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DTI challenges Brussels on BA

The rift between the UK and Brussels over British Airways' proposed alliance with American Airlines deepened yesterday after the Department of Trade and Industry insisted it had the final say over approving the tie-up.

It came after Karel van Miert, the EC Competition Commissioner, had threatened on Monday to take the UK to the European Court of Justice if it pressed on with its decision to approve the alliance before the commission had concluded its own investigation.

The DTI last night admitted the question of who had jurisdiction over the alliance was "complex" and said certain aspects of the law were "untested". However, a spokeswoman said any moves by Brussels to stop infringements of competition under European law could not prejudice UK government policy. British Airways has also insisted the commission has no power to block transatlantic alliances of this kind.

The Office of Fair Trading has provisionally ruled that the link-up, which would give British Airways and American control over 60 per cent of flights between the UK and US, can go ahead as long as the two carriers give up 168 lucrative take-off and landing slots at Heathrow Airport. Rival carriers claim the conditions, which leave the alliance with 3,000 Heathrow slots, are too lenient.

Mr van Miert's office yesterday vigorously defended his intervention. "This is not a declaration of war. We've been saying this about the alliance for months. What we're afraid of is that if two big guys unite forces they'll kill competition," said a spokesman.

He added that approval of the alliance was not based solely on how many slots the two airlines would have to give up. "Competitors have suggested they should give up 400 slots but it's a very blunt mistake to say this is also our view."

It also emerged that the commission is preparing to threaten KLM, the Dutch airline, with fines if it fails to submit information on its alliance with Northwest Airlines.