EU right to block Ryanair takeover of Air Lingus: court

(LUXEMBOURG) - The European Union's general court barred no-frills airline Ryanair from taking over Aer Lingus on Tuesday but said Ryanair could keep a minority stake in its Irish rival.

Ryanair had launched a takeover bid of Aer Lingus in 2006, but it was blocked by the European Union's competition watchdog, the European Commission, which deemed that it was incompatible with the common market.

In turn, Aer Lingus asked the commission to order Ryanair to divest all of its shares in Aer Lingus, which had risen to nearly 30 percent. The commission rejected the Aer Lingus request in 2007.

The two companies challenged the commission's decisions before the Eureopan court, which upheld them.

The general court ruled that the commission was right to block Ryanair's takeover bid because it would have created a monopoly on a number of routes from or to the Irish cities of Dublin, Cork and Shannon.

"Those dominant positions are monopolistic or very significant and are sufficient, in themselves, to validate the Commission's finding that the implementation of the merger must be declared incompatible with the common market," the court said.

The commission was also right to reject Aer Lingus's request because Ryanair only had a minority share in its rival, the court ruled.

"In the absence of effective control by Ryanair over Aer Lingus, Ryanair's shareholding cannot be likened to a merger which has already arisen, which would give the Commission the right to act," the court said.

Judgement of the European Court of Justice General Court in case T-342/07 - Ryanair v Commission