EU court rules against Ryanair monopoly

RYANAIR has been firmly told by the European Court of Justice that it cannot take over Aer Lingus and create a monopoly service into and out of the country.

But Aer Lingus was told by the same court that it has to live with the fact that the low-cost airline owns 29.8% of its shares.

Three years ago Ryanair wanted to merge with Aer Lingus but the EU’s competition watchdog said this would have created an airline with a dominant position on 35 routes, accounting for about 80% of all intra-European traffic.

The commission had analysed the effects of the proposed merger and of the changes Ryanair promised to make if it went ahead. The court said it agreed with its conclusion that competition would suffer.

It concluded that the merger would be to the detriment of more than 14 million passengers that travel to and from Ireland every year and rejected Ryanair’s appeal against the decision.

The judges said none of Ryanair’s arguments against the decision changed the situation, many of them were made very late and the adjustments they offered still left them dominant on a number of routes from Dublin, Cork and Shannon.

In a separate ruling the court rejected an appeal by Aer Lingus. The airline wanted the commission to order Ryanair to divest its minority shareholding which was 25.17% at the time. Afterwards this increased to 29.8%.

The court said in this case Ryanair’s holding did not constitute a controlling share of Aer Lingus and so the commission could not force them to sell or reduce.

Competition law expert, Paul McGeown of Hunton and Williams, said the court decided the Governments 25% shareholding together with the 12% owned by the Aer Lingus staff fund was enough to prevent Ryanair having control.

He added Ryanair would be relieved they were not being forced to sell their Aer Lingus shares since it would constitute a fire sale given the value of the shares had fallen considerably.

Ryanair have also been careful, said Mr McGeown, in not take part in board decisions in Aer Lingus.

The court in Luxembourg will hear a number of cases brought by Ryanair against state aid decisions by the commission involving airports used by the low-cost airline.


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