The European Commission said it has blocked a proposed merger between Greece’s two major airlines, Olympic Air and Aegean Airlines SA, because it would have created a quasi-monopoly and lead to to higher fares for four of the six million Greek and European passengers flying to and from Athens each year.

Citing that Olympic and Aegean controlled more than 90 percent of the domestic Greek market, the Commission said its investigation showed “no realistic prospects that a new airline of a sufficient size would enter the routes and restrain the merged entity's pricing.”

The merger between Aegean and Olympic, the Commission added, would have led to a “quasi-monopoly in Greece and thus to higher prices and lower quality of service for Greeks and tourists travelling between Athens and the islands, said Joaquin Almunia, the Commission's vice-president of competition policy.

The merger of the Greek air carriers was initially announced last February, when the country’s dire economic situation was cited as reason for a combination.

An important opportunity for a consolidated representation in the European aviation market has been lost, said Theodore Vassilakis, chairman of Aegean Airlines. We will adjust and continue. Our track record shows that we can succeed through challenging times.

Andreas Vgenopoulos, the chairman of Marfin Investment Group, which owns Olympic, said the Commission's decision will have negative consequences for consumers as well as our country's economy.

The Commission had blocked a similar merger of Irish airlines Ryanair Holdings PLC and Aer Lingus Group PLC back in 2007.

However, such merger terminations by the Commission are rare.