Regulators bring in an Amazon exec to undercut Staples’ competition concerns

March 23, 2016 01:10 PM

(Bloomberg)— Inc. is struggling to win primary office-supply contracts with companies, one of the retailer’s executives said, undercutting a key argument Staples Inc. is making to defeat U.S. opposition to its planned takeover of rival Office Depot Inc.

Prentis Wilson, a vice president with Amazon Business, testified Tuesday in federal court in Washington that the company has made only limited efforts to obtain such contracts from companies with more than $250 million in revenue and has won only one bid. Amazon Business, which debuted a year ago, is Amazon’s third foray into the business-to-business marketplace.

Wilson was called to testify by the U.S. Federal Trade Commission, which sued Staples in December seeking to block its merger with Office Depot. The agency says that the two companies dominate the market for sales to large corporate customers and the tie-up would lead to higher prices.

Staples and Office Depot argue the FTC’s request to block their merger should be denied. They contend Amazon is a “behemoth” that is expanding rapidly in the market and winning business. That makes it a formidable competitor, the companies say. Amazon is No. 1 in the Internet Retailer 2015 Top 500 Guide; Staples is No. 4.

Wilson said Amazon hasn’t answered all the requests for bids it has received because it doesn’t have the right resources, citing on-site stocking of shelves as one example.

When asked by U.S. District Judge Emmet Sullivan whether the company was likely to be in a better position to respond five years from now, Wilson replied, “That’s our plan.”

Wilson is scheduled to continue his testimony on Wednesday.

Jennifer Rie, a Bloomberg Intelligence analyst, said that the prospect of future competition from a new player should still be taken into consideration.

“The Amazon witness made it fairly clear that Amazon Business is working and investing resources to be a vigorous competitor to Staples and Office Depot in the B-to-B office supplies segment,” Rie said.

The case is FTC v. Staples Inc., 15-02115, U.S. District Court for the District of Columbia (Washington).




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