The Italian Competition Authority accused Ryanair of trying to “extend its market power” by offering other tourist services such as hotel and car rental reservations.

Ryanair “appears to impede travel agencies from directly acquiring airline tickets” from its website, the regulator said.

Instead, travel agencies have to buy tickets via a reservation platform that subjects them to “considerably less favourable conditions” in terms of prices and services.

“The carrier’s conduct would harm travel agencies and consumers by attempting to extend its market power into the provision of other tourist services,” the authority said.

READ ALSO: Ryanair threatens to cut more routes in row over Italy’s flight price cap

The announcement came shortly after Italy’s government on Tuesday watered down plans to cap airfares for flights to Italian islands, after Ryanair led a furious pushback by low-cost airlines against the proposal.

The government had moved in August to limit fares for flights between the Italian mainland and the major islands of Sicily and Sardinia, under a decree which contained a clause saying ticket prices at peak times could be no more than ‘200 percent higher’ than average.

Ryanair had called the plan illegal as it lodged a complaint with European Union authorities and said it would reduce the number of flights to Sardinia and Sicily.

The government on Tuesday scaled back the plans by removing the flight price cap clause from the decree, and handed over the job of monitoring prices for domestic flights to the Italian Competition Authority.

Business Minister Adolfo Urso told reporters on Tuesday that there would “no longer be a ceiling” on prices within the decree.

But he said the antitrust authority, which can levy fines on companies, will be able to intervene during periods of peak demand and when the ticket price a week before a flight to the islands is more than 200 percent above average.

Italy’s national consumer’s union however said the competition watchdog needed more powers to crack down on inflated flight prices.

“This is not enough,” said Massimiliano Dona, president of the consumer group.

“The antitrust [authority] needs to be able to intervene not just for an abuse of a dominant position or an agreement restricting competition, but also in the case of unfair business practices,” he said in a statement.

Italy’s competition watchdog in December launched an investigation into claims that airlines had deliberately raised fares on routes linking mainland Italy with Sicily during the Christmas holidays.

The investigation involved Ryanair, Wizzair, easyJet and ITA Airways, the state-owned successor of former flag carrier Alitalia.