Brussels, 27/06/2007 (Agence Europe) - As was to be expected, the European Commission announced on Wednesday 27 June that it was rejecting the projected merger between the Irish airline Aer Lingus and Ryanair, due to excessive concentration on routes serving the Republic of Ireland. This is only the 20th merger to be rejected by DG Competition, of over 3000 notifications which have been tabled since 1990. Even though this result did not exactly come as a surprise, the CEO of the low-cost airline Ryanair, Michael O'Leary, has stated that he is extremely disappointed with the decision, which he described as “political”. Speaking to the press the day before, he had already expressed his intentions of appealing to the Court of First Instance.
But the Competition Commissioner, Neelie Kroes, is confident: “today's decision is based on a solid legal basis, and will stand up to examination by the Court of First Instance in case of an appeal”, she told a Commission press conference on Wednesday. She stressed that given the preponderance of the proposed new entity on 37 routes in Europe, and its quasi-monopoly on 22 of them, an increase in prices and drop in quality would have been the inevitable result of the merger. The decision which was taken, therefore, was the only one able to safeguard the interests of the consumer. Prior discussions between Ryanair and the Commission had broken down, particularly on the number of take-off and landing slots available for competitors in Dublin, a city with just one airport. Ms Kroes explained that the domination of a single operator would discourage newcomers to the market, even in the case of excessive price increases brought about by that operator.
In response to Mr Leary's accusations, alleging that the Commission is biased in favour of the historical and national operators, the Commissioner pointed out that Ryanair itself had played an important part in the liberalisation and re-dynamisation of the European aviation market. However, she also pointed out that although Ryanair has done much towards the liberalisation of the market, it has no right to deprive travellers of the liberty of choosing an airline on the routes serving Ireland.
It is worth noting that Ryanair owns 25% of Aer Lingus, which already allows it certain rights of veto in the management of the latter company. Speaking to the press, Ms Kroes stated that this stake was not a majority stake, and was therefore not under consideration in the light of Community law on mergers. On the other hand, in virtue of antitrust law, if the Commission launches a separate investigation, Ryanair could possibly be obliged to sell its stake, according to an article which appeared in the Wednesday edition of the daily newspaper “Irish Times”. (cd)