EU court upholds decision to block bid for Aer Lingus

EUROPE’S SECOND-HIGHEST court yesterday upheld a decision by the European Commission three years ago to block Ryanair’s hostile takeover of Aer Lingus on competition grounds.

But it rejected an appeal from Aer Lingus to force Ryanair chief executive Michael O’Leary to sell Ryanair’s 29.82 per cent in the airline, thereby rubberstamping a separate decision by the European Commission in October 2007.

The rulings were issued simultaneously yesterday by the General Court of the EU and can be appealed on a point of law to the European Court of Justice, Europe’s highest court.

Aer Lingus welcomed the ruling to reject Ryanair’s appeal to the commission’s decision to block the proposed takeover. The airline said it would consider the other judgment in detail before deciding on a further appeal to the European Court of Justice.

Aer Lingus chairman Colm Barrington said it was “regrettable” that the court had not taken the “further step necessary to address the anti-competitive effects of Ryanair’s minority shareholding in Aer Lingus, which is contrary to the interests of the majority of our shareholders”.

Ryanair, meanwhile, welcomed the court’s ruling that it did not have to sell its shares in Aer Lingus. “This is the third time since 2007 that Aer Lingus has lost appeals on this issue,” Mr O’Leary said yesterday.

In relation to the court’s decision to reject Ryanair’s appeal of the commission’s decision to block its offer for Aer Lingus, Mr O’Leary said: “This will not prevent Ryanair making a future offer for Aer Lingus, but any such offer will have to take account of the court’s detailed ruling.

“Ryanair has no immediate plans to make a third offer for Aer Lingus, which, in any event, would be unlikely to succeed unless the Irish Government decides to sell its 25 per cent stake.”

The commission said it was “happy” with the court’s ruling on its decision to block Ryanair’s takeover of Aer Lingus.

Commission vice-president in charge of competition policy, Joaquín Almunia, said: “The combination of Ryanair and Aer Lingus would have created a dominant position on 35 routes, to the detriment of more than 14 million EU passengers that travel to and from Ireland each year.”

Minister for Transport Noel Dempsey also welcomed the court’s decision to reject Ryanair’s appeal.

“For an island economy, which is so dependent on the provision of competitive air services for its economic growth, the merger would have been wholly incompatible with Irish aviation policy,” he said.

“The merger of the two largest Irish airlines would have had a significant detrimental effect on consumer choice and competition in the market, with negative long-term consequences for Irish aviation.”

Mr O’Leary said it was still his view that Aer Lingus’s long-term viability could only be secured as part of “one strong” Irish airline group. “Unless Aer Lingus finds a strong airline partner, then we believe it is doomed to fail because it can’t compete with Ryanair’s low fares, customer service or scale,” he said.