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EU blocks takeover of Aer Lingus

Ryanair bid stirs fear of monopoly at Dublin airport

BRUSSELS -- EU regulators blocked a hostile takeover bid by low-fare carrier Ryanair for Ireland's Aer Lingus yesterday, saying it would limit consumer choice and likely boost ticket prices.

Together, the two Irish airlines would control more than 80 percent of all European flights to and from Dublin airport, the European Commission said.

"What we are doing is preventing a monopoly from emerging," EU Competition Commissioner Neelie Kroes said. "Ireland, being an island, depends heavily on air transport."

It is only the second time the EU has blocked a takeover bid since 2001.

The $1.9 billion takeover already appeared doomed after nearly half of Aer Lingus Group PLC shareholders vowed to block it.

Ryanair believes the EU decision is politically motivated and aimed to please the Irish government. The government and Ryanair each control about a quarter of Aer Lingus.

Ryanair vowed to take regulators to court, citing earlier EU decisions to allow the combination of Air France and KLM and of Lufthansa and Swissair.

Regulators, however, say the Ryanair bid was unprecedented because both airlines have such a large share of routes at one airport, Dublin. In previous takeovers, the airlines' main hubs were in different cities.

Aer Lingus and Ryanair compete directly on 35 routes to and from Ireland, regulators said, and the combination would give the combined carrier a monopoly on 22.

"This would have reduced choice and, most likely, led to higher prices for more than 14 million EU passengers using these routes to and from Ireland each year," the European Commission said.

Changes offered by Ryanair to soothe EU concerns were inadequate, it said.

Regulators said the limited number of airport landing slots the airline offered to give away to new rivals would not replace the competitive pressure in the market that would disappear if Ryanair swallowed Aer Lingus.

"What is certain is that Ryanair proposed to end the intense competition between Ryanair and Aer Lingus at Dublin airport that has pushed prices down and brought Irish consumers an increasing choice of direct flight connections from Dublin," it said.