The EU's antitrust regulators warned the deal could harm competition and lead to higher prices.

The European Commission said it threatened competition on short-haul routes between Italy and central European countries.

It could also impact long-haul routes between Italy, the U.S., Canada and Japan.

And it would also strengthen ITA's dominant position at Milan's main airport.

Lufthansa and the Italian government can now put forward new remedies by April 26.

The German group wants to buy a 41% stake in state-owned ITA for $351 million.

Lufthansa said it would present remedies to the Commission "in a timely manner."

It added it believed the deal would strengthen competition in Europe and in Italy.

The company also said it was still confident ITA would become part of the Lufthansa group family this year.