(New throughout, adds statement by Brazil antitrust regulator)
SAO PAULO, June 24 (Reuters) - Brazil's antitrust regulator wants new rules for allocating airplane landing and departure rights, known as slots, in Sao Paulo's crowded domestic airport, saying they are too concentrated among two main airlines.
The recommendation comes as the country's civil aviation regulator ANAC has announced it will take back the slots held by grounded airline Avianca Brasil in the airport, known as Congonhas, as part of a plan to redistribute them later.
Under current rules, many of the slots would go to the two airlines that already control most of Congonhas' flights: Gol Linhas Aereas Inteligentes and LATAM Airlines Group .
The antitrust regulator, known as CADE, wants the rules changed to favor potential new entrants, increasing competition, according to a legal recommendation made public on Monday.
The Brazilian government recently enacted a law that allows foreign-owned carriers to operate domestic flights in Latin America's largest air market, which could unleash new competition for the Congonhas slots.
The timing is significant because Congonhas slots are not normally up for grabs. But Avianca Brasil's financial crisis has changed that landscape. Formerly Brazil's No. 4 airline, the carrier has been grounded since May following a bankruptcy filing and the progressive reduction of its operations.
Its financial struggles set off a fierce battle over who would inherit its slots, particularly in Congonhas and the domestic airport in Rio de Janeiro. Brazil's top three airlines, Gol, LATAM and Azul SA, had all expressed interest in the slots, and spent millions in efforts to secure them.
Avianca Brasil had planned to auction the slots on July 10, in hopes of raising at least $140 million for its creditors. But with ANAC's decision to recall the slots, it is unclear whether the auction will still take place.
A representative for Avianca Brasil did not have immediate comment. (Reporting by Marcelo Rochabrun and Alberto Alerigi Jr; editing by Susan Thomas and David Gregorio)