WASHINGTON (From The Wall Street Journal) -- A federal judge on Tuesday blocked the planned merger of rivals Staples Inc. and Office Depot Inc. because of antitrust concerns, prompting the office-supply companies to say they will abandon the roughly $6 billion deal.

U.S. District Judge Emmet G. Sullivan sided with the Federal Trade Commission, which in a December lawsuit alleged the combination of the office superstores would lead to higher prices for large corporations that buy office supplies in bulk.

Shares of both companies plunged in morning trading in New York. Office Depot stock dropped 37% to $3.82, while Staples fell 19% to $8.41.

Staples Chief Executive Ronald Sargent said he was disappointed the judge sided with the agency "despite the fact that it failed to define the relevant market correctly, and fell woefully short of proving its case."

Staples said Tuesday it will cut another $300 million in annual costs and explore alternatives for its European operations, which include more than 200 stores. The Framingham, Mass., company will pay its smaller rival a $250 million breakup fee.

Office Depot CEO Roland Smith said the Boca Raton, Fla., retailer wouldn't appeal. He said the two companies will end their merger agreement on Monday.

The decision was released after U.S. stock markets had closed Tuesday. Wall Street has been skeptical for most of the past year of the prospects for the combination to overcome the antitrust challenge, and Office Depot shares have been trading at a wide discount to the proposed stock-and-cash offer.