The European Commission has opened an in-depth investigation into the proposed takeover of Aer Lingus by Ryanair.
In a statement the EC said both were major players in the Irish passenger air transport services market.
It said: "Ryanair and Aer Lingus are the main operators out of Dublin Airport.
"On a large number of European routes, mainly out of Ireland, the two airlines are each other's closest competitors and barriers to entry appear to be high.
"Many of these routes are currently only served by the two airlines.
"The takeover could therefore lead to the elimination of actual and potential competition on a large number of these routes."
The EC said an preliminary investigation indicated "potential competition concerns".
It has until 14 January next year to make a decision on the proposed takeover.