WASHINGTON — Staples Inc.’s bid to defeat a federal antitrust lawsuit against its planned takeover of rival Office Depot Inc. was undermined by its own legal strategy, according to the judge who blocked the merger last week.
In a 75-page opinion made public Tuesday, US District Judge Emmet Sullivan called out the office-supply companies for failing to put up a defense of their $6.3 billion deal. Because their legal teams made the surprise move to rest their case during the trial without calling witnesses, they didn’t overcome the government’s arguments that the merger would harm competition, he said.
The evidence offered by the companies “was inadequate as a matter of law,” the judge wrote.
The ruling, the latest in a string of successful government efforts to block big takeovers, suggests that a loss by Staples and Office Depot may not have been inevitable. It delivered a critique of Staples’ legal strategy, serving as a warning to other companies facing down government antitrust officials.
In the trial, the Federal Trade Commission argued that the merger between the nation’s No. 1 and No. 2 office suppliers would harm competition in the office-supply business because Amazon Business, a unit of Amazon.com Inc. that sells office supplies to companies, wasn’t ready to compete. After Sullivan spent much of the trial picking at the government’s case, Staples elected not to present its own evidence — saying instead that the government had failed to meet its burden.
“They were really rolling the dice with that decision and it did clearly backfire,” said Seth Bloom, an antitrust lawyer at Bloom Strategic Counsel in Washington.
Staples and Office Depot spokesmen didn’t respond to requests for comment.
Sullivan last week blocked the merger, keeping his reasoning secret until the companies redacted confidential business information from the opinion. His three-page order, which prevented the companies from merging pending a full-blown trial at the FTC’s administrative court, prompted Office Depot and Staples to announce they were calling off the deal.