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Brussels Reconsiders Ryanair Aer Lingus Merger

by Jason Gorringe,, London

05 September 2012

The European Commission has agreed to revisit the question of whether low cost carrier Ryanair can acquire Irish airline, Aer Lingus, despite competition concerns.

Ryanair and Aer Lingus are major players in the Irish air transport services market, both utilizing Dublin Airport as a key base of operations. Outlining its competition concerns, the Commission highlighted that on a large number of European routes, mainly out of Ireland, the two airlines are each other's closest competitors and barriers to entry to other competitors appear to be high. Many of these routes are exclusively served by the two airlines, and the takeover could therefore lead to the elimination of competition on a number of routes, the Commission said.

The Commission previously blocked an attempt by Ryanair to acquire Aer Lingus in June 2007, and Ryanair lost in its appeal at the General Court of the European Union in July 2010. A second attempt by Ryanair in 2009 was subsequently withdrawn by the company.

Although the Commission said it would launch an objective, in-depth investigation on the matter, it highlighted that in comparison to the situation in 2007, the number of routes shared by both Ryanair and Aer Lingus had in fact increased. The Commission will present its decision within three months, no later than January 16, 2013.

Ryanair is a substantially larger outfit than Aer Lingus, carrying around 75.8m passengers in the year ended March 2012, compared with the 10.4m Aer Lingus serviced. Aer Lingus operates 108 routes, across Ireland, the United Kingdom, continental Europe, and the United States, with 45 aircraft. Meanwhile, Ryanair has a fleet of 294 aircraft and 51 bases across Europe.

Ryanair already owns 29.82% of Aer Lingus. This minority shareholding is currently under review by the UK Competition Commission, in particular as to its effects on competition between Ryanair and Aer Lingus on routes between Ireland and the United Kingdom.

TAGS: business | European Commission | Ireland | law | aviation | mergers and acquisitions (M&A) | United Kingdom | Europe

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