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Almunia: Ryanair bid bar protects public

Wednesday, February 27 12:31:26

EU Commission Vice President in charge of competition policy Joaquin Almunia today said that the decision to reject Ryanair's bid for Aer Lingus was done in the best interests of the travelling public.

The European Commission earlier today prohibited the proposed takeover of the Irish flag carrier Aer Lingus by the low-cost airline Ryanair.

It said that the acquisition would have combined the two leading airlines operating from Ireland.

"The Commission concluded that the merger would have harmed consumers by creating a monopoly or a dominant position on 46 routes where, currently, Aer Lingus and Ryanair compete vigorously against each other. This would have reduced choice and, most likely, would have led to price increases for consumers travelling on these routes. During the investigation, Ryanair offered remedies. The Commission assessed them thoroughly and carried out several market tests. However the remedies proposed fell short of addressing the competition concerns raised by the Commission," it found.

Commission Vice President in charge of competition policy Joaquin Almunia said: "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. 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."

Ryanair and Aer Lingus are by far the most important carriers operating out of Ireland. They compete directly on 46 routes.

In a statement, Aer Lingus welcomed the decision.

"Aer Lingus Group plc welcomes the decision announced today by the European Commission (EC) prohibiting Ryanair's offer for Aer Lingus. This is the first occasion on which the EC has needed to block the same deal twice. It is also Ryanair's third failed offer for Aer Lingus. The full text of the EC's announcement and frequently asked questions are linked below," it said.

It was the third time that the proposed acquisition of Aer Lingus by Ryanair was notified to the Commission.

In 2007 the Commission prohibited Ryanair's first attempt to acquire Aer Lingus and this decision was upheld by the EU General Court.

In 2009, the second notification by Ryanair was withdrawn.

"The Commission took into account the changes in market circumstances since 2007, for example the fact that the market positions of Ryanair and Aer Lingus have become even stronger, with their combined market shares going up from 80pc in 2007 to 87pc in 2012 for short-haul flights out of Dublin. The number of routes to and from Ireland operated in competition by Ryanair and Aer Lingus has increased from 35 in 2007 to 46 in 2012."