On 29 August 2012, the European Commission announced that it would initiate an in-depth (phase II) investigation into the proposed acquisition of Aer Lingus by Ryanair. Under the EU Merger Regulation, where significant competition concerns arise in mergers and acquisitions, the Commission typically opens an in-depth investigation.
Ryanair launched a public offer for shares in Aer Lingus in June 2012 and notified the Commission of the proposed takeover on 24 July 2012. A preliminary investigation by the Commission indicated that the proposed transaction gives rise to potential competition concerns as these airlines are the main operators in Dublin airport and are each other’s closest competitors on a large number of routes, primarily out of Ireland. The Commission will now conduct an in-depth investigation, with a decision on whether the acquisition can proceed due early next year.
A previous takeover bid by Ryanair in 2006 was prohibited by the Commission in June 2007. At that time, the Commission found that the merger would have harmed consumers by creating a monopoly or dominant position on 35 routes operated by both parties. This was the first time an airline merger was prohibited by the Commission and the decision was upheld by the General Court in 2010, on appeal by Ryanair. In the recent announcement, the Commission noted that since 2007, the number of routes on which the two airlines compete has increased.
Meanwhile, the UK Competition Commission is in the process of investigating Ryanair’s current minority 29.82% stake in Aer Lingus as previously reported here.
Contributed by Claire Waterson, Cormac Little.
