In lieu of the almost-certain approved merger deal between US Airways and American Airlines, across the pond, Ireland airline company, Ryanair, had its renewed bid to take over rival Irish carrier Aer Lingus, rejected, due to what European Union officials rule would undermine competition and drive up ticket prices.
The merger of the two Dublin-based airlines would have harmed consumers by creating a monopoly or a dominant position on almost 50 routes where Aer Lingus and Ryanair currently compete, said the EU Commission, the bloc's executive arm, according to USA Today.
"This would have reduced choice and, most likely, would have led to price increases for consumers traveling on these routes," it said, rejecting the remedies offered by Ryanair in return for a green light to its takeover bid, reported USA Today.
Ryanair has responded to the EU's decision by vowing to fight what they claim is a "political decision" designed to meet the interests of the Irish government. Its offer valued Aer Lingus at about €700 million ($900 million), according to USA Today.
"At a time when airlines in Europe and further afield are merging to form bigger competition champions ... the EU Commission has yet again set back competition and choice in Europe while delaying much-needed consolidation," said Ryanair spokesman Robin Kiely, according to USA Today.
Ryanair, who is already the biggest shareholder of Aer Lingus, believes that The Irish government, who has a 25 percent stake, has opposed them ever since they surprised virtually everyone by launching its initial bid for Aer Lingus in 2006 just days after the government floated it on the British and Irish stock exchanges, reported CNN.
The other problem, according to USA Today is the Aer Lingus employee-controlled trusts that own more than 10 percent of shares. The unionized Aer Lingus work force views Ryanair with particular hostility because it refuses to recognize unions, and has a reputation for combative treatment of customers and employees alike.
However, Ryanair points to how the EU have cleared other large airline mergers or takeovers in the past, including the British Airways-Iberia and Lufthansa-Austrian Airlines deals.
But, EU antitrust chief Joaquin Almunia, claims the Ryanair's bid is different because the two airlines operate principally in the same market and are both based in Dublin. He compared the situation to a proposed merger between two Greece-based airlines, Olympic and Aegean, that the EU blocked in 2011.
As Ryanair was furious, the same could not be said for Aer Lingus who cheered the EU's decision.
"Aer Lingus' position from the outset has been that Ryanair's offer should never have been made," chief executive Christoph Mueller said in a statement, according to USA Today.
The newspaper further states that the airline is suing Ryanair in an effort to force its rival to divest its 30% stake. Britain's competition watchdog also is investigating whether Ryanair's investment in Aer Lingus unfairly influences its competitor's decisions. Ryanair holds no seats on the Aer Lingus board.
This article is copyrighted by Travelers Today, the travel news leader
