Staples-Office Depot and UP-SP: An Antitrust Tale of Two Proposed Mergers

Abstract

This paper examines two proposed mergers of the 1990s: the Staples proposal to merge with Office Depot, and the Union Pacific railroad's proposal to merge with the Southern Pacific. Though the two mergers appeared to be quite different on the surface, closer analysis indicates that they were surprisingly similar: both involved a merger of two of the three firms in their respective markets; and both involved significant issues of market delineation. However, the two proposals received quite disparate treatment by different antitrust regimes: The former was blocked by the FTC, while the latter was approved by the STB. The former was a sensible decision; the latter had disastrous consequences for freight shipments in the American southwest in the late 1990s.