Ryanair’s Proposed Takeover of Aer Lingus Blocked for Third Time

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The European Commission has prohibited the proposed takeover of Irish flag carrier Aer Lingus by the low-cost airline Ryanair.  It concluded that the acquisition, which would have combined the two leading airlines operating from Ireland, would have “harmed consumers by creating a monopoly on 46 routes”, adding:  “This would have reduced choice and, most likely, would have led to price increases.”

This was the third time that the Commission has blocked Ryanair’s bid for its rival.  In 2007, the carrier’s first attempt was prohibited and its second notification was withdrawn in 2009.  In November 2012, the EU Commission raised further concerns in its Statement of Objections, including that Ryanair’s commitments did not cover all 46 crossover routes and that its proposed transfer of Aer Lingus’ Heathrow slots was “legally unclear”.

A statement from Ryanair has said that it will appeal against the latest decision, stating that its most recent remedies package had addressed all previous issues raised by the Commission.  The package included the divestiture of Aer Lingus’ operations on 43 overlap routes to Flybe and the transfer of take-off and landing slots to IAG/British Airways at London airports.  Both Flybe and IAG committed to operate the routes for three years.

The Commission argued that Ryanair’s remedies, “were insufficient to ensure that customers would not be harmed”.  It added that it believed Flybe was not a suitable purchaser for competition against a Ryanair/Aer Lingus merger and that IAG/British Airways would not constrain the merged entity to a sufficient degree, nor have incentive to stay on the routes for more than three years.  It said:  “In addition, the Commission could not conclude with the requisite degree of certainty that the proposed commitments could actually be put in place in a timely manner.  Nor was it certain that they would work in practice and for a sustained period of time.”

Ryanair’s spokesperson Robin Kiely commented:  “The EU Commission has regrettably reversed its own precedents in order to prohibit Ryanair’s offer for Aer Lingus.  Ryanair’s radical remedies package clearly addressed all of the concerns raised by the EU both in its 2007 prohibition and in its November 2012 statement of objections.”

He added:  “Ryanair regrets that the EU Commission has again failed to apply its own competition rules and precedents in a fair and dispassionate manner.  We regret that this prohibition is manifestly motivated by narrow political interests rather than competition concerns and we believe that we have strong grounds for appealing and overturning this politically-inspired prohibition.  Accordingly, Ryanair has instructed its legal advisers to prepare a comprehensive appeal against this manifestly unjust prohibition.”

 

(Image: DAA)

This entry was posted in Airline Focus, Contracts, Legislation, News.

One Response to Ryanair’s Proposed Takeover of Aer Lingus Blocked for Third Time

  1. kevan james says:

    Personally I wouldn’t go anywhere near Ryanair. For once the EU has served a useful purpose by blocking this. It would be nice to think that Aer Lingus would get it’s act together and stand on it’s own two feet thus enabling it to rebuff compnaies like Ryanair