Regulators move to stop Staples' deal with Office Depot

NEW YORK -- The Federal Trade Commission said Monday it is seeking to block the proposed combination of Staples and Office Depot because the deal would reduce competition in the office supplies market.

The companies said they plan to fight to preserve the deal. Shares of the two retailers fell sharply.

The FTC said corporations rely on Staples and Office Depot to buy pens, paper clips and other supplies at low prices.

A deal between Staples and Office Depot would cut competition and lead to higher prices, the FTC said. The decision comes 10 months after Staples offered to buy rival Office Depot for $6.3 billion.

Staples and Office Depot said they plan to show the FTC's decision is based on "a flawed analysis and misunderstanding" of the competitive landscape the companies deal with.

The pair argue competition has become even tougher since Office Depot and OfficeMax merged in 2013, and the FTC is contradicting itself because it said the office-supply market was highly competitive two years ago.

Office Depot chairman and CEO Roland Smith said Staples and Office Depot plan to pursue legal options to complete the deal.

Staples is based in Framingham, Massachusetts. Office Depot is based in Boca Raton, Florida.

Shares of Staples Inc. fell $1.70, or 14 percent, to close at $10.66 on Monday. Shares of Office Depot Inc. fell $1.05, or 16 percent, to close at $5.59.