BRUSSELS (Reuters) - EU regulators said on Friday they had started an investigation into Airbus Safran Launchers' (ASL) purchase of Arianespace, the operator of Europe's Ariane rockets.
In a statement, the European Commission said it was concerned the proposed deal could lead to less innovation and higher prices in the satellite and launch service markets.
"A competitive space industry has a crucial role in strengthening the EU's industrial base and boosting our global competitiveness," Competition Commissioner Margrethe Vestager said.
Plane manufacturer Airbus Group (PA:AIR) and French aero engine and equipment maker Safran (PA:SAF) agreed in 2014 to combine their space launcher activities to fend off what they described as a growing threat to Europe's Ariane programme from U.S. low-cost rival SpaceX.
Airbus Group suggested the EU investigation was too narrow to address this.
"We take note of the decision. However, the competition is not within the EU; the competition is a global one," an Airbus Group spokesman said.
Safran had no immediate comment.
The chief executives of Airbus Group and Safran both expressed frustration this week at the slow pace of talks to complete the next phase of the venture, blaming regulatory and other issues.
The next phase includes Airbus Safran Launchers' purchase of French space agency CNES's stake in France-based Arianespace, as well as other interests.
France has highlighted the importance of Ariane jobs.
European approval is one of a number of regulatory hurdles that must be ironed out before phase two of the tie-up can go ahead.
Europe aims to replace its Ariane 5 rocket launcher with an Ariane 6 by 2021, but manufacturers are under pressure to finish their tie-up in coming months in order to submit bids.