THE British Government could face a flood of court cases and compensation claims across Europe if it approves the planned British Airways merger with American Airlines without clearance from Brussels, it was claimed yesterday.

The EU competition commissioner, Mr Karel Van Miert, confirmed that an offence against treaty obligations would expose Britain to legal action from all member states with a grievance over fair trade.

Mr Van Miert insists that the airline merger is subject to EU rules designed to prevent large companies dominating a market sector.

In a letter to the British industry secretary, Mr Ian Lang, he warned legal action was likely unless the British government obtained Commission approval before giving the go ahead.

The fear is that Brussels would block the merger without massive concessions from British Airways and American Airlines involving deep cuts in their existing transatlantic services at three British regional airports - Manchester, Birmingham and Glasgow.

In addition, Brussels expects BA to increase its offer to give up 168 take off and landing slots at Heathrow in London before any deal can be approved.

At a news conference yesterday, the Commissioner repeated that court action was a real possibility - but not just from Brussels.

"If Britain clears the deal (without EU permission) that would create a situation whereby the alliance (between BA and AA) is illegal and opens the possibility for competitors to go to court, not just to the European Court, but also the national courts."