The European Commission on Wednesday vetoed the planned merger of the rail units of French firm Alstom and Germany’s Siemens, a transaction that the governments in both Paris and Berlin had envisaged as creating a champion that could compete with Chinese competition.

The regulatory body’s decision has set up a confrontation with the European Union’s most influential members and could force changes to antitrust rules.

German Economic Affairs Minister Peter Altmaier announced immediately after the news that a joint effort with the French government was under way to seek reforms.

Changing the antitrust laws is about “making possible for the future mergers that are necessary for the competitiveness of Europe in international markets,” Altmaier said, according to German daily Handelsblatt.

The chief of Germany’s ruling Christian Democratic Union party, Annegret Kramp-Karrenbauer, agreed with Altmaier’s position, saying that competition law should not “prevent strategic decisions.”

In arguing the case for the merger, Siemens and Alstom pointed to the Chinese national champion rail firm CRRC, which was the result of an earlier merger combining two companies. China CNR Corp and China CSR Corp had both benefited from technology-transfer agreements that allowed Siemens and Alstom to provide rail cars to the Chinese market.

But the EU commissioner in charge of competition policy, Margrethe Vestager, said the Siemens-Alstom deal would stifle competition inside Europe.

“Without sufficient remedies, this merger would have resulted in higher prices for the signaling systems that keep passengers safe and for the next generations of very high-speed trains,” she said in a statement.

“The commission prohibited the merger because the companies were not willing to address our serious competition concerns,” she added.