The European Commission blocked US travel giant Booking from acquiring its Swedish rival eTraveli on Monday.
Booking commands a 60% market share for online travel agencies in Europe, the Commission said. Meanwhile, eTraveli operates several websites to compare airfares like Gotogate and MyTrip.
"Booking's acquisition of eTraveli would strengthen Booking's dominant position in the online travel agencies market and likely lead to higher costs for hotels and, possibly, consumers," EU Justice Commissioner Didier Reynders said.
Deal struck down to protect travelers
The EU said it vetoed the €1.63 ($1.8 billion) deal to protect consumers and ensure there is competition in the market.
It was concerned that Booking would become the main online travel agency for flights, in addition to its already-dominant position in the hotel market.
"Our decision to block the merger means that European hotels and travelers will not be further limited in the options available to offer their services and book their trips," Reynders said.
Booking.com is headquartered in Amsterdam but it is a subsidiary of Booking Holdings, which is based in the US. The company's other travel websites include Kayak, Priceline and Agoda.
"Bans are rare, and today's decision is in fact the first merger to be blocked this year," Reynders added.