BRUSSELS--The European Union's antitrust watchdog on Wednesday formally blocked the planned $28 billion tie-up between Deutsche Börse AG and London Stock Exchange Group PLC after the parties failed to offer sufficient remedies to assuage antitrust concerns.

The announcement has been expected after the LSE in late February rejected demands by the European Commission, the bloc's antitrust authority, to sell its stake in its Italian trading platform MTS SpA, all but dashing the merger's chances of EU approval.

Late in the review process, the exchanges had offered a single remedy to assuage the EU's antitrust concerns: to sell the LSE's French clearing operation to pan-European rival Euronext NV for EUR510 million ($550.09 million).

But, following a test of the proposed remedy with market participants, the EU determined the solution wouldn't address concerns that the merger would create a de facto monopoly in fixed income trading.

"The divestment of MTS, a comparatively small asset compared to the parties' combined revenues and market value, would have been a clear-cut remedy," to address the concerns, the commission said.

The parties had only offered additional behavioral changes but not the divestiture of MTS, the EU said, adding "they were not able to demonstrate that these measures would have been effective in practice."

The German and British exchanges struck a deal to merge last March with the aim of creating Europe's biggest stock-exchange operator, and one that could better challenge large U.S. rivals.

Deutsche Börse said that it was informed of the decision, adding that both the merger offer and agreement to merge would be automatically terminated.

Write to Natalia Drozdiak at natalia.drozdiak@wsj.com