Arguments against blocking of airline takeover rejected

THE GENERAL Court of the European Union yesterday found none of Ryanair’s arguments in its appeal against the European Commission’s decision to block its takeover of Aer Lingus undermined the commission’s findings that it would significantly impede effective competition.

The commission had found the combined entity would have dominant positions on a number of routes in and out of Irish airports.

Those positions were monopolistic or very significant and were enough to validate the commission’s finding that the merger should be declared incompatible with the common market, the ruling added.

“This is not a transaction involving active operators which have a home airport in different countries,” the court said.

“Ryanair and Aer Lingus operate from the same airport, Dublin airport, where they have significant advantages which could not easily be countered by competitors,” it continued.

“Furthermore, the results of the market tests showed that current and potential competitors were not ready to compete with the merged entity on all of the routes affected by the transaction.

“Even on the Dublin-London (Heathrow) route, the interest of certain airlines, some of which were already present on that route, was not borne out by a firm undertaking in that respect, which could have been submitted by Ryanair to substantiate its commitment relating to the ‘up-front buyer’.”

In upholding the commission’s refusal to compel Ryanair to offload its stake in Aer Lingus, the court said the EU executive had no power to take such action in the case of acquisition of a shareholding which does not confer control of a company.

Without effective control by Ryanair over Aer Lingus, Ryanair’s shareholding could not be likened to a merger which has already arisen, which would give the commission the right to act.

“If control has not been acquired, the commission does not have the power to dissolve the concentration,” the court said.

“If the legislature had wished to grant the commission broader powers than those laid down in the merger regulation, it would have enacted a provision to that effect.”

The court said the contested decision was adopted at a time when the commission had declared that the concentration notified by Ryanair was incompatible with the common market.

“In the present case, from the moment when the decision finding incompatibility with the common market was adopted, it was no longer possible for Ryanair, de jure or de facto, to exercise control over Aer Lingus or to exercise decisive influence on that undertaking.”

In the case of Ryanair’s appeal, costs were awarded by the court to the commission and Aer Lingus.

In the matter of Aer Lingus’s appeal, costs were awarded to the commission and to Ryanair.

No estimate on costs was available from either Aer Lingus or Ryanair yesterday.