The European Union has formally blocked Ryanair?s latest attempt to take over its Irish rival Aer Lingus.
Ryanair earlier this month revealed that the EU?s competition regulator was set to block the proposed ?694 million hostile bid for Aer Lingus. Ryanair has already announced its intention to appeal against the decision.
The European Commission today (February 27) formally confirmed that it would not approve the takeover, which is the second time it has blocked Ryanair from buying the whole of Aer Lingus.
EU Competition Commissioner Joaquin Almunia said in a statement: ?The commission's decision protects more than 11 million Irish and European passengers who travel each year to and from Dublin, Cork, Knock and Shannon. For them, the acquisition of Aer Lingus by Ryanair would have most likely led to higher fares."
Alumina also said that Ryanair?s proposals to deal with competition fears should the takeover be allowed did not go far enough.
?During the procedure, Ryanair had many opportunities to offer remedies and to improve them. However, those proposals were simply inadequate to solve the very serious competition problems which this acquisition would have created on no less than 46 routes," added Alumina.
Ryanair had reached agreements with Flybe and British Airways about taking over some of the affected routes. But these were not enough to persuade the EU to grant permission for the takeover.
Ryanair spokesman Robin Kiely said: "At a time when airlines in Europe and further afield are merging to form bigger competition champions (witness American Airlines' merger with US Airways last week and Emirates' recent strategic joint venture with Qantas), the EU Commission has yet again set back competition and choice in Europe while delaying much-needed consolidation."?
Flybe added in a statement. "Flybe is disappointed by the commission's announcement and remains firmly of the view that the proposed remedy - whereby Ryanair would transfer a number of aircraft and operating routes to Flybe - would have afforded credible and robust competition, including new jobs and bases in Ireland."
But Aer Lingus welcomed the EU's decision and said that "Ryanair's?offer should never have been made".
CEO Christoph Mueller added:"The series of inadequate remedy offers presented by Ryanair only underlines the view that Ryanair made its offer without any reasonable belief that it could obtain clearance."
The European Commission gave the following reasons for the blocking of the takeover:
- On 28 routes the proposed merger would have created an outright monopoly.
- On 11 further routes, the only alleged competitive constraint to the merged entity would have come from charter airlines. However, this constraint would have remained weak because charter airlines have a very different business model.
- Finally, on 7 routes Ryanair and Aer Lingus operate alongside other scheduled carriers. In addition to their very high market shares Ryanair and Aer Lingus are very close competitors - if not each other's closest competitors ? on these routes. The reason is that the business model of competing scheduled operators tends to focus on bringing connecting passengers to their own network hubs - typical examples are British Airways (to London Heathrow), Lufthansa (to Frankfurt) and Air France (to Paris Charles de Gaulle) ? as opposed to the point-to-point connections that Ryanair and Aer Lingus offer.
Source: http://buyingbusinesstravel.com/news/2720398-eu-blocks-ryanair-takeover-aer-lingus
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