Aer Lingus falls below symbolic €2.80 per share price

Aer Lingus shares yesterday fell below the symbolic €2.80 a share price which Ryanair is offering as part of its €1.4 billion takeover bid.

There were no indications last night that Ryanair, which can enter the market to buy shares below the bid level, was preparing to do so. The company declined to comment, pointing out that it was in an offer period.

Market sources said there was no one reason for the softening in the price, although most said the trading involved hedge funds. Other conventional funds like Gartmore have also been selling some shares.

Members of the Aer Lingus Employee Share Ownership Trust are currently balloting on the Ryanair offer, but most observers believe they will strongly reject the approach.

Some dealers cited the "vigorous opposition" of Taoiseach Bertie Ahern to the proposed takeover as outlined by him to the European Commission yesterday.

In a three-hour meeting with Commission president José Manuel Barroso and all 25 commissioners, Mr Ahern said he vigorously opposed the emergence of a new aviation monopoly in Ireland through the proposed takeover of Aer Lingus by Ryanair.

"As an island nation, Ireland needs a range of competitive air services," Mr Ahern told reporters after the meeting. "We think real competition between Aer Lingus and Ryanair is needed and the basis we have now is the best on overall terms."

Mr Barroso said the commission was committed to supporting competition in the aviation sector and underlined that EU regulations had been instrumental in changing the landscape in Europe to one of lower fares for consumers.

However, he said that the commission had yet to determine if it fell under its competence to rule on the merger, or whether it was a question for the national competition authorities in Europe.

He said an initial decision from the commission on the proposed bid would be announced on December 6th.

It is understood competition commissioner Neelie Kroes outlined the procedure the commission will follow in its investigation of the proposed merger at the meeting.

Mr Ahern also pressed the commission to adopt a more flexible approach to the issue of allowing State aid to be offered to innovative companies such as Intel. Last year, the commission vetoed a decision by the Government to award tens of millions of euro to Intel to support the construction of a new chip plant in Kildare.

In his address to the commission, Mr Ahern said competition and State aids policy needed to move from an overly localised focus to a European-based approach.

"There is a real need to take account of the fact that Europe, in seeking to attract mobile investment, is in competition with other major economic powers," he added.

Mr Ahern also expressed his strong support for the commission's efforts to find a resolution to the community patent issue.