EC go-ahead for BA and Iberia's merger

The decision came at the end of an inquiry into whether the link-up – creating the world's third-largest airline – would breach EU rules on fair competition.

A Commission statement said: "The Commission's investigation confirmed that the merged entity will also continue to be subject to competition from a number of competitors on the markets for air cargo transport and ground handling services."

The decision comes as the Commission investigates what it called "extensive" levels of co-operation on transatlantic routes proposed between BA, Iberia and American Airlines – members of the 'oneworld alliance'.

The arrangements involve joint management of schedules, pricing and revenue-sharing which, Commission officials have warned, could breach EU rules on restrictive business practices.

The three airlines received a Statement of Objections last October. Yesterday the Commission finally gave the green light for the three-way accord, which now needs endorsement from the US Department of Transportation (DOT).

BA chief executive Willie Walsh commented: "We await the DOT's final decision but welcome this important and vital step forward. The high number of new services on London to US routes since the Open Skies agreement demonstrates that Heathrow is open."