The proposed take-over by Airtours of the First Choice group in Britain has been blocked by the European Commission.

The ruling yesterday, only the 12th merger halted by the Commission, is a landmark decision in considering not only the relative dominance of one firm but the effect of a merger on collective dominance by a number of firms in one sector.

First Choice owns JWT and Falcon in the Republic while Airtours owns Panorama.

The new Competition Commissioner Mr Mario Monti, said the Commission was "not unlikely to face more such cases".

He said the decision had taken into consideration all the special undertakings given by Airtours to the Commission, except its last offer which had arrived after the deadline.

He hinted strongly that any renewed and restructured application would be unlikely to succeed in the light of the substantial difficulties involved in overcoming the problem of market concentration.

Both British firms are active primarily in the package tour market and both are vertically integrated with strong interests in charter airlines and travel agencies.

Airtours is involved in tour operating, travel agencies, charter airlines and cruise ships active in 17 countries, including the Republic. First Choice functions in Britain, Ireland and, to a small extent, in Canada in tour operating, travel agencies, seat broking, charter airlines and car rental broking.

Airtours allowed its public bid for First Choice to lapse in June following the announcement of a Commission investigation but had made clear it might reintroduce it if the Commission's decision had been positive.

Mr Monti said the British leisure travel market was already highly concentrated, with some 80 per cent dominated by four firms. Of the remaining 20 per cent, the vast majority involved small firms with less than a 1 per cent share of the market. The merger would have consolidated that dominance in three vertically integrated firms, Air tours/First Choice, Thompson, and Thomas Cook.

The specific nature of the market, particularly the fixing in advance of the number of holidays that will be on offer, and the links between the main players through the mutual sales of products, make it a very difficult market to enter, the Commission argued.

Mr Monti also announced that the Commission had sanctioned a series of raids on premises of the French car firm Peugeot over suspicions that it has been involved in anti-competitive car price fixing across borders.