As widely expected, the European Union blocked General Electric Co.'s $41 billion purchase of Honeywell International Inc. on Tuesday, the first time a proposed merger between two U.S. companies has been blocked solely by European regulators.

The veto of one of the world's largest industrial mergers by the EU became a foregone conclusion after the American companies failed to allay European fears the deal would create an unfairly dominant position in markets for jetliner engine and avionics.

It was only the 15th time in more than a decade that the 20-member executive Commission has blocked a merger -- and the first time it has ever blocked an all-American merger which had already been approved by U.S. regulators.

"The merger between GE and Honeywell, as it was notified would have severely reduced competition in the aerospace industry and resulted ultimately in higher prices for customers, particularly airlines," EU Competition Commissioner Mario Monti said in a statement.

The Commission's decision was unanimous. It came after a one-hour meeting during which Monti presented the issues to his colleagues.

EU officials, who spoke on condition of anonymity said both companies were notified immediately after the decision.

The companies' plans now were not immediately clear. GE could either challenge the decision in court or file a new application and start the process all over again. But many believe the deal is dead.

To do business in Europe, U.S. companies must comply with EU law just as European companies must abide by U.S. law to do business in America.

However, the EU's objections to a deal that had already secured regulatory approval from U.S. antitrust authorities has raised American hackles.

U.S. senators accused EU regulators of protectionism and warned of a possible "chilling effect" on trans-Atlantic relations. Even President Bush expressed concern.

EU officials point out that trans-Atlantic antitrust cooperation is generally good. As evidence, Monti noted that the two sides of the Atlantic usually reach the same decision, a tribute to daily contacts and close cooperation between the agencies.

Of nearly 400 cases involving U.S. companies reviewed in Brussels since 1990, only one deal -- WorldCom-Sprint -- was barred. And Washington moved to block it the next day.

On Friday GE rejected last-ditch revisions suggested by Honeywell. GE chairman and chief executive Jack Welch said Honeywell's proposal "makes no sense" for his company's shareholders.

Honeywell had offered to accept a lower purchase price, and in return asked GE to divest more of its holdings to satisfy European antitrust regulators.

As a result of the failed deal, Honeywell's board of directors is reportedly going to oust chairman and chief executive Michael Bonsignore at a meeting Tuesday.

The Wall Street Journal reported Tuesday that his replacement will be Lawrence A. Bossidy, 66, the former chairman and chief executive of AlliedSignal Corp., which in 1999 acquired Honeywell and adopted the Honeywell name.

-- Reuters and the Associated Press contributed to this report.