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."
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