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EU blocks Ryanair bid to buy Ireland's Aer Lingus

Published on NewsOK Modified: February 27, 2013 at 11:52 am •  Published: February 27, 2013
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BRUSSELS (AP) — The European Union's antitrust authority on Wednesday blocked Ryanair's renewed bid to take over rival Irish carrier Aer Lingus, ruling that it would undermine competition and drive up ticket prices.

The merger of the two Dublin-based airlines would have harmed consumers by creating a monopoly or a dominant position on almost 50 routes where Aer Lingus and Ryanair currently compete, said the EU Commission, the bloc's executive arm.

"This would have reduced choice and, most likely, would have led to price increases for consumers traveling on these routes," it said, rejecting the remedies offered by Ryanair in return for a green light to its takeover bid.

Ryanair, Europe's biggest budget airline and already the biggest shareholder in Aer Lingus, vowed to appeal what it called a "political decision" designed to meet the interests of the Irish government. Its offer valued Aer Lingus at about €700 million ($900 million).

"At a time when airlines in Europe and further afield are merging to form bigger competition champions ... the EU Commission has yet again set back competition and choice in Europe while delaying much-needed consolidation," said Ryanair spokesman Robin Kiely.

The Irish government has opposed Ryanair ever since the airline surprised virtually everyone by launching its initial bid for Aer Lingus in 2006 just days after the government floated it on the British and Irish stock exchanges. Ireland retained a 25 percent stake that it refused to sell to Ryanair.

So did Aer Lingus employee-controlled trusts that own more than 10 percent of shares. The unionized Aer Lingus work force views Ryanair with particular hostility because it refuses to recognize unions, and has a reputation for combative treatment of customers and employees alike.

Irish Transport Minister Leo Varadkar said a Ryanair-run Aer Lingus "would have a significant detrimental effect on competition, connectivity and employment in the Irish market."

The EU said both airlines combined would have controlled 87 percent of all short-haul flights out of Dublin, creating a dominant position on 18 routes and an "outright monopoly" on 28 others.

"The acquisition raised very significant competition concerns since it would have eliminated Ryanair's strongest competitor," said EU antitrust chief Joaquin Almunia. "In the end the most likely outcome of this transaction would have been quite simple: When flying to and from Ireland, passengers ... would have ended up paying higher prices."

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