Europe’s competition watchdog yesterday cleared the way for a merger between British Airways and Spanish rival Iberia which would create one of the world’s biggest airlines.

“The Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area or any substantial part of it,” the European Commission said in a statement.

BA and Iberia signed a merger deal on April 8 in order to compete more effectively in the fast-consolidating industry.

The tie-up will create Europe’s second-biggest airline by market value after Lufthansa, combining Iberia’s strong position in Latin America with BA’s presence in Africa, Asia and North America.

The European Union regulator said its investigation found that the combined group would face sufficient competition from other carriers on the key short-haul routes London-Madrid and London-Barcelona.

The commission said “passengers will have adequate alternatives to fly on these routes after the merger”.

The airlines would also face enough competition on long-haul flights on which one company offers a non-stop connection and the other offers a one-stop connection.

“Finally, 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,” it said.

“The Commission therefore concluded that the transaction will not significantly impede effective competition on any of the markets concerned by the proposed merger.”

In a separate decision, the commission paved the way for a trans-Atlantic alliance between British Airways, Iberia and American Airlines after the companies committed to competition safeguards.

To ease concerns, the airlines offered to make landing and take-off slots available at London Heathrow airport to facilitate the entry or expansion of competitors on routes between London and New York, Boston, Dallas and Miami.