Ryanair's attempted takeover of Aer Lingus is likely to be a matter for the European Commission rather Irish regulatory authorities, Minister for Finance Brian Cowen said today.
Brian Cowen
The Government was accused in the Dáil this morning of being taken by surprise when Ryanair acquired nearly 20 per cent of its competitor's shares since its flotation two weeks ago.
Mr Cowen said the Opposition appeared to regard the takeover as "inevitable", yet Ryanair was "a long way away from the majority shareholding that they seek".
Ryanair last week said it could effect its takeover while the State remained a shareholder but Mr Cowen expressed doubts about the viability of the proposal.
He repeated the Government's opposition to the takeover and said by holding over a quarter of Aer Lingus shares it could stop any other company compromising its independence.
"Without delisting and operational integration with Ryanair it is hard to see how the synergies which motivate mergers and takeovers could be realised," he said.
Ryanair chief executive Michael O'Leary stunned the stock market last week when he announced the company was bidding €1.4 billion for Aer Lingus. Mr O'Leary said the competition issues were likely to be a matter for the EC.
"There is a question as to whether jurisdiction for the purposes of merger clearance rests with the European Commission or member states, including Ireland. It is expected that jurisdiction will lie with the European Commission.
"The departments of Transport and Finance are working closely with advisors to prepare and make submission to the European Commission and will also be consulting with the Attorney General," Mr Cowen said.
There was outcry in the House however, when he failed to answer questions on why the Government had reduced its stake in Aer Lingus from 35 per cent to 28.2 per cent.
Joe Higgins of the Socialist Party said the public offering was a "debacle" and Labour Party leader Pat Rabbitte said the company's shares had been offered at a "bargain basement price".
The Initial Public Offering (IPO) valued Aer Lingus shares at €2.20 but are now trading at over €3.
Both TDs demanded to know why the Government had not foreseen the possibility of a takeover attempt by another airline and what its strategy was for dealing with current situation.
When announcing the takeover bid, Mr O'Leary referred to the consolidation of European airlines in recent years involving major companies such as Air France, KLM, British Airways, Lufthansa and SAS. In light of this, experts have suggested the Commission make take a sympathetic view of the Ryanair bid.