The European Commission on Tuesday announced an in-depth investigation of German airline Lufthansa’s planned takeover of Italian carrier ITA Airways, citing competitive concerns. Lufthansa signed a deal last year for a 41% minority share in the long-struggling ITA Airways, formerly Alitalia.

The deal calls for a 325-million-euro (CDN$475 million) investment by Lufthansa, and another 250 million euros ($350 million) from the Italian Finance Ministry. Lufthansa would have the option of buying the remaining shares at a later date.

The European Commission cited concerns about reduced competition on short-haul flights between Italy and Central Europe and long-haul routes between Italy and the United States, Canada, Japan, and India.

ITA Airways and Lufthansa compete on the Central European flights, where low-cost players generally serve secondary airports. On the longer-haul routes, ITA is competing against Lufthansa and its partners Air Canada and United. The commission also said the deal could strengthen ITA’s dominant position at Milan’s Linate airport.

The commission said that it would make a decision by June 6. The commission has the power to set conditions for the deal. It said that Lufthansa’s response to preliminary concerns was insufficient.

ITA was formed in October 2021 on the ashes of Alitalia, which had gone through a series of bankruptcies, government bailouts and failed partnerships as subsequent governments tried to prevent its demise. At the time, the commission insisted on a new name to mark a break with the 74-year-old carrier’s past.