A federal judge has blocked the proposed merger of Staples and Office Depot, saying the government had made the case that the merger had a "reasonable probability" of hurting competition in office supplies.
The injunction issued Tuesday by U.S. District Judge Emmet Sullivan means the last two national office-supply chains will drop their $6.3 billion merger plan.
Office Depot CEO Roland Smith said the companies will not appeal the court's ruling and will terminate the massive merger effective May 16.
"While we are respectful of the Court's decision to grant the FTC's request for a preliminary injunction to prevent our merger with Staples, we are disappointed by this outcome and strongly believe that a merger would have benefitted all of our customers in the long term," Smith said in a statement.
The Federal Trade Commission has sought to block the merger, contending it would allow the new combined company to dictate the price of supplies, especially for corporate customers that buy in bulk.
Staples Chief Executive Officer Ron Sargent had said in March that he would most likely scrap the deal if Judge Sullivan granted the preliminary injunction, even though he said the FTC's opposition to its acquistion by Office Dept was "simply wrong."
Staples agreed to buy Office Depot in February of 2015, but the FTC, which regulates competition, sued in December to block the merger. The FTC has said a merger between the two could reduce competition for nationwide contracts for office supplies.
It has also rejected Staples' raised offer to divest up to $1.25 billion of commercial contracts to secure approval for the deal.
In the Chattanooga area, Staples operates stores on Highway 153 in Hixson, on Hamilton Place Mall Boulevard in East Brainerd, on Keith Street in Cleveland, Tenn., and on South Congress Parkway in Athens, Tenn.
Office Depot operates local stores on Brainerd Road near the Eastgate Town Center, on Gunbarrel Road in East Brainerd, on Highway 153 in Hixson and on Battlefield Parkway in Fort Olgethorpe, Ga.,