Ryanair CEO Call Decision "Unlawful," Vows Legal Action
After a seven month investigation, EU Commission regulators
ruled Wednesday to prohibit budget airline Ryanair from taking over
its Irish rival, Aer Lingus.
Neelie Kroes, European Commissioner for Competition Policy, told
reporters at a press conference such a deal would have limited
competition as the combined airlines would have controlled more
than 80 percent of all European flights to and from the Dublin
Airport.
Kroes said the decision was made to "safeguard consumers" and
the Commission "does not prohibit takeovers lightly."
"But in this case, the Commission had no alternative because
this takeover would have led to dramatically reduced choice for
consumers and, as a result, the likelihood of lower quality and
higher fares," said Kroes.
"This would have been unacceptable for the fourteen million
passengers currently flying on 35 routes to and from Ireland. As an
island, Ireland depends heavily on air transport: the harm of this
takeover to consumers would therefore have been significant."
The Board of Aer Lingus said it welcomed the EU Commission's
prohibition decision.
"Today's prohibition decision, following the EU Commission's
exhaustive investigation, is good news for Aer Lingus and for our
customers. Consumer choice is at the core of every competitive
market and the creation of one dominant player out of Ireland,
despite the protestations of Ryanair, just cannot be in the
interests of consumers," said Aer Lingus Chairman John Sharman.
"Aer Lingus has made tremendous strides over a relatively short
time in successfully executing our strategy and that work will
continue apace. We are determined to deliver on our excellent
prospects as an independent company and I'd like to thank our staff
for their continued commitment,"
As ANN reported, when Ryanair
announced its offer last October, the Aer Lingus Board advised
shareholders to reject the offer on the basis that it ignored the
company's prospects as an independent company and that it was
anti-competitive.
Ryanair was not pleased with the decision.
"The European Commission's decision to prohibit this merger
between two EU airlines which between them represent just 5 percent
of European airline traffic is not just unprecedented, but in our
view unlawful," said Ryanair's Chief Executive, Michael
O'Leary.
"We call on the Commission to explain how it can rubber stamp
mergers between larger airlines such as Air France/KLM,
Lufthansa/Swiss and Lufthansa/Austrian, when these airlines have
bigger positions at their home airports than the combined
Ryanair/Aer Lingus share at Dublin Airport.
When Air France, which has over 60 percent share of aircraft
movements at Paris CDG, is allowed by the Commission (with minimal
remedies) to acquire KLM which has over 60 percent share of
movements at Schipol, it is untenable that the Commission now
changes these rules, to prohibit a Ryanair/Aer Lingus merger which
will result in a similar 60 percent share of movements at only one
airport Dublin which is currently doubling its capacity.
Whereas the Air France/KLM merger, resulted in significant fare
increases, Ryanair has offered unprecedented remedies which
includes…guaranteed fare and fuel surcharge reductions. It
is obvious that the Commission is applying a unique and
unprecedented set of rules in the Ryanair/Aer Lingus case," he
said.
Ryanair said it will appeal the decision to the European Court
of First Instance and seek to have it overturned.
The carrier currently owns 25 percent of Aer Lingus.
"The Court has overturned several Commission prohibitions and we
expect the Court will do so again in this case. European consumers
should not be denied the lower fare and fuel surcharge savings
which will follow from a Ryanair/Aer Lingus merger," O'Leary
said.