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.