Commission grounds Ryanair’s bid for Aer Lingus

The Commission decided, on 27 June 2007, to prohibit low-fare airline Ryanair from taking over Ireland’s formerly state-owned airline Aer Lingus, arguing that the merger would kill off competition and consumer choice. 

The Commission based its negative judgement over Ryanair‘s bid for Aer Lingus on the share that both companies hold in serving their home airport, Dublin. Jointly, the two companies would be serving around 80% of passengers flying to and from Dublin, with no competitor holding more than a 5% share. Furthermore, the Commission said, a joint undertaking of Ryanair and Aer Lingus would be without any competitors on 22 of the 35 European routes to and from Dublin. 14 million people fly into and out of Ireland every year. 

Ryanair Chief Executive Michael O’Leary had offered remedies to enable the takeover in the form of slots on Dublin airport and London’s Heathrow airport to be transferred to competitors. Competition Commissioner Neelie Kroes said she “examined those remedies carefully, but they were not sufficient”. In particular, Kroes said, Ryanair failed to demonstrate how competitors could enter the market for air travel into and out of Ireland. 

Addressing journalists in Brussels, Kroes said that she took the decision to prohibit the takeover “in order to safeguard consumers”, adding that the merger “would have led to dramatically reduced choice for consumers”. 

Irish Prime Minister Bertie Ahern as well as Aer Lingus Chief Executive Dermot Mannion vigorously opposed Raynair’s €1.48 billion takeover bid, which Ahern said “would create a new monopoly” on the airline market serving Dublin. 

But O’Leary slammed the Commission decision as “politically motivated, designed to appease the narrow interests of the Irish government, which was the only party – other than Aer Lingus itself – to object to the merger.” O’Leary said that Ryanair would appeal against the EU’s “unlawful” decision. 

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