BRUSSELS/ZURICH - Siemens and Alstom's plan to create a European rail champion collapsed on Wednesday after EU regulators rejected the deal, prompting Germany and France to call for an overhaul of EU competition policy to better meet global challenges.

The European Commission also blocked a bid by German copper company Wieland-Werke AG to buy a business unit from Aurubis, Europe's biggest copper smelter, similarly arguing the deal could have pushed up prices for consumers.

The two vetoes are likely to spur efforts by France and Germany to loosen EU competition rules so as to take a more global than solely European view of mergers and potentially to allow EU ministers to have a say.

Shortly after the Commission's announcements, German economy minister Peter Altmaier said Berlin and Paris were working on a proposal to change European competition rules. 

Alstom said the veto was a clear set-back for industry in Europe, while Siemens Chief Executive Joe Kaeser said Europe urgently needed to reform its industrial policy to help its companies compete.

"Protecting customer interests locally must not mean that Europe cannot be on a level playing field with leading nations like China, the United States and others," Kaeser said in a statement.

Proponents of the bloc's strict merger regime, however, argue such changes could lead to opaque and unpredictable rules.

EU Competition Commissioner Margrethe Vestager said the Commission had approved over 3,000 mergers in the past 10 years and blocked only nine, including those on Wednesday.

"Prohibition decisions, they are rare and it is the first time (we have announced...) two prohibition decisions on the same day," she told a news conference, adding most mergers either did not pose a problem or the companies involved offered sufficient remedies.

Shares in Siemens and Alstom were little changed by the announcement, which was widely expected.

INSUFFICIENT CONCESSIONS

Siemens and Alstom had wanted to combine their rail operations to compete more effectively with China's state-owned CRRC Corp Ltd, a move backed by the French and German governments, which favour creating industrial champions.

However, Vestager said she blocked the deal to protect competition in the European railway industry.

"Without sufficient remedies, this merger would have resulted in higher prices for the signalling systems that keep passengers safe and for the next generations of very high-speed trains," she said.

In the copper case, Vestager said rolled copper would become even more important in an age of electrical vehicles.

She said the companies in both deals were not willing adequately to address the regulator's competition concerns and their concessions fell short.

The rail deal also triggered criticism from national competition agencies in Germany, Britain, Spain, Belgium and the Netherlands.

Siemens makes the ICE trains for Deutsche Bahn and also builds units for Channel Tunnel operator Eurostar. Alstom is the manufacturer of France's signature bullet train, locally known as the TGV. The rolling-stock maker also sells urban and suburban trains as well as signalling systems.

Canadian rival Bombardier BBDb.TO welcomed the Commission's decision.

"It would have severely undermined the health and competitiveness of the whole European rail market, leaving European consumers, both as rail users and tax payers, to pay the price," said Daniel Desjardins, Bombardier general counsel and company secretary.

(Reporting by Foo Yun Chee, additional reporting by Philip Blenkinsop, John Revill in Zurich, Michelle Martin in Berlin and Sudip Kar-Gupta in Paris; Editing by Philip Blenkinsop and Mark Potter) ((foo.yunchee@thomsonreuters.com; +32 2 287 6844; Reuters Messaging: foo.yunchee.thomsonreuters.com@reuters.net))