The European Commission has slammed the brakes on Google’s acquisition of DoubleClick to conduct a full-scale investigation into whether the $3.1 billion (£1.5 billion) deal will stifle competition in the online advertising market.

The Brussels watchdog said that an initial investigation indicated that the deal may raise competition concerns. It will spend four months investigating the proposed deal in depth.

Eric Schmidt, Google’s chairman and chief executive, said: “We are obviously disappointed . . . We will continue to work with the commission to demonstrate how our proposed acquisition will benefit publishers, advertisers and consumers.”

He noted that purchases of rivals to DoubleClick by Google’s peers, including the $6 billion acquisition of aQuan-tive by Microsoft in May, had been approved in recent months. “We seek to avoid further delays that might put us at a disadvantage in competing fully against Microsoft, Yahoo, AOL and others,” Mr Schmidt said.

The European Commission has the power to block the Google deal altogether if it finds significant competition issues. Analysts have suggested that a combined Google-DoubleClick could control as much as 80 per cent online advertising in Britain.

Lawyers, including advisers close to the Google camp, have said that the case will rest on whether the Commission takes the view that online advertising represents a distinct market – in which case Google’s strength could prove a deal blocker – or whether online advertising is only a part of a much larger sector that also includes print, television and radio advertising.

Meanwhile, the decision to launch a full-blown inquiry will be construed as an interim victory for Microsoft, which lobbied fiercely against the DoubleClick deal. Microsoft, which is fighting to reinvent itself as a force in online advertising, was beaten in an auction for DoubleClick in April. The European Commission has set an April 2 deadline to reach a final decision on the DoubleClick deal and decide whether a merger would lead to to an anticompetitive environment.

Google accounts for as much as 40 per cent of online advertising spending in the UK and is likely to generate about £1.2 billion in that market this year, according to estimates.

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