The European Commission has launched an inquiry into the deal, which would see the three airlines share revenues on their flights from North America to the 27 E.U. countries, the Financial Times reported Saturday.
Officials said it's not a formal merger investigation with a fixed timeline, but rather an inquiry to determine if the proposal to coordinate the airlines' prices, capacity and schedules on trans-Atlantic routes would violate E.U. antitrust laws.
The announcement by BA, Spain's Iberia and American is the first big airline industry proposal under the new U.S.-E.U. "open skies" agreement that came into effect in March. Late last month BA announced it intended to merge with Iberia, which it said would help its position in the international airline industry and reduce its aircraft, maintenance and staffing costs.
That move was blasted by Richard Branson, president of Virgin Atlantic Airlines, who said the deal would create "a monster monopoly that would push up ticket prices," the Financial Times reported.