Staples and Office Depot are scrapping their planned $6.3 billion merger after a federal judge blocked the deal, saying the government had made the case that the combination would likely hurt competition in office supplies, reports the AP. The Federal Trade Commission had sought to block the merger of the last two national office-supply chains, contending the deal would allow the combined company to dictate the price of supplies, especially for corporate customers that buy in bulk. The judge agreed, and the two companies said they will not appeal the ruling. As a result, the larger Staples will pay Office Depot a $250 million breakup fee, reports the New York Times.
US District Judge Emmet Sullivan said in Tuesday's ruling that the FTC met its legal burden by showing it was likely the Staples-Office Depot merger would "substantially impair competition in the sale and distribution of consumable office supplies to large business-to-business customers." Regulators also succeeded in showing that blocking the deal would be in the public interest, he said. Staples Inc., based in Framingham, Mass., is the largest "big box" office-supply chain. Office Depot Inc., headquartered in Boca Raton, Fla., is No. 2. (Read more Staples stories.)