The British Competition Commission has blocked the planned acquisition of the Liverpool-Dublin ferry service by Stena.
The commission said it had blocked the acquisition of the route from P&O because the transfer of this route was expected to result in a substantial lessening of competition.
This would give Stena scope to increase prices to some ferry customers on the Irish Sea, the body said.
The commission found that, post merger, Stena's market share on the central corridor would more than double, giving Stena a market share significantly larger than its nearest rival.
The four main competitors on this corridor would be reduced to three. The lack of transparency of pricing in the freight ferry market, coupled with Stena's enhanced market power, would give Stena scope to increase prices to some customers.
However, the Competition Commission approved Stena's acquisition of P&O's Fleetwood-Larne route because this was not expected to result in less competition.