IAG (ICAG.L) reached a deal worth 172.5 million pounds to buy its smaller loss-making rival late last year after trumping Virgin . Bmi has coveted slots at Heathrow airport, Europe's busiest.

The European Commission said IAG's concessions, which also included a pledge to carry connecting passengers to feed its rivals' long-haul flights, were sufficient to address competition concerns.

"The commitments package includes an appropriate number of very sought-after slots at London Heathrow as well as far-reaching feeder arrangements as regards connecting passengers," EU Competition Commissioner Joaquin Almunia said in a statement.

"We are therefore satisfied that the competitive dynamics will be maintained so as to ensure choice and quality of air services for passengers," he said.

Twelve slots ceded by IAG are for some UK domestic routes and other European routes. Two others will be leased to Transaero for flights to Moscow.

IAG currently has a 43.1 percent share of the take-off and landing slots at Heathrow. Together, IAG and bmi have a combined share of 53 percent of the airport's slots.

Virgin has urged EU regulators to block the deal, saying it would distort competition in British aviation.

(Reporting by Foo Yun Chee)

• A Permanent Economic Emergency