European Commission Again Grounds A Ryanair Bid For Aer Lingus

Author:Mr Niall Collins
Profession:Mason Hayes & Curran
 
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On 27 February 2013, the European Commission (Commission) announced its decision to prohibit the proposed acquisition of control of Aer Lingus by Ryanair (theProposed Acquisition). Ryanair has indicated that it intends to appeal the Commission's decision. This is not the first time that the Commission has blocked a proposed acquisition of control of Aer Lingus by Ryanair. In 2007, the Commission prohibited such an attempt, a decision which was later upheld by the EU General Court in 2010. In 2009, Ryanair launched a second bid for Aer Lingus, but which was subsequently withdrawn. In June 2012, Ryanair announced its intention to launch a new bid for Aer Lingus, and upon which the Commission has now delivered its substantive competition analysis. In deciding to block the Proposed Acquisition, the Commission noted that the market position of the two companies on flights to and from Ireland is even stronger today than in 2007, with their combined share now resting at 87 per cent (up from 80 per cent) for short-haul flights out of Dublin. Further, that the number of routes where Aer Lingus and Ryanair compete directly against each other had increased from 35 to 46. The Commission also opined that the merger raised 'unprecedented' competition concerns regarding the 46 routes and that, on 28 of those routes, the Proposed Acquisition would have led to monopoly. During the proceedings, Ryanair submitted four different sets of remedies aimed at addressing the Commission's concerns. The final remedy package, submitted late in the process and described by Ryanair as 'revolutionary and unprecedented', consisted, broadly, of the divestiture of Aer Lingus' operations on 43 overlap routes to Flybe and the cession of take-off and landing slots to IAG/British Airways (IAG) at London airports (so that IAG would operate on three routes (Dublin-London, Shannon-London, and Cork-London). Further, Flybe and IAG committed to operate the routes for three years. Additional slot divestitures on London-Ireland routes were also offered. However, following a Phase II investigation involving market testing and the gathering and assessment of views from, inter alia, competitors, customers, travel agents, consumer associations, public authorities and airport operators, the Commission considered that the...

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