EC set to investigate Ryanair bid

The European Commission said it is to open an in-depth investigation into Ryanair’s bid for Aer Lingus.

The move, which was widely expected, could delay a final decision on the takeover attempt until next year.

In a statement the commission said its preliminary investigation “indicated potential competition concerns”.

“Ryanair and Aer Lingus are the main operators out of Dublin airport. On a large number of European routes, mainly out of Ireland, the two airlines are each other's closest competitors and barriers to entry appear to be high,” it said. “Many of these routes are currently only served by the two airlines. The takeover could therefore lead to the elimination of actual and potential competition on a large number of these routes.”

The commission has until January 14th 2013 to reach a decision on whether the proposed transaction would “significantly impede effective competition”.

Aer Lingus has already recommended that shareholder reject the €694 million offer, claiming that it undervalues the airline.

In a statement today, Aer Lingus said the its airline was much stronger than when Ryanair made previous offers, and is Ryanair’s “only significant competitor” on the majority of Irish air routes.

“The number of routes into and out of Ireland on which Aer Lingus and Ryanair compete has sharply increased since 2007. The reasons for prohibition are therefore even stronger than before,” it said.

This is Ryanair’s third offer for Aer Lingus. It last attempt in 2007 was blocked by the European Commission on competition grounds.

The UK Competition Commission is also investigating Ryanair’s current 29.8 per cent shareholding in the airline.

Ryanair said it would re-bid for Aer Lingus if the European Commission clears the offer.