Questions Staples Office Depot
Hi everyone,
We will discuss the Staples-Office Depot case. How would you characterize the industry structure?
Oligopoly
Small number of big firms, with notable entry barriers, high competition and rising demand, competitive prices, present on national scale, efficient cost structure.
1. Are there barriers to entry that help maintain this structure?
The broad present of actual market competitors, the cross price elasticity.
Economies of scale, advertising, channels of distribution, purchasing
2. What is the FTC looking at to assess whether or not the merger is ant-competitive?
If the merger with meddle with the competitiveness of the market, if it will make it harder for new business to arise, if the prices will rise unfairly, the market concentration changes,
3. What is the relevant market? Which elasticity measure is critical to define this market?
The relevant market in this case are the 42 metro areas in which there is presence of Staples and Home Depot, the cross price elasticity is critical to define this market…. In markets where they are both present prices are more competitive and lower in comparison with markets in which not.
Defined by the product market and the geographical market
Superstores in metropolitan areas is the relevant market…
4. How is the HHI affected by the merger? Why are there many HHI’s in this case whereas in last class we talked about ‘the HHI’?
The HHI will suffer a great rising impact with the merger, in some cases the merger will conclude in a 100% share for Staples, there are different HHI because we are talking about different geographical areas, in some there is presence of only to competitors, in other there is 3
5. What are Staples and Office defense arguments?
That the merger will give field for other competitors to improve their market that they will share best purchasing practices, that they will force suppliers to offer better discounts.
We will discuss the Staples-Office Depot case. How would you characterize the industry structure?
Oligopoly
Small number of big firms, with notable entry barriers, high competition and rising demand, competitive prices, present on national scale, efficient cost structure.
1. Are there barriers to entry that help maintain this structure?
The broad present of actual market competitors, the cross price elasticity.
Economies of scale, advertising, channels of distribution, purchasing
2. What is the FTC looking at to assess whether or not the merger is ant-competitive?
If the merger with meddle with the competitiveness of the market, if it will make it harder for new business to arise, if the prices will rise unfairly, the market concentration changes,
3. What is the relevant market? Which elasticity measure is critical to define this market?
The relevant market in this case are the 42 metro areas in which there is presence of Staples and Home Depot, the cross price elasticity is critical to define this market…. In markets where they are both present prices are more competitive and lower in comparison with markets in which not.
Defined by the product market and the geographical market
Superstores in metropolitan areas is the relevant market…
4. How is the HHI affected by the merger? Why are there many HHI’s in this case whereas in last class we talked about ‘the HHI’?
The HHI will suffer a great rising impact with the merger, in some cases the merger will conclude in a 100% share for Staples, there are different HHI because we are talking about different geographical areas, in some there is presence of only to competitors, in other there is 3
5. What are Staples and Office defense arguments?
That the merger will give field for other competitors to improve their market that they will share best purchasing practices, that they will force suppliers to offer better discounts.