European Union antitrust regulators have blocked Ryanair's third attempt to buy Aer Lingus.

The regulators said that the bid could hurt competition and lead to higher prices for passengers.

Ryanair has said it will appeal the decision, saying it was a "political decision" bowing to the interests of the Government.

Minister for Transport Leo Varadkar welcomed the ruling, saying the Commission had made the right decision for consumers.

Ryanair had already flagged the European Commission's rejection of the €694m bid for Aer Lingus earlier this month.

The EU executive vetoed its first takeover attempt in 2007.

The EU Commission said that the merger would harm consumers by creating a dominant company on 46 routes where the carriers are currently competing.

Competition Commissioner Joaquin Almunia said: "For [Irish and European passengers], the acquisition of Aer Lingus by Ryanair would have most likely led to higher fares." 

He continued: "Those proposals [from Ryanair] were simply inadequate to solve the very serious competition problems which this acquisition would have created on no less than 46 routes."

The State holds a 25% stake in Aer Lingus and Ryanair is Aer Lingus' biggest shareholder, with a 30% stake.

It argues the European airline industry is changing rapidly, with regional carriers failing and larger ones merging.

Aer Lingus welcomed the decision.

In a statement, its chief executive Christoph Mueller said: "Aer Lingus' position from the outset has been that Ryanair's offer should never have been made."

Ryanair has accused the European Commission of acting unfairly and failing to apply its own competition rules and precedents to the latest takeover plan.

The airline said the takeover bid was supported by a historic and unprecedented remedies package.

The bid included two upfront buyers - BA/IAG and Flybe - to take over around half of Aer Lingus's short-haul business.

The takeover plan appeared to have been boosted earlier this month when Flybe agreed to fly 43 of Aer Lingus's short-haul routes, easing competition concerns.

There had also been a commitment from the IAG airline group to run overlapping Aer Lingus/Ryanair routes between Dublin and London Gatwick to ensure competition.

The airline submitted its final package of takeover plans and commitments earlier this month following a series of meetings with European chiefs.

It said the package addressed the shortcomings in its previous two failed bids in 2007 and 2012.