The owner of British Airways, IAG, has received approval for the takeover of BMI from current owners Lufthansa.
European authorities cleared the deal after IAG agreed to give up landing slots at Heathrow airport.
Together IAG, which also owns Iberia, and BMI would have controlled 53% of landing slots at Britain's biggest airport.
Virgin urged regulators to block the deal saying that it distorts competition in the aviation market.
IAG reached a deal worth £172.5m ($273m) to buy BMI late last year.
The European Commission said its decision was conditional on the release of 14 slots at London's Heathrow airport in order to allow other airlines greater access.
It was also dependent on IAG committing to carry connecting passengers to feed the long-haul flights of competing airlines out of London Heathrow.
EU's Competition Commissioner Joaquin Almunia said in a statement: "The commitments package includes an appropriate number of very sought-after slots at London Heathrow as well as far-reaching feeder arrangements as regards connecting passengers.
IAG's chief executive Willie Walsh said: "This is great news for Britain. Over time we will launch new long-haul routes to key trading nations that are currently not served from Heathrow, while supporting our short-haul network.
"This is good for UK business and UK consumers. We have already announced that British Airways will re-start flights from Belfast to Heathrow, maintaining important economic links."
The takeover had been strongly opposed by rival airline Virgin Atlantic.
Earlier, in a letter to Mr Almunia, Virgin founder Richard Branson wrote: "I am really battling to understand why the Commission seems to be bending over backwards to clear this deal at phase one rather than submitting it to the proper scrutiny intended in phase two of the clearance process."