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Ryanair in EU probe on Aer Lingus Ryanair still hunting Aer Lingus
(about 5 hours later)
The European Commission is launching an investigation into Ryanair's bid for Ireland's national airline, Aer Lingus. Budget airline Ryanair is "committed" to buying Aer Lingus despite the European Commission starting an inquiry into the 1.48bn-euro (£1bn) bid.
The deal would "raise serious competition concerns" for air passengers, said the Commission. Ryanair's offer for Aer Lingus has now lapsed but it said it would make a new bid if Brussels approves the deal.
It might limit consumer choice and prompt higher fares, it said, echoing Aer Lingus, which has long opposed the 1.48bn euro ($1.9bn; £1bn) deal. Brussels said the deal would "raise serious competition concerns" for passengers and may push up fares.
Ryanair's earlier offer has lapsed but the airline says it will make a new bid if the Commission okays the deal. Ryanair said fares would fall as a result and accused Brussels of an "inconsistent" approach to the issue.
Deadline Still confident
Initial measures proposed by Ryanair to counter concerns were inadequate, said the Commission. Ryanair boss Michael O'Leary said he was "disappointed" by the decision, which will delay a ruling on the deal until May.
Based on takeover rules, all acceptances of the offer received to date become void effective immediately. But he added: "Ryanair remains confident that its offer, which is consistent with the Competition Commission's stated policy on airline consolidation, will win EU competition approval."
But while Ryanair expressed its disappointment by the decision, it said it was still "committed" to buying Aer Lingus. Brussels said initial measures proposed by Ryanair to counter concerns about the impact of the deal on competition and prices were inadequate.
Ryanair, which recently increased its stake in Aer Lingus to 25%, defendined its bid saying it would lead to lower Aer Lingus fares and fuel surcharges, maintain Aer Lingus as a separate stand alone airline and retain its brand. Aer Lingus says it will co-operate with the Commission in its enquiry
The Commission has extended the deadline for a decision to be reached by several months, to 11 May from December 20. Based on takeover rules, all acceptances of Ryanair's offer received to date become void effective immediately.
The Irish government, which holds some 25% of Aer Lingus, has stated it would not sell its share. The government has voiced concerns over the impact such a deal could have on Aer Lingus jobs. Ryanair will need approval by the Takeover Panel to make another offer next year.
It and other shareholders have said the offer undervalues the firm. Ryanair, which recently increased its stake in Aer Lingus to 25%, defended its bid saying it would lead to lower Aer Lingus fares and fuel surcharges, maintain Aer Lingus as a separate, stand-alone airline and retain its brand.
Together Aer Lingus and Ryanair operate most flights in and out of Ireland. The Irish government, which holds some 25% of Aer Lingus shares, has stated it would not sell its stake, voicing concerns over the impact such a deal could have on Aer Lingus jobs.
It and other investors have said Ryanair's offer undervalues the firm.
Together, Aer Lingus and Ryanair operate most flights in and out of Ireland.