The decision has drawn sharp criticism from Moscow, with politicians and senior business figures alike making accusations of unfair competition and discrimination against Russian companies on international markets.
But Benita Ferrero-Waldner, the European Commission's commissioner for external relations, said at a briefing in Moscow that the merger was purely a business decision.
The board of Luxembourg-based Arcelor Sunday night approved a deal with Mittal Steel after the London-based company raised its bid. The decision torpedoed a proposed merger with Russia's Severstal, which wanted a 25% stake in what would have been the world's largest steelmaker after its proposed merger.
Arcelor and Mittal Steel will hold 50.6% and 49.4%, respectively, in the new company.
Viktor Pleskachevsky, who chairs the State Duma's property committee, said "unfair competition was used" in the deal between the metals giants.
State Duma Speaker Boris Gryzlov and Industry and Energy Minister Viktor Khristenko also slammed the merger.
Gryzlov said, "I regard the events around this deal as an example of serious obstacles Russian business is facing when it enters foreign markets," while Khristenko labeled it an example of a "double approach" and called it a "bad sign."