Ryanair”s proposed takeover of fellow Irish carrier, Aer Lingus, has been blocked by the European Commission today (27 June).
”Our decision to prohibit this merger was essential to safeguard Irish consumers, who depend heavily on air transport, and other EU consumers,” said competition commissioner, Neelie Kroes.
”Monopolies are bad for consumers because they reduce choice, lower quality and give rise to higher prices. Low-cost carriers like Ryanair are no exception to this rule,” Kroes continued, adding: ”Unfortunately, the remedies proposed by Ryanair were not sufficient to remove the competition concerns.”
The remedies set out in Ryanair”s proposal included reducing Aer Lingus” short-haul fares by 10% per annum; eliminating Aer Lingus” fuel surcharges with immediate effect; transferring Heathrow slots to BA and Air France, who would each base aircraft in Dublin; and transferring other Dublin slots to competitors if they based between six and ten new aircraft at the airport.
In a statement released yesterday, Ryanair pre-empted today”s announcement and CEO, Michael O”Leary, was keen to express his contempt at the decision calling it ”not just unprecedented, but in our view unlawful,” adding: ”One can only conclude that the European Commission”s decision is a political one to appease the Irish Government.
”We call on the Commission to explain how it can rubber stamp mergers between larger airlines such as Air France/KLM, Lufthansa/Swiss and Lufthansa/Austrian, when these airlines have bigger positions at their home airports than the combined Ryanair/Aer Lingus share at Dublin Airport,” he said.
In response to Ryanair”s claims that the decision is the first to block a proposed takeover in 20 years, the Commission said that this was a unique case, differing from all other mergers as it involved two main airlines in a single country, both operating from the same ”home” airport, Dublin, as well as two low-cost carriers serving on a ”point-to-point” basis.
Ryanair”s next move will be to appeal against the Commission”s decision to the European Court of First Instance and seek to have it overturned. ”We are confident that the European Courts will overturn this bizarre, illogical, manifestly inaccurate and untenable prohibition,” said O”Leary.
Aer Lingus, however, embraced the Commission”s decision. ”Consumer choice is at the core of every competitive market and the creation of one dominant player out of Ireland, despite the protestations of Ryanair, just cannot be in the interests of consumers,” said chairman, John Sharman.
”Today”s prohibition announcement supports the Board”s position and allows the company to get on with what it does best ” providing consumers with choice, with year-round low fares on direct services to popular destinations and with a commitment that we will look after our passengers in the event of disruptions,” he concluded.