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EU to block Olympic, Aegean airline merger

BRUSSELS, Jan 26, 2011 – The European Commission was expected to block Wednesday a merger between Greece\’s biggest carriers, Olympic Air and Aegean Airlines, because of concerns the deal would erode competition, according to sources close to the matter.

Europe\’s competition watchdog rarely uses its veto on mergers: the last time it blocked one was in 2007, when it barred Irish low-cost airline Ryanair from taking over national competitor Aer Lingus.

European competition commissioner Joaquin Almunia was expected to recommend to the commission it reject the Olympic-Aegean deal because he believes that the new company would be in a dominant position in the Greek market, one source said.

A second source said that the commission was "leaning towards a veto."

Olympic Air and Aegean Airlines announced in February 2010 plans to merge into a single listed company that would take the name Olympic Air and become a "national champion" in the airline business.

The European Commission decided in July to launch an in-depth investigation into the deal over concerns that it would create a monopoly on certain domestic and international routes.

In November, Almunia still expressed concerns about the deal and said there were similarities with the failed Ryanair-Aer Lingus merger.

The commission has only blocked 20 mergers since 1990 out of thousands of deals it has reviewed.

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