European Union regulators are launching an investigation into Lufthansa’s bid for Austrian Airlines, saying the deal could reduce choice and hike fares for passengers on some routes.

The European Commission said it had “serious doubts” that the takeover could proceed without the airlines making some changes to eliminate antitrust concerns.It said the new company could become too powerful on flights from Vienna to other European cities.

Lufthansa is Germany’s biggest airline and Austrian Airlines dominates routes out of Austria.

Lufthansa has already offered to make some changes but the EU said these were “not sufficient” to approve the deal at this stage and it wanted more time to look at the problems and possible solutions.

Regulators can now take an extra 90 days to examine the deal. Lufthansa has the right to pull out of the takeover if EU approval doesn’t come through by July 31.

Antitrust EU officials are separately looking into whether the Austrian government is selling Austrian Airlines at a fair price to Lufthansa. They launched an investigation in February, saying they believed that the price could be too low and may be an illegal state subsidy.
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