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New trend in M&A deals: Former FTC commissioner

A court did the right thing by shredding the Staples-Office Depot deal, a former commissioner of the Federal Trade Commission said Wednesday.

It is the latest high-profile merger to go down the drain and it has nothing to do with overzealous regulators and everything to do with the nature of the deals changing, Julie Brill said.

"I do think that this is a trend we are seeing — very large mergers attempting to be pushed through and I think the parties need to be careful about this process and know that the regulators are very serious about trying to protect competition in this country," she said in an interview with CNBC's "Power Lunch."

"When costs go up to businesses then those costs can get passed onto consumers."

On Tuesday, a court ruled that Office Depot and Staples may not merge, sending shares of the companies plummeting Wednesday.

The FTC called the ruling great news, noting that the deal "would eliminate head-to-head competition between Staples and Office Depot and likely lead to higher prices and lower quality service for large businesses that buy office supplies."

The failed deal comes on the heels of the cancellation of the nearly $35 billion merger between Halliburton and Baker Hughes. Recently Comcast and Time Warner Cable, General Electric and Electrolux, Sysco and US Foods, and Bumble Bee and Chicken of the Sea have also all seen their deals killed.

M&A attorney Frank Aquila noted that because there were a record number of deals in 2015, it is not unusual to have a lot of the proposed transactions fall through this year. However, he pointed out that the percentage of failed mergers is not "overly high."

In fact, a CNBC analysis of FactSet data shows the rate of cancelled mergers worth more than $100 million remains around 5 percent.

Aquila believes in the case of Staples and Office Depot, there is actually plenty of competition, especially online.

"There is a need for regulation, there's need to protect consumers but it has to be done in way that looks at the reality of competition today," he said on "Power Lunch."

Anthony Chukumba, senior equity research analyst at BB&T, called Tuesday's decision "just plain wrong, nonsensical and ludicrous," especially given the growth in Amazon Business.

He believes Staples will survive the decision, although not necessarily thrive. The long-term outlook for Office Depot, on the other hand, is murky, he said.

"They don't have the scale that Staples does. They don't have the profitability, they don't have the balance sheet that Staples does," Chukumba told "Power Lunch."

However, Brill said the future viability of any company is taken into account when regulators and the courts decide whether to squash a deal.

"What the courts and the agencies try to do is project out several years to understand what will be dynamically happening with respect to competition," she said.

CNBC's Krystina Gustafson, Mark Fahey and Stefanie Kratter contributed to this report.

Disclosures: Comcast is the owner of NBCUniversal, the parent company of CNBC and CNBC.com. BB&T owns shares of Staples and Office Depot. Office Depot and Staples are investment banking clients of BB&T.

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