Italy’s competition authority has opened a probe into Ryanair Holdings Plc’s market position in the country, further escalating tensions between the Irish budget carrier and Prime Minister Giorgia Meloni’s government. 

The authority is investigating Ryanair’s dominant positions in services for tourists, including car rentals and hotel bookings, which the watchdog alleges harm travel agencies and customers, according to a statement. 

The announcement comes amid a spat between the Italian government and Ryanair over a decree that aimed to set a price cap for domestic airline tickets to Italian island destinations. 

Ryanair Group Chief Executive Officer Michael O’Leary has blasted the proposed cap as illegal and threatened to scale back flights on popular domestic routes if the government holds onto the measure. 

Ryanair said Wednesday it welcomes the investigation as it will prove that its conduct doesn’t harm consumers. 

The probe “will make it clear to passengers that they should book directly on for the lowest fares,” the company said in a statement.  

While the government is now considering amending the price cap rule, it has granted the competition authority oversight on companies in the sector. The latest investigation shifts the focus from ticket price-fixing to ancillary services.  

The watchdog alleges that “Ryanair’s conduct seeks to restrict travel agencies from selling airline tickets, which is typically the initial step in planning a holiday and a crucial entry point for selling additional services.”

That practice “could have adverse consequences on both travel agencies and end-consumers,” the agency said.

The carrier responded that the Italian authority “has shown no interest” in investigating that prices for its flights and services on online travel agent websites often far exceed their cost on the company’s own website.