European General Court: prohibition of Ryanair’s takeover of Aer Lingus valid

Following the privatisation of Aer Lingus by the Irish Government in 2006, Ryanair acquired a shareholding of 19.16 % in the share capital of that company. On 23 October 2006, Ryanair launched a public bid for the entire share capital of Aer Lingus and notified the Commission a week later of its planned takeover, in accordance with the Merger Regulation. During the public bid, Ryanair bought further shares and on 26 November 2006 it held 25.17 % of Aer Lingus’s share capital.On 27 June 2007 the Commission adopted a decision declaring that Ryanair’s planned takeover of Aer Lingus was incompatible with the common market. Ryanair brought an action against that decision before the General Court (Case T-342/07). Following the Commission’s decision Ryanair bought further shares bringing its shareholding in Aer Lingus’s capital to 29.3 %.Both during the procedure which led to the prohibition decision and following that decision, Aer Lingus requested the Commission to order Ryanair to divest all of its shares in Aer Lingus. In its decision dated 11 October 2007, the Commission refused to grant that request, stating that it was not in its power under the Merger Regulation to order Ryanair to divest its shareholding since the planned takeover had not been implemented and Ryanair only held a minority shareholding which did not enable it to exercise either de jure or de facto control over Aer Lingus. Aer Lingus brought an action against that decision before the General Court (Case T-411/07). By order of 18 March 2008, the President of the General Court rejected the parallel application made by Aer Lingus for interim measures to prevent Ryanair from exercising its voting rights.In judgments of July 6, 2010, the General Court confirmed the two Commission decisions. The merger would create dominant positions on a number of routes from or to Dublin, Cork and Shannon which would be monopolistic or very significant and thus sufficient, in themselves, to validate the Commission’s finding that the implementation of the merger must be declared incompatible with the common market. On the other hand, the General Court concluded that the Commission justified to the required legal and factual standard its decision not to order Ryanair to divest its shareholding in Aer Lingus.Both, Ryanair and Aer Lingus can now bring an appeal, limited to points of law only, before the European Court of Justice.Source: General Court Press Release 72/10Full text of judgement T-342/07 available here>>.Full text of judgement T-411/07 available here>>.

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