Swiss regulators have blocked the proposed mobile network merger between France Telecom’s Orange and TDC’s Sunrise in Switzerland on anti-trust grounds, reports Reuters. “These two companies would have been in a collective dominant position which risked eliminating effective competition,” Switzerland’s Competition Commission said in a statement. The ruling is a blow for the two smaller networks in Switzerland, which agreed last November to join forces to take on market-leader, Swisscom.

The regulator ruled that turning the market into a duopoly would have kept prices high, an argument rejected by France Telecom and TDC. “[We] strongly believe that the contemplated combination and the substantial commitments that they had proposed to undertake would have benefited the Swiss consumer,” the two operators said. “Without this combination, Swisscom’s dominant position in the Swiss telecommunications market will be maintained.”

The merger would have created an operator with approximately 3.4 million mobile and 1.1 million fixed and broadband customers, accounting for a 38 percent share of the Swiss mobile market and 13 percent of the country’s fixed broadband connections.

A France Telecom spokesman told Reuters that the two companies have the right to appeal the decision to a federal court within 30 days, but had not yet decided whether to do so. Analysts were also confident that the collapse of the deal would not affect France Telecom’s bottom line. “Switzerland accounted for only EUR220 million of France Telecom’s overall operating income of 16 billion last year,” said one Paris-based analyst.”The decision isn’t good news, but it won’t alter the profitability of France Telecom this year or next.”

The impact on TDC is likely to be more negative since it will not get the EUR1.5 billion that France Telecom was supposed to pay it if the deal was approved. However, a TDC spokesman said the rejection would have no impact on the group’s financial statements since the deal had not been incorporated into its books.