EU probe into Ryanair takeover bid

THE European Commission this week opened what it calls “an in-depth investigation” under EU Merger Regulation into the proposed acquisition of Aer Lingus by Ryanair.

The possible takeover would have implications for Shannon, given that the two airlines are responsible for carrying most of the airport’s passengers.

In its statement, the European Commission stated, “The Commission’s preliminary investigation into the proposed takeover, which takes the form of a public offer, indicated potential competition concerns.
“Ryanair and Aer Lingus are the main operators out of Dublin Airport. On a large number of European routes, mainly out of Ireland, the two airlines are each other’s closest competitors and barriers to entry appear to be high. Many of these routes are currently only served by the two airlines. The takeover could therefore lead to the elimination of actual and potential competition on a large number of these routes.”

It stated that the investigation could well go on until next year.
“The opening of this in-depth inquiry does not prejudge the result of the investigation. The Commission now has 90 working days, until January 14, 2013, to take a decision on whether the proposed transaction would significantly impede effective competition in the European Economic Area (EEA).”

In 2007, the Commission prohibited the first attempt by Ryanair to take over Aer Lingus.
This decision was then upheld by the General Court of the European Union in a judgement handed down in July of 2010.
A second attempt by Ryanair to take over its competitor was notified to the Commission at the start of 2009 but was later withdrawn.
Ryanair already owns almost 30% of Aer Lingus and its minority shareholding is currently under review by the UK Competition Commission, in particular as to its effects on competition between the two airlines on routes between Ireland and the UK.

Speaking to The Clare Champion last month, Clare TD Michael McNamara said he was very doubtful the takeover would be allowed.
“There are real issues around whether the commission would approve it. We can’t prejudge the decision but given the issues that have been raised around the existing Ryanair shareholding in Aer Lingus, it’s very hard to see how the purchase could be approved.”