Ryanair's Irish Takeover Rejected by European Commission

The European Commission announced today that it has prohibited budget airline company Ryanair (NASDAQ: RYAAY  ) from acquiring Irish airline Aer Lingus. After examining the proposal, the Commission determined that such a merger would have created unfair monopolies and price increases for consumers.

Ryanair said it will appeal the EU Commission's decision in court.

Commission VP for Competition Policy Joaquín Almunia said in a statement today that "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."

The Commission had previously rejected a takeover proposal in 2007, and in late 2012 the Government of Ireland announced that it would not support Ryanair's continued acquisition attempts.

A statement [link opens in PDF] from Aer Lingus CEO Christoph Mueller leaves little doubt as to the airline's opinion of Ryanair's offers: "Aer Lingus' position from the outset has been that Ryanair's offer should never have been made. 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."

Ryanair, meanwhile, said it had set up a "remedies package" and that "the history of the EU's treatment of Ryanair's two offers for Aer Lingus conclusively proves that this prohibition is a 'political' decision to pander to the vested interests of the Irish Government (a minority 25% shareholder in Aer Lingus) and is not one that is based on a fair and reasonable application of EU competition rules or precedent airline merger approvals in Europe."


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2282908, ~/Articles/ArticleHandler.aspx, 9/2/2014 12:26:52 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement