Britain's Airtours allowed its £950 million sterling (€1.45 billion) hostile bid for rival First Choice Holidays to lapse yesterday in the light of a detailed European Commission investigation.

But Airtours vowed to fight on, saying it would argue its case strongly for a First Choice takeover in the four-month inquiry. It would look to re-bid for its smaller rival if given the green light, making it Britain's and Ireland's biggest holidays firm.

First Choice owns JWT and Falcon here, while Airtours owns Panorama Holidays.

Airtours tabled the bid in April, disrupting First Choice's plans for a merger with Switzerland's Kuoni.

Some 52 per cent of First Choice shareholders had agreed to accept the offer from Airtours.

First Choice chairman Mr Ian Clubb said its Kuoni merger still represented the best deal for shareholders as awaiting a decision from Brussels involved regulatory risk.