Brussels, 29 August 2012
Mergers: Commission opens in-depth investigation into proposed acquisition of Aer Lingus by Ryanair
The European Commission has opened an in-depth investigation (phase II) under the EU Merger Regulation into the proposed acquisition of Aer Lingus by the low cost carrier Ryanair, which was notified to the Commission on 24 July 2012. Both are major players in the Irish passenger air transport services market.
The Commission's preliminary investigation into the proposed takeover, which takes the form of a public offer, indicated potential competition concerns. Ryanair and Aer Lingus are the main operators out of Dublin airport. On a large number of European routes, mainly out of Ireland, the two airlines are each other's closest competitors and barriers to entry appear to be high. Many of these routes are currently only served by the two airlines. The takeover could therefore lead to the elimination of actual and potential competition on a large number of these routes.
The Commission will now investigate the proposed merger in-depth to determine whether these initial concerns are confirmed or not. The opening of this in-depth inquiry does not prejudge the result of the investigation. The Commission now has 90 working days, until 16 January 2013, to take a decision on whether the proposed transaction would significantly impede effective competition in the European Economic Area (EEA).
The Commission prohibited the first attempt by Ryanair to take over Aer Lingus in its decision M.4439 of 27 June 2007 (see for a copy of the decision and other case related documents http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_4439). This decision was upheld by the General Court of the European Union by its judgement T-342/07 handed down on 6 July 2010.
The second attempt by Ryanair to take over Aer Lingus was notified to the Commission on 8 January 2009 and subsequently withdrawn.
In comparison with the situation in 2007, when the Commission adopted its decision, the number of routes where both Ryanair and Aer Lingus operate has increased.
Ryanair is a low-fares airline operating point-to-point scheduled air services essentially in Europe. The company has a fleet of 294 aircraft and 51 bases across Europe. Dublin is one of the biggest bases of Ryanair. In the year ended March 2012, Ryanair carried around 75.8 million passengers.
Aer Lingus is a publicly listed Irish-based airline. It offers essentially point-to-point scheduled air transport services. In the IATA Summer Season 2012, it operates on 108 routes, across Ireland, the United Kingdom, continental Europe, and the United States of America, with 45 aircraft. Its main base is located at Dublin airport. It carried 10.4 million passengers in 2011.
Ryanair already owns 29.82% of Aer Lingus. This minority shareholding is currently under review by the UK Competition Commission, in particular as to its effects on competition between Ryanair and Aer Lingus on routes between Ireland and the United Kingdom.
Merger control rules and procedures
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The Commission clears the vast majority of mergers after a one-month review, but if it has competition concerns it must open an in-depth investigation (Phase II review). The opening of a full probe does not prejudge its outcome.
There are currently five other phase II investigations. The first one examines the proposed creation of a joint venture in the UK between Vodafone, Telefónica and Everything Everywhere in the field of mobile commerce (see IP/12/367). The Commission has until 19 September to reach a final decision. The second phase II investigation concerns the planned acquisition of EMI's recorded music business by Universal (see IP/12/311), with a deadline set for 27 September 2012. The third phase II investigation relates to the proposed acquisition of Inoxum, the stainless steel division of ThyssenKrupp of Germany, by the Finnish stainless steel company Outokumpu (see IP/12/495), with a deadline until 24 October 2012. The fourth phase II investigation was opened in June 2012 into the proposed acquisition of Orange Austria by Hutchinson (see IP/12/726). The deadline for this investigation is 30 November 2012. Finally, the fifth phase II investigation concerns the planned acquisition of TNT Express by UPS (see IP/12/816), with a deadline until 20 December 2012.