OTTAWA — The Competition Bureau is challenging a proposed merger between Staples and Office Depot, saying the country's office supplies industry is becoming too concentrated. The federal agency has filed an application with the Competition Tribunal raising concerns over how dominant Staples would be if its proposed US$6.3 billion acquisition of Office Depot is given approval. Office Depot operates the Grand & Toy retail and supplier in Canada. The Competition Bureau says the deal would give Staples more than 80 per cent of office product sales in Canada, which would "substantially lessen competition" and likely drive prices higher. It says the impact wouldn't just hit consumers, but also for-profit and not-for-profit businesses, governments, health care organizations and educational institutions representing more than $500 million in sales each year. Also Monday, the U.S. Federal Trade Commission filed a lawsuit seeking to block the Staples transaction (see video above). It's the second time the FTC has attempted to block a merger of the two companies, after a successful ruling in 1997.