The European Commission has prohibited Ryanair’s takeover of Aer Lingus, dismissing the carrier’s proposed remedies as “inadequate”.
A furious Ryanair said it would appeal, describing the EC prohibition as “a political decision to pander to the vested interests of the Irish government”.
Dublin owns a 25% stake in Aer Lingus and opposed the takeover. Ryanair made a €694 million bid for Aer Lingus – its third attempt at a takeover since 2007.
In a statement, the EC said: “The acquisition would have combined the two leading airlines operating from Ireland.”
Its verdict included a withering dismissal of Ryanair’s proposed remedies which included agreements with British Airways’ parent IAG and regional carrier Flybe.
The Commission concluded the merger would harm consumers “by creating a monopoly or dominant position on 46 routes” where Ryanair and Aer Lingus currently compete.
“This would have reduced choice and, most likely have led to price increases.”
It added: “The remedies proposed fell short of addressing the competition concerns.”
The EC decided the deal would give Ryanair an outright monopoly on 28 routes, while on another 11 the only “alleged competitive constraint” would come from charter airlines.
It said: “Customers’ options would have been substantially reduced . . . Higher prices would have been the likely outcome.”
Ryanair proposed to pay Flybe to take over Aer Lingus operations on 43 routes and hand slots at Heathrow to IAG, with BA agreeing to operate for three routes between Britain and Ireland for three years.
The Commission found “Flybe was not a suitable purchaser capable of competing sufficiently with the Ryanair/Aer Lingus merged entity” and that “IAG/BA would not constrain the merged entity to a sufficient degree”.
The EC added: “[BA] would have little incentive to stay on the routes beyond a three-year period.”
Ryanair described its final package of remedies as “historic and unprecedented” and decision as “manifestly unjust”.