ROME (Reuters) -Italy's antitrust agency opened an investigation on Wednesday into low-cost carrier Ryanair "for possible abuse of a dominant (market) position", the latest regulatory challenge in Italy for Europe's largest airline.
Ryanair, which has expanded to become the largest carrier in Italy, is already in a dispute with the Italian government which is trying to hold down the price of domestic flights to its main islands at peak times.
Ryanair said on Wednesday that internal Italian flights to Sicily would be cut by 10% in its latest winter schedule, blaming the government's planned price cap.
Heralding a new regulatory battle, the Italian competition authority said it suspected the carrier of exploiting a dominant position "to extend its power" in other sectors such as hotels and car rentals, to the detriment of travel agencies.
Ryanair allegedly limits travel agencies' ability to buy tickets from its website, thus restricting their capacity to offer accommodation and transport services alongside plane tickets, the authority said.
The Italian government has asked the same regulator to police the price of flights to islands, modifying an original decree to cap airfares announced in August.
Eddie Wilson, the chief executive of Ryanair DAC, the biggest airline in the Ryanair group, said the airline opposed the measure despite the modification.
He also said Ryanair welcomes the antitrust agency's investigation, saying it should take into account other aspects and "bring transparency for everybody", as quoted by the ANSA news agency.
During a visit to Sicily, Wilson contrasted Ryanair's expansion of foreign flights to and from the island with the reduction on domestic routes.
"Italian domestic growth has sadly been negatively impacted by the Italian government's unlawful price cap decree to restrict airlines’ freedom to set low air fares," Wilson said in a statement.
Ryanair has already reduced its domestic schedule for flights to Sardinia over the winter.
(Reporting by Alvise Armellini and Keith Weir; editing by Cristina Carlevaro, Jason Neely and Barbara Lewis)