, 19 tweets, 10 min read Read on Twitter
This week, the @FTC approved a bad merger, letting Staples buy the office supply wholesaler Essendant.

Before you glaze over at the thought of copy paper, I want to explain why this is a terrible decision, why it hurts local economies, and what we should do about it. 1/
@FTC First, about this industry. Over 25% of office supplies are sold by independent dealers. These dealers are highly competitive. They’ve had next-day delivery for 30+ yrs & e-commerce for 20+ yrs. They beat Amazon Business on price. 2/ opsoftware.com/OP/docs/Amazon…
@FTC These dealers are also significant in their local economies. Many employ 100-300 people. Because they don’t have storefronts – it’s mostly a B2B market — you may not know they exist in your community. But they do. 3/
@FTC As competitive as these businesses are though, concentration threatens their future.

They’re down to just 2 wholesalers — that’s just 2 lifelines to their supply chain. On Monday, the FTC let a big competitor, Staples, buy one of those lifelines, Essendant. 4/
@FTC Wholesalers do more than ship products to independent dealers. They are intimately involved, providing services to end customers, working with dealers to put together bids for big contracts, etc. 5/
@FTC The FTC has handed Staples an inside look at its competitors’ business. Staples has agreed to a “firewall” but that’s not enforceable. As one dealer told me, it would be easy for Essendant to verbally share w/ Staples details about an independent's bid on a big contract. 6/
@FTC Staples could also raise prices to these independent dealers. When these higher prices are passed to end customers, then those customers might switch to a new supplier… such as Staples. 7/
@FTC One extraordinary section of the FTC’s decision says this won’t happen because Staples isn’t really a competitor in the B2B market that indies sell to. LOSING MY MIND…. 8/
@FTC … Staples is buying Essendant is to get into that market! Amazon is eating the consumer market. So Staples thinks: Essendant lets us into B2B and helps us knock out the independents. 9/
@FTC Another section of the FTC’s decision says that independents can easily switch to the 1 other wholesaler, SP Richards. This is nonsense. SPR isn’t in every region, for one, and switching is like undergoing a kidney transplant for an independent dealer. It’s not that simple. 10/
@FTC Moreover, by this line of thinking, the FTC is consigning independent dealers to a monopoly wholesaler. The majority even admits that it’s highly unlikely that a new wholesaler will start up: “We assume it will not occur, and so do not rely on it for our conclusions.” 11/
@FTC Okay, what do we do. This was a 3-2 decision. A few years ago, it probably would have been 5-0. Both dissents are worth reading. 12/ ftc.gov/news-events/pr…
@FTC Commissioner @RKSlaughterFTC makes a compelling case for not being so permissive about vertical mergers. 13/
@FTC @RKSlaughterFTC Commissioner @RKSlaughterFTC also says the FTC needs to analyze past merger approvals – to see if their analysis was right or not. She’s absolutely right.

If the FTC won’t bring itself to do this self-examination, Congress should compel it to. 14/
@FTC @RKSlaughterFTC Meanwhile, @chopraftc unpacks why this deal harms competition and violates the law, and why the settlement – the “firewall” – is not in the public interest. 15/
@FTC @RKSlaughterFTC @chopraftc He also says the FTC is being negligent in not considering that Staples is owned by Sycamore, a private equity firm with a nasty track record of hollowing out companies and selling off the carcasses. 16/
@FTC @RKSlaughterFTC @chopraftc “The majority seems to believe we should wear blindfolds when it comes to this type of buyer evidence,” he writes. 17/
@FTC @RKSlaughterFTC @chopraftc So, what do we do? One thing is to submit a public comment to the FTC during the 30 day comment period on this deal. It doesn’t take many letters to get the FTC’s attention. They can lead to changes in a deal. But more importantly… 18/
@FTC @RKSlaughterFTC @chopraftc … Letters become a public record for Members of Congress. They are grounds for Congress to exercise oversight, to ask why the @FTC is not fulfilling its mission. Here’s the link to comment:
ftcpublic.commentworks.com/ftc/staplesess… 19/19
Missing some Tweet in this thread?
You can try to force a refresh.

Like this thread? Get email updates or save it to PDF!

Subscribe to Stacy Mitchell
Profile picture

Get real-time email alerts when new unrolls are available from this author!

This content may be removed anytime!

Twitter may remove this content at anytime, convert it as a PDF, save and print for later use!

Try unrolling a thread yourself!

how to unroll video

1) Follow Thread Reader App on Twitter so you can easily mention us!

2) Go to a Twitter thread (series of Tweets by the same owner) and mention us with a keyword "unroll" @threadreaderapp unroll

You can practice here first or read more on our help page!

Follow Us on Twitter!

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just three indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3.00/month or $30.00/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!