Power Machines accounts for 37% of Russia's turbines, turbo-generators, hydro-generators and electrical equipment market.
"In the event of the deal sought by Siemens, the aggregate share of the German company on the Russian market of energy equipment will be some 50%, which will secure the company the dominating position," the Federal Anti-Monopoly Service (FAS) said.
Siemens currently has a 13% share of the total fuel and energy equipment supply.
Power Machines' largest shareholders are Russian electricity giant Unified Energy System (UES) and Siemens, which hold 25% plus one share each, and Interros, the holding company for the world's largest nickel producer Norilsk Nickel, which owns 30.4%.
In July, Interros and UES said they intended to sell their stakes.
In late August, the FAS allowed Cyprus-based Highstat Ltd., controlled by steel tycoon Alexei Mordashov, to buy up to 100% in Power Machines. The service also allowed billionaire Oleg Deripaska, owner of industrial holding Basic Element, to bid for up to 82% of the company's voting shares.
Siemens already applied for a controlling stake in the company in 2005, and the bid was also rejected, leaving Siemens with a blocking package.
Power Machines provides engineering services, and produces, assembles, services and modernizes equipment for hydro, thermal, gas and nuclear power plants and the transportation industry. It has clients in 87 countries.
