The merger would affect the HHI Index because the index would increase substantially causing high concentration in the market. The case lists a range because until the two companies merge one would not know how much of the market share they would obtain in all areas. The market share may increase when they merge, but if the superstore increases prices considerably the percentages of market share may decrease, and OfficeMax may receive a larger portion of the market.
Staples and Office Depot defend the merger because they say it will eliminate competition in areas where they were the only two office supply stores. The two firms think it would get rid of planned additional competition that would have decreased prices in many areas where the two stores were competing. They believe they would be able to receive cost savings if they merged, because they will use the best methods from each company to save the most and try to receive bigger discounts from suppliers.
I believe that the courts should not allow this merger because even though the companies would benefit the customers would be harmed. The companies being two separate firms still makes it very hard for any other firms to enter the market, but if the two companies were merged entry would be seemingly impossible. The companies seemed to be more concerned with themselves and trying to get more for less money. In the end they separately make enough profits that they will survive without this merger and customers will be happier they do not have to pay higher prices for office products. View More »