EC poised to rule on Ryanair bid for Aer Lingus

Europe’s competition authorities will rule tomorrow on whether to approve a Ryanair takeover of Aer Lingus or refer the bid to a second phase of investigation.

The EC competition commissioner confirmed the ruling date last week as Ryanair chief executive Michael O’Leary said he was confident the process would proceed to ‘phase two’. Aer Lingus forecast the bid would be blocked.

O’Leary said last week he was prepared to present “radical remedies” to overcome concerns about the impact on competition.

Aer Lingus pointed out Ryanair had passed up the chance to offer remedies up to now.

Ryanair launched a euro694 million (£555 million) bid for Aer Lingus in June, its third attempt to buy the carrier. The European Commission blocked the first bid in 2007 and Ryanair withdrew a second in 2009.

The EC prohibited the first bid on the grounds that a combined airline would have a dominant position on 35 routes to and from Ireland. Aer Lingus said the number of routes on which it and Ryanair were sole carriers had doubled since then and a takeover would leave Ryanair dominant on 44 routes.

In a statement, Aer Lingus said: “The board remains of the view that Ryanair’s offer is not in the interests of shareholders, fundamentally undervalues the business and is likely to be prohibited by the EC due to the scale and extent of the competition issues.”

Ryanair already holds a 29.8% stake in Aer Lingus, with the UK Competition Commission investigating whether its existing holding has affected competition in the UK. Ryanair has sought repeatedly to block the investigation.

A phase two competition investigation into the bid for Aer Lingus would last 90 working days and carry over into next year.

Ryanair’s proposed remedies are likely to include an offer to divest Aer Lingus slots at Heathrow where the carrier holds 23 pairs of slots.

The carrier is understood to have made informal approaches to several airlines, including Virgin Atlantic and British Airways, to take some of the Aer Lingus slots.

O’Leary restated Ryanair’s interest in acquiring a stake in Stansted last week, although he said any holding would be below 25% and he would prefer to avoid the carrier becoming a shareholder in the airport.

He confirmed Ryanair had been asked to join a consortium bid for Stansted. Airport operator BAA confirmed last week it would sell Stansted in line with a Competition Commission ruling.

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