(Adds details, Almunia comment, background)
BRUSSELS, April 23 (Reuters) - Aegean Airlines may have to offer fresh concessions to secure EU approval for its second bid to buy Greek rival Olympic Air, after the EU's competition watchdog deepened its investigation into the deal on Tuesday.
Aegean submitted concessions to the European Commission last month, including capping fares on some domestic routes. It sees the 72 million-euro ($94 million) deal as vital to its survival in the shrinking Greek air transport market.
But the Commission said in a statement on Tuesday that it was concerned a deal would lead to price rises and poorer services on some domestic routes out of Athens, where the combined group would have a monopoly or strong position.
The routes in question were used by Greek passengers as well as foreign travellers, it said.
"We have the duty to ensure that Greek passengers and people visiting Greece can travel at competitive air fares, even more so during challenging economic times," EU Competition Commissioner Joaquin Almunia said in the statement.
The Commission will now decide on the deal by Sept. 3. Reuters had reported the Commission still had concerns earlier this month.
The regulator blocked Aegean's first bid for Olympic in 2011, worried that the combined group would have a quasi-monopoly in the Greek air travel market.
And blocking another deal in the sector, the Commission rejected Ireland-based carrier Ryanair's third bid for Aer Lingus in February this year, saying Europe's biggest low-cost airline had not offered sufficient concessions. ($1=0.7674 euros) (Reporting by Foo Yun Chee; Editing by Greg Mahlich)