Siemens had applied for permission to raise its stake in the engineering group above 50 percent. Siemens currently holds 25 percent of the company.
If Siemens were allowed to take control of Power Machines, it would be able to dominate the domestic market for equipment for the electricity generation plants, which could lead to a reduction in competition, the Federal Anti-Monopoly Service said in a statement.
The German engineering giant had applied to buy the 30 percent stake in Power Machines held by Interros holding.
A spokesman for Siemens said the company was aware that its application had been rejected but had not yet been formally notified by Russian authorities. "At this point we have no further comment," spokesman Wolfram Trost said.
An earlier bid by Siemens for control of Power Machines was turned down in 2005 on security grounds. A unit of Power Machines makes turbines that power the country's nuclear submarines.
The Federal Anti-Monopoly Service has given permission to take over Power Machines to two Russian tycoons -- RusAl owner Oleg Deripaska and Severstal owner Alexei Mordashov.
Either one would need both the Interros stake and a 25 percent stake held by state-owned electricity monopoly Unified Energy System to gain immediate control. UES plans to sell its stake at an auction by the end of the year.
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