The office supply sector is one retail area Amazon (AMZN) has not been able to penetrate and disrupt, if you listen to one of its executives.
Amazon Business executive Preston Wilson wrapped up his second day of testimony at an injunction hearing stemming from a lawsuit filed by the Federal Trade Commission to stop the proposed merger of office supply retailers Office Depot (ODP) and Staples (SPLS).
Office Depot and Staples have contended that the disruption from Amazon has necessitated the merger of the world's top-two office supply chains. Amazon's position is that its outfit has not matured to the point of being able to threaten its rivals.
Amazon Business was formed in 2015 as the successor to Amazon Supply. While the company has made inroads in small businesses, Wilson says that the stranglehold Office Depot and Staples have on corporate contracts hasn't been loosened.
"At this point, Amazon Business does not negotiate contracts with large business customers," said Wilson. When asked if the company was the primary supplier for any companies with revenue over $250 million, Wilson responded, "Not to my knowledge, no."
Wilson's testimony supports the FTC's argument that a tie-up of the two companies would be illegal because combined, they sell nearly 80% of the pens, paper, file folders and other "consumable office supplies" to Fortune 100 companies.
The FTC has intimated that the two companies would need to make major concessions in the U.S to gain regulatory approval.
During a preliminary hearing last week, FTC lawyer Tara Reinhart said that the only settlement the agency will consider is the two companies "divesting a going concern," according to court transcripts of the proceeding obtained by the Florida Sun-Sentinel. This means the companies will have to divest an asset, or assets, large enough to stand on its own as a business.
Last month, the companies attempted to address that issue when they announced that they would sell corporate contracts totaling $550 million to wholesaler Essendant (ESND).
Office Depot and Staples' strong position in the large corporate market was also at the crux of its recent approval by European regulators.
Office Depot had to agree to sell its contract distribution business in the European Union and Switzerland, while also selling its entire business in Sweden in order to gain regulatory approval in Europe.
According to European regulators, there were only three companies in the EU that had the capacity to enter into international supply contracts for large business customers, and Office Depot and Staples were two of them. As a result Office Depot and Staples had to make significant concessions to receive approval.
The FTC is entrenched in its position ahead of an official hearing scheduled for May. Office Depot and Staples have said that a merger injunction blocking the deal ahead of the FTC hearing would scuttle their deal. Through testimony today, Amazon has done its part to make sure that Office Depot and Staples never reach their merger goals.