Mergers & Acquisitions

enforcement. There were four written opinions, including a three-commissioner majority opinion, one concurring opinion, and two dissents. Much can be learned about the new makeup of the Commission from the various opinions. The Majority Opinion Joined by Commissioners Joseph Simons, Noah Phillips, and Christine Wilson The FTC's investigation covered careful consideration of multiple theories of harm, 8 including: E Raising rivals' costs: The FTC analyzed whether Staples would be able to acquire market power al- lowing it to raise prices of upstream suppliers or otherwise adopt strategies to shift upward the sup- ply curve of its rivals. E The acquisition of monopsony or market power on the buy side: The FTC analyzed whether Staples would garner increased market power from the merger to enable it to squeeze its upstream manufac- turers and extract income in the form of lower prices. E A loss of future competition: The FTC analyzed the likelihood of entering the office supply whole- sale business, or of Essendant shifting its approach to directly supply consumers or businesses. E Anticompetitive use of commercially sensitive data: The FTC analyzed whether Staples could use Essendant's data related to its reseller customers' commercially-sensitive business information to of- fer higher prices when bidding against a reseller for an end customer's business. As to the first three theories, the majority opinion (concurring with the recommendations of FTC staff) determined that these potential harms were unlikely and were not supported by the qualitative and quantitative evidence. Of note, none of the five Commissioners dis- agreed as to the notion that vertical transactions can be ei- ther pro- or anticompetitive, nor was there disagreement between any of the Commissioners on the need to care- fully evaluate every potential theory of harm. The major- ity articulated that it was simply unwilling to bring an enforcement action on the basis of theoretical harms un- supported by factual evidence. The majority opinion (and, in turn, the consent decree), was concerned with the more limited theory of harm stemming from the potential use by Staples of Essendant's competitively-sensitive data. Essendant keeps detailed data from its reseller customers (including Staples' competitors), which carries a significant competitive value to Staples. The FTC was concerned that if Staples gained access to this data, it could strategically raise prices to mid-sized businesses when bidding against Es- The M&A Lawyer March 2019 | Volume 23 | Issue 3 The M&A Lawyer West LegalEdcenter 610 Opperman Drive Eagan, MN 55123 K2019 Thomson Reuters For authorization to photocopy, please contact the West's Copyright Clearance Center at 222 Rosewood Drive, Danvers, MA 01923, USA (978) 750-8400; fax (978) 646-8600 or West's Copy- right Services at 610 Opperman Drive, Eagan, MN 55123, fax (651) 687-7551. Please outline the specific material involved, the number of copies you wish to distribute and the purpose or format of the use. This publication was created to provide you with accurate and authoritative information concerning the subject matter covered; however, this publication was not necessarily prepared by persons licensed to practice law in a particular jurisdiction. The publisher is not engaged in rendering legal or other professional advice and this publication is not a substitute for the advice of an attorney. If you require legal or other expert advice, you should seek the services of a competent attorney or other professional. Copyright is not claimed as to any part of the original work prepared by a United States Government officer or employee as part of the person's official duties. One Year Subscription E 10 Issues E $ 1,128.00 (ISSN#: 1093-3255) 2 K 2019 Thomson Reuters

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