France’s government said Wednesday that an expected European Union veto of a plan to merge French and German rail companies Alstom and Siemens into one industry giant was a mistake that would give China the edge on the world market.

When it was announced last year, the merger was hailed as the birth of an industry giant analogous to European plane manufacturer Airbus that would compete with a formidable Chinese rival.

But following months of investigation and a failed concession offer by the companies, the European Commissioner for Competition, Margrethe Vestager, was set to turn down the proposal, sources told AFP agency.

French Finance Minister Bruno Le Maire acknowledged a veto was likely and called it “an economic mistake” that “will serve the interests of China”.

France’s government had lobbied for the merger as a defence to compete against China’s state-backed CRRC, will Le Maire saying before a meeting with Vestager last month that merging the companies was “the best response to China’s growing importance in the railway sector. And the only one.”

Brussels believes the proposed merged company would be in a commanding position for selling high-speed trains and rail signalling, crushing smaller groups and hiking prices for national rail companies.

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