The European Union’s executive arm said on Monday it is blocking leading US online travel agency Booking from acquiring Sweden’s flight booking provider Etraveli Group, because it would have allowed it to increase its dominant position on the market on the continent.

The European Commission said it had warned Booking Holdings about its concerns, but that the remedies offered by the company were not sufficient.

Booking’s brands include Booking.com, Rentalcars, Priceline and Agoda.

Booking Holdings said it plans to appeal, adding that the fusion would have “delivered tremendous benefits for consumers and partners by bringing more options and competitive pricing.”

“The company strongly believes the Commission is wrong on both the facts of the case and the law applicable to this transaction, which was cleared unconditionally by multiple competition authorities,” it said.

“Booking Holdings regrets very much the lack of convergence of the European Commission with other major international enforcers on this pro-competitive transaction.”

Following its investigation, the Commission had opposite views. It believes the proposed 1.63 billion euro (£1.4 billion) deal would have led to higher costs for hotels and, possibly, a negative impact on the price paid by consumers.

“Bans are rare, and today’s decision is in fact the first merger to be blocked this year,” EU justice commissioner Didier Reynders said.

According to the European Commission, online travel agencies (OTA) handle transactions worth more than 100 billion euros (£87 billion) per year.

Mathias Hedlund, chief executive of Etraveli Group, was disappointed by the Commission’s move.

“For Etraveli Group to come together with Booking.com beyond the existing commercial partnership would have further benefited European consumers by reducing prices and enhancing competition in the flight sector while undoubtedly having negligible effects in the hotel OTA sector,” he said.