A Zambian government regulator has rejected a proposed merger of Japanese conglomerate Toyota Tsusho Corp and France's CFAO, because it would lessen competition in the local car market, according to a Reuters report.

The companies are both involved in the selling and distribution of new vehicles and parts in Zambia as well as servicing vehicles.

A Competition and Consumer Protection Commission spokesman said allowing the merger would give the two companies a combined market share of 75 percent.

Toyota Tsusho Corp said in December it had secured almost 98 percent of French distribution company CFAO.