EU Defends IAG's BMI Takeover As Virgin Plans Appeal - Wall Street Journal

--EU Commission says IAG commitments address competition concerns

--Branson's Virgin Atlantic to appeal takeover decision

--Branson criticizes time taken to reach decision

(adds background, detail and comments by Richard Branson)

BRUSSELS (Dow Jones)--The European Commission Monday defended its decision to allow International Consolidated Airline Group SA's (IAG.LN) acquisition of U.K. airline bmi from Deutsche Lufthansa AG (LHA.XE) after British entrepreneur Richard Branson said that Virgin Atlantic would launch a legal appeal against the GBP172.5 million deal.

In a statement Monday, the European Commission said: "We are confident that the commitments proposed by IAG address all competition issues identified and we stand by our decision to clear the transaction subject to these conditions."

Branson, whose Virgin Group is owner of Virgin Atlantic along with Singapore Airlines Ltd. (C6L.SG), has complained that the deal will give IAG a further stranglehold at London's Heathrow airport as well as on the domestic routes that Virgin relies on to bring passengers to its long-haul flights. IAG's British Airways was already the biggest holder of takeoff and landing slots at Heathrow, while bmi was the second-largest. The combined company would have 53% of the takeoff and landing slots at the airport, the world's busiest international hub.

Antoine Colombani, spokesman for European Union antitrust commissioner Joaquin Almunia, said commitments offered by IAG in order to get regulatory clearance for the deal had effectively addressed the Commission's competition concerns.

"IAG agreed to release 14 pairs of slots at Heathrow and to carry connecting passengers to feed the long-haul flights of its competitors," he said.

"These remedies are both significant and appropriate to address the competition issues identified. We reached such a conclusion after comparing the impact of the acquisition on competition to the alternative scenario, which of course took into account the financial difficulties of bmi."

Virgin Atlantic had also bid for loss-making bmi but Lufthansa instead agreed to sell the British carrier to IAG for GBP172.5 million in cash.

In a blog on Virgin Group's website Monday, Branson reiterated that Virgin Atlantic would appeal.

"When it is published, we will scrutinise every line of the Commission's decision and we will also be fighting to operate 12 slots that BA has been forced to give up," Branson said.

Highlighting the importance of the local flight network in serving Virgin's existing long-haul services, Branson said: "For years we have wanted to take on BA on its short haul network to ensure that U.K. passengers get a good deal when connecting through London. One of the key points we will be making to the authorities is that the slots cannot be broken up among numerous airlines - that would merely be another gift to BA - and that they must be passed on as a block."

Branson has also criticized the E.U. Commission for clearing the IAG-bmi deal within 35 days but Colombani insisted the Commission had spent enough time examining the case. He said the 35 working days the decision took was "not particularly fast" and that the Commission had "in-depth pre-notification contacts" with the parties starting last November.

-By Laurence Norman and Vanessa Mock, Dow Jones Newswires; +32 2741 1484 vanessa.mock@dowjones.com

(Steve McGrath contributed to this article.)