidence, the court agreed
with the FTC that there was a reasonable probability that the transaction would harm competition.
GCR USA
In early 2013 Office Depot and OfficeMax – the second and third-largest office superstores in the
US – entered into a proposed merger of equals that would test whether the Staples decision
continued to apply today. Although it was plain that a host of new retailers both on- and off-line
had begun selling office supplies over the past decade or so, some observers questioned whether
the landscape had shifted so dramatically that the FTC would allow the Office Depot/OfficeMax
transaction to go forward. Based on a survey of prices for a few office supply products at a handful
of office supply superstores and on Amazon, one publication speculated that even today online
retailers may not serve as substitutes to brick-and-mortar retailers for consumers of office supplies.
After the initial merger filing, the FTC conducted an expansive second request investigation;
collecting documents from numerous employees, analyzing reams of sales and pricing data, and
conducting depositions of both parties’ key executives to understand how the office supply
industry operates today.