RYANAIR TOLD a court the European Union’s veto two years ago of its €1.48 billion bid for Aer Lingus Group was based on a “fundamental fallacy”.

The European Commission was “manifestly” wrong to find that Ryanair and Aer Lingus were each other’s closest competitors and that the rivalry between the two acted as a constraint on anti-competitive behaviour, lawyers for Ryanair told the European Court of First Instance yesterday. “This case and the contested merger are all about rivalry,” John Swift, one of Ryanair’s lawyers told a three-judge panel at the Luxembourg-based EU court. “It’s about the idea that the merger would seriously damage this rivalry against the interest of the passengers.”

In June 2007, the commission blocked Ryanair’s bid, saying the proposed takeover would have allowed the airline to dominate 35 routes and would have eliminated its main competitor in Ireland. The case is one of two concerning the commission’s decisions over the deal. Tomorrow Aer Lingus will complain about the regulator’s decision not to force Ryanair to divest its 29.8 per cent stake. The commission had rejected Aer Lingus’s request, saying it did not have the power.

The Government earlier this year rejected a second takeover bid from Ryanair, saying the offer undervalued Aer Lingus and that a merger would harm competition. Ryanair withdrew its second offer in January. Finding that Ryanair and Aer Lingus were “like for like” carriers was a “fundamental fallacy”, Ryanair said in its appeal against the commission ruling.

Ryanair wanted to create a dominant position for passengers travelling to and from Dublin, said Xavier Lewis, for the commission. Aer Lingus also argued in support of the commission. –(Bloomberg)