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Note that by the time Gandalf reckons with Saruman, the wizard of many colours is already broken. Gandalf even waits patiently while Saruman has one last go at it, in regards to the Rohirrim, Gimli, Theoden and even Gandalf himself. After Saruman shows that his power is lessened (due to the dissipation of that power in order to control his armies, the making of his ring, etc), then, and only then does Gandalf break his staff and boot him out of the Order.

This is technically okay for Gandalf to do as he is not using his powers against an unvanquished foe, the playing field is already leveled and mankind has done its part, meaning that Gandalf is not making the road to the Fourth Age any easier - no deus ex machina.

And note that I speaking about the books, not the PJ interpretation.