Companies Worried Of Secrets Falling Into Hands of Office Depot/Staple

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Companies Worried Of Secrets Falling Into Hands of Office Depot/Staple

 news 2016-01-21 at 11:59:15 am Views: 260
  • #44934
    Companies Worried That Secrets Will Fall Into Hands of Office Depot, Staples
    By Marcia Heroux Pounds For Sun Sentinel

    Large corporate customers of Office Depot and Staples are seeking to prevent or limit access to proprietary information amassed by the Federal Trade Commission during its review of the office supply giants’ proposed merger.

    In December, the FTC rejected the $6.3 billion merger and filed suit to stop it. Facing a drawn-out federal court battle, the FTC in early December secured a court order to prevent public disclosure of information collected by the federal agency.

    But on Jan. 10, the court order was modified to remove a requirement that outside attorneys agree to protect the proprietary information.

    The modification triggered challenges by motor club federation AAA, hardware chain Lowe's, and Ecolab, a Minnesota-based environmental technology company.

    The companies, all customers of Office Depot or Staples, said the modified order fails to prevent the office retailers from accessing their confidential information, according to documents filed late last week and Tuesday in U.S. District Court in Washington, D.C.

    Both Framingham, Mass.-based Staples and Boca Raton-based Office Depot declined to comment Tuesday on the court filings.

    Robert Brighton Jr., a merger specialist with Shutts & Bowen in Fort Lauderdale, said Staples and Office Depot likely believe that fairness entitles them to information gathered by FTC prior to its decision to block the merger. Yet companies that provided information to the FTC, presumably under promises of confidentiality, fear the office retailers could use that information to their advantage in future negotiations, Brighton said.

    On Tuesday , Ecolab filed an objection to a subpoena that Staples served to Sodexo, a supplier and partner, seeking access to records involving Ecolab, as well as Office Depot and OfficeMax — whose merger was reviewed and cleared by the FTC in 2013.

    In its objection, Ecolab calls the request "overly broad" and seeks information "that is not relevant to any party's claim or defense in this lawsuit." The information concerns the products and services that Ecolab provides to Sodexo, including contracts, correspondence, invoices, purchase orders, audits and pricing, according to the filing.

    "Such information contains confidential and proprietary information of Ecolab that constitute trade secrets," Ecolab said in its response.

    On Jan. 10, AAA filed a motion objecting to the modified protective order, saying it allows in-house counsel from Staples and Office Depot to potentially access AAA's confidential communications that disclose AAA's business strategies related to purchasing office supplies.

    "The disclosure of such documents to employees of Staples and Office Depot would potentially compromise AAA's ability to obtain competitive prices for office supplies regardless the outcome of the challenge to the merger," AAA says in its court objection.

    AAA says that it previously cooperated with the FTC in its investigation by producing nearly 10,000 pages of documents related to its purchases of office supplies and equipment. The documents were produced "with the understanding they would remain confidential," AAA's motion states.

    Lowe's filed a motion on Friday seeking to modify the protective order and on Tuesday proposed specific modifications. Lowe's proposed that in-house attorneys for Staples and Office Depot who are able to access its confidential information should not be permitted to provide future business advice to the office retailers or be allowed to print, save or store documents they review. In addition, outside attorneys involved in the case should sign agreements to abide by the protective order, Lowe's proposed.

    "While Lowe's does not challenge the vast majority of the protections afforded under the Protective Order, it lacks certain discreet protections to prevent impact on Lowe's and other third parties' businesses," Lowe's objection states.

    The FTC on Dec. 7 rejected Staples' acquisition of Office Depot, saying it would result in higher prices for large business customers.

    The trial challenging the rejection is set to begin May 10 but could be canceled if the retailers and the FTC strike a deal or Staples decides to pull out of the merger. The merger agreement expires Feb. 4, though that could be extended.

    Staples would have to pay $250 million to Office Depot if it terminates the merger or loses the FTC trial, according to the agreement.

    This is the second time the FTC has rejected a merger between the companies. In 1997, the commission filed suit against a merger proposal and won.

    Office Depot has about 2,000 employees at its headquarters in Boca Raton. If completed, Staples has said the combined companies would be operated out of its home of Framingham, Mass.