Ireland-based Ryanair has already submitted a package of concessions which includes a commitment from at least two EU airlines to set up bases in Dublin, increasing competition, and the scrapping some of its and Aer Lingus' routes from Ireland.

But the proposals have failed to sway the European Commission, which last month told Ryanair that the deal would hurt competition on routes out of Ireland.

"Ryanair has until December 20 to amend its remedies," the source said.

The EU competition watchdog will decide by February 6 whether to clear or block the deal. It vetoed Ryanair's first takeover bid in 2007. The carrier, which holds a 30 percent stake in Aer Lingus, withdrew its second attempt in 2009.

(Reporting by Foo Yun Chee; editing by Luke Baker)

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