Booking Holdings Inc.’s €1.6 billion ($1.7 billion) takeover of Sweden’s Etraveli Group was blocked by the European Union, after merger regulators concluded that the proposed acquisition would harm the market for online travel agencies.

The European Commission said on Monday that the deal would have strengthened Booking’s dominant position and risked “higher costs for hotels and, possibly, consumers.”

The veto “means that European hotels and travelers will not be further limited in the options available to offer their services and book their trips,” Didier Reynders, the EU’s interim commissioner for competition, said in an emailed statement. “This also means that the drive for competitive prices and innovation will be preserved in this important part of the travel industry.”

Booking announced in November 2021 plans to acquire Etraveli, whose core business focuses on the online sale of flights. Booking Holdings — headquartered in Delaware — has a suite of well-known brands under its banner, including Booking.com, Kayak and Rentalscars.com.

The EU veto is still a rarity, with competition officials generally opting for remedies that correct any risks to fair competition, rather than outright bans.

But in recent years, the EU has vetoed Hyundai Heavy Industries Co.’s bid for Daewoo Shipbuilding & Marine Engineering Co. and Illumina Inc.’s $7 billion takeover of cancer-test provider Grail Inc.

The commission said that remedies offered by Booking “did not adequately address its competition concerns so that it could be concluded that competition would be preserved on a lasting basis.”