International Airlines Group's planned acquisition of BMI from Lufthansa will not be reviewed by the UK Office of Fair Trading, which has decided to leave the decision of whether to allow the deal to go ahead in the hands of the European Commission.
The OFT says it will "work closely with the European Commission as it assesses whether the proposed transaction raises competition concerns", but adds that the Commission "would be best placed to consider the deal".
Virgin Atlantic, which has written to the European Commission to protest against the proposed takeover, today expressed its disappointment in the OFT's decision.
"We're very disappointed that the OFT has failed to take responsibility for competitiveness in the UK aviation market," says the carrier.
"The passing of slots from BMI to BA will fundamentally change the landscape of UK aviation for good, harming competition and disadvantaging consumers."
Virgin adds that it will "remain fully engaged with the European Commission in its scrutiny over the coming weeks".
OFT director of mergers Sheldon Mills acknowledges that the proposed acquisition of BMI by IAG "has generated a significant level of concern in the UK, especially in Scotland, the north west of England and Northern Ireland".
He adds: "We consider that the transaction should be subject to a careful and detailed review and we will continue to work closely with the European Commission to ensure that UK airline passengers will not lose out through the proposed deal."
IAG is hoping to conclude the deal by the end of this month, and plans to fully integrate BMI's operations into its own.