WASHINGTON – Shares of Staples and Office Depot soared Thursday after a federal judge accused the government of trying to bend a witness’s testimony in its case against a merger of the last two major U.S. office-supply chains.
Office Depot Inc. shares rose 9 per cent as investors grew hopeful that the proposed $6.3 billion merger will be allowed over the government’s objections. Staples Inc. shares jumped 7 per cent.
The Federal Trade Commission is seeking to block the merger, contending it would dampen competition and allow the new combined company to dictate the price of supplies. The regulators in December rejected an offer from Staples to sell $1.25 billion in contracts to work around the competition issues.
Staples Inc., which is based in Framingham, Massachusetts, is the largest “big box” office-supply chain. Office Depot Inc., headquartered in Boca Raton, Florida, is No. 2.
Founded in the late 1980s, they were among a group of chains led by Wal-Mart that opened thousands of supersized stores for shoppers wanting to buy in bulk. But changing shopping patterns, like the demand for price deals and the move toward shopping online, have hurt the big chains.
U.S. District Judge Emmet Sullivan in Washington, who is presiding over the merger case, said the FTC had tried to get a witness — Amazon.com Vice-President Prentis Wilson — to make false statements in his testimony.
“Were you surprised that the government was telling you what to say and not say?” Sullivan asked Wilson in a closed-door hearing on Wednesday. Wilson answered that he was.
“The public ought to know that the government wanted Amazon to say some things that weren’t true,” Sullivan said, according to a hearing transcript reviewed by The Associated Press. Sullivan made the transcript public on Thursday, though large portions of it were redacted.
FTC attorney Tara Reinhart said the agency “certainly never asked” Wilson to make false declarations. FTC spokesman Peter Kaplan declined to comment Thursday.
As an online retailer, Amazon has become a prime competitor to Staples and Office Depot for corporate customers. The FTC called Wilson to testify in the case.
In a brief filed with the court Wednesday, the agency said it doesn’t consider the process it used to bring out Wilson’s testimony to be “anything unusual or inappropriate.”