retail news in context, analysis with attitude

The Wall Street Journal reports that hedge fund Starboard Value has acquired about six percent of Staples' outstanding shares, raising the possibility that it could push for a merger between it and Office Depot, in which it has a 10 percent stake.

The story notes that there is enormous pressure in the office supplies business to consolidate, as competition heightens from the likes of Walmart and Amazon; Office Depot and OfficeMax merged just last year.
KC's View:
The story also quite rightly suggests that any such merger would draw a lot of antitrust regulators, who could easily argue that putting Staples and Office Depot together would eliminate competition in the office supplies category.

But it would raise an interesting question, and I would suggest that antitrust regulators would have to look at a merger of these two companies through 21st century lens. Competition is a very different thing now than it was a dozen years ago, and so-called format and category boundaries have fallen away. If merging is the only way that Staples and Office Depot can compete effectively with Walmart and Amazon, should regulators get in the way? And doesn't the very fact that competition comes from so many quarters - traditional and unorthodox - mean that the way antitrust rules are applied have to change.

I'm getting ahead of myself here. The merger is a matter of speculation, not fact. But I do think the very idea of it raises larger questions that eventually will have to be answered.