BRUSSELS--The European Union threw down a hurdle to General Electric Co's (GE) planned $17 billion acquisition of France-based Alstom SA's (ALO.FR) energy unit Monday, saying it would open an in-depth investigation into whether the deal might stifle competition.

The European Commission, the EU's top antitrust authority, said it was concerned that the transaction, announced last June, might limit competition in the market for heavy-duty gas turbines, which are mainly used in gas-fired power plants.

EU authorities regularly open in-depth probes to assess specific aspects of large deals, and the commission stressed that the move didn't pre-judge the outcome of its investigation. It will make a final decision on the merger by July 8.

"We are concerned that the proposed acquisition might not only lead to higher prices but also result in less choice for customers and less innovation in the sector," EU antitrust chief Margrethe Vestager said in a statement.

Alstom Chief Executive Patrick Kron said last month he expected only "limited overlaps" where European regulators might require that the company divest operations for competitive reasons.

Write to Tom Fairless at tom.fairless@wsj.com

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