The Office of Fair Trading (OFT) said the European Commission (EC) was best placed to review IAG's proposed acquisition of Lufthansa's UK unit bmi and that there is no need for a separate British review of the deal.

The OFT has decided not to make a request to the EC for a UK review of the proposed acquisition by IAG of bmi from Lufthansa, the OFT said in a statement on Monday.

Britain's consumer watchdog said it would continue to work closely with the EC to assess whether the deal raises competition concerns for airline passengers including those travelling to and from airports in Scotland and the North West of England to London's Heathrow airport.

Late last year, British Airways (BA) owner IAG agreed to buy bmi for 172.5 million pounds, seeing off rival bidder Virgin Atlantic in the race to grab loss-making bmi's coveted runway slots at Heathrow.

Virgin Atlantic last month made a formal complaint to the EC about the deal, saying competition on some European routes would diminish and that fares would increase.

The OFT said the EC should consider the deal because the impact of the acquisition on the overall competitive position at London's Heathrow airport requires a comprehensive review of routes across many jurisdictions, not just those in Britain.

It added that the EC has extensive expertise in handling airline merger cases and has recent experience in merger and antitrust cases involving the merging parties.

Shares in IAG were 2.4 percent down at 163.4 pence by 1430 GMT, valuing the company at around 3 billion pounds.

(Reporting by Rhys Jones; editing by Matt Scuffham)