Image copyright EPA

Thyssenkrupp has said it expects its proposed steel merger with Tata Steel to be blocked by the European Commission over competition concerns.

The deal was expected to create Europe's second-biggest steelmaker, after ArcelorMittal.

However, the tie-up has been subject to an in-depth European Commission (EC) competition investigation.

An EC spokesman said the Commission had until 17 June to make a decision about the proposed merger.

Thyssenkrupp said that it and Tata Steel had offered "significant further concessions" to try to assuage Commission concerns about the deal, but that had not resolved the situation.

More concessions than those already offered would make the merger uneconomical, the firm said.

Assuming the merger is now not going ahead, Thyssenkrupp said it was now considering a new strategy, which could include a partial listing of its lifts division.

As part of this new plan, the executive board will recommend not going ahead with a plan to split the business in two.

Thyssenkrupp unveiled plans last September to create two divisions:

Thyssenkrupp Industrials, spanning its lifts, car parts and plant engineering businesses

Thyssenkrupp Materials, which included materials trading and shipbuilding.

However, rising trade tensions between the US and China and fears of a disorderly Brexit have dented share prices, forcing a number of companies, including Continental and Volkswagen, to review plans for spin-offs and listings.

The European Commission opened its investigation in October, after concerns that customers would face higher prices and fewer suppliers.

The proposed deal included the UK's biggest steelworks, at Port Talbot in Wales.

Unions initially welcomed the merger, but then said they were "unconvinced" after it started looking more like a takeover.

Image copyright Getty Images Image caption Port Talbot is the UK's biggest steelworks

Tata Steel's chief executive T V Narendran told the Press Association that Tata Steel's plant in Port Talbot would remain open.

"I think what we're saying is obviously the plant will keep running.

"We need to make sure we run it well. We didn't have a great year last year in the UK."

However, the Tata chief said he was "concerned" about increasing energy costs in the UK.

"In the last 18 months it's gone up quite significantly and that's not helping us.

"But we have plans to keep UK (operation) running as long as they are performing well and is cash positive, and I think the team there is working hard to make it that way."

"We want to make sure this year we run it well and we run it in a manner that is cash positive.