FTC Blocks Office Supply Merger; Retailers Push for Organic Cosmetics

FTC Blocks Staples and Office Depot Merger

The planned merger between Staples and Office Depot is on hold, now that the Federal Trade Commission has weighed in. The FTC has filed an antitrust lawsuit charging that the merger would hamper the competition necessary to keep office supply prices down for large corporations.

Corporate historians will note that this isn’t the first time that Staples and Office Depot have tried to merge. In 1997, the companies were likewise stymied in their efforts by the FTC, which argued that the acquisition would harm individual consumers by reducing competition.

As many analysts have noted, individual consumers now have multiple choices for sourcing office supplies. However, this is not the case when it comes to major corporations who need to buy in huge quantities.

According to Adam Levine-Weinberg, senior consumer goods specialist The Motley Fool, both multibillion-dollar retailers sell to corporate clients through bulk contracts. 

“Staples and Office Depot are the only two national companies competing for these contracts,” Levine-Weinberg wrote in a recent article. “As a result, the FTC believes that the merged company would have too much market power on this side of the business.”

Executives for both Staples and Office Depot have expressed dismay over the FTC’s actions. While the companies have attempted to appease the federal agency with a divestiture offer, these efforts have been rejected.

An administrative trial is set to begin on May 10. Both Staples and Office Depot have indicated that they plan to fight the FTC on this issue. Stock prices for both companies declined after the announcement that the merger was running into difficulties.

Retailers Push for Sustainable Cosmetics

For many years, consumer demand for “natural” and organic cosmetics that aren’t tested on animals has given rise to a number of brands that lead with their commitment to sustainability. However, there’s also been another sustainability revolution quietly taking place.

Major retailers, such as Wal-Mart Stores Inc. and Target, have been leading the industry in efforts to pressure cosmetics manufacturers to eliminate “ingredients of concern” from their products.

The demand for change is placed on all brands, not just manufacturers of specialty products that were developed specifically for the natural or organic markets. The retailers are exerting pressure throughout the cosmetics and personal care industry.

This doesn’t mean, however, that consumers haven’t had a huge role in retailer commitment to sustainable products. As the public becomes more educated about sustainability issues, as well as the health consequences of using certain product formulations, retailers and manufacturers have taken note.

A GreenBiz.com piece quoted Helen Clarkson, director of Forum for the Future U.S., as saying: “You wouldn’t have the retailers pushing as hard if the consumer pressure wasn’t there. Retailers are seeing more rapid growth in product categories with natural or safe on the label. … We want more products like this, and we want to be more sure about what the labels mean, because more manufacturers are making these claims.”

For consumer products suppliers, the new awareness on the part of both consumers and retailers presents a challenge — and also an opportunity.

The challenge is formulating (and reformulating) products that meet the new standards. The opportunity is in attracting attention from store buyers and customers who are eager to buy sustainable, healthy cosmetics and personal care items.