The prosecutor stressed that the group had no link to the three attacks last month around Toulouse that left seven people dead — three paratroopers, a rabbi and three Jewish schoolchildren.
Authorities have said they view the case of Merah, the suspected gunman, as an example of so-called lone wolf terrorism, contending he radicalized alone in his prison cell.
However, investigators are still searching for any potential accomplices of Merah, and his older brother remains in custody.
Sylvie Corbet in Paris contributed to this report.
Sylvie Corbet in Paris contributed to this rep