By Foo Yun Chee
BRUSSELS (Reuters) -British Airways owner IAG (LON:ICAG)'s bid to buy out Air Europa may reduce competition on domestic, short-haul and long-haul routes, EU antitrust regulators said on Wednesday as they opened a full-scale probe into the 400-million-euro ($435.9 million) deal.
The deal underlines the wave of consolidation among airlines, with Germany's Lufthansa seeking to buy a minority stake in Italy's state-owned ITA Airways, and Korean Air looking to buy Asiana.
IAG, which also owns Iberia, said last February it had agreed to buy the 80% of Air Europa it did not already own from Spain's Globalia.
They scrapped a previous deal in 2021 after EU regulators indicated their remedies were insufficient to alleviate the competition concerns.
The European Commission said the deal may lessen competition on domestic routes to the Balearic and Canary islands.
It said the deal may also reduce competition on short-haul routes between Madrid and the main cities in Europe, Israel, Morocco, the UK and Switzerland.
Another area of concern is long-haul routes between Madrid and North and South America. The EU competition enforcer set a June 7 deadline for its decision.
IAG's Chief Executive Luis Gallego reiterated the company's willingness to offer remedies to address the EU concerns, saying it was talking to companies which may potentially take up the remedies.
EU regulators have recently taken a tougher line on airline mergers, indicating that airlines may have to divest assets and not just give up some routes or airport slots to address their concerns.
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