EU regulators said Wednesday they doubted Lufthansa AG was paying a high enough price for Austrian Airlines and they launched a probe into the carrier's restructuring and sale.
Lufthansa plans to pay 366 million to buy the Austrian government's 41.56 percent stake in the country's struggling carrier. The deal also sees Austria take on 500 million of Austrian Airlines' debt and leaves the door open to more payments in the future.
The European Commission said it "doubts that the price to be paid by Lufthansa reflects the market price for what is being sold."
It said it also suspected that the deal could violate EU subsidy rules that restrict government handouts for businesses that risk collapse and rules that require governments to act like normal market investors.
Austria came under fire for possibly paying too much to the airline and for the way it plans to restructure the business. The EU said it doubted that this would make the company viable in the long-term and able to survive without more public money.
Regulators also criticized the way the airline was sold, saying it may not have been "truly open, transparent and unconditional."
The probe is separate from EU approval granted last month to Austria's 200 million guarantee on a short-term rescue loan for Austrian Airlines.
The EU executive must check large state subsidies to private companies to make sure they don't damage competition by giving one business an unfair advantage over rivals.
The new investigation is a second roadblock to Lufthansa's buying spree. Regulators are also looking into its bid for Brussels Airlines over worries that it could create a monopoly on some routes.
Last year, Lufthansa bought 80 percent control of BMI British Midland _ which gave it a much greater presence at London's Heathrow Airport. It was also reportedly interested in Scandinavian airline group SAS AB and bankrupt Italian carrier Alitalia.
