Ryanair Case Study

On 27 September 2006 Ryanair started acquiring a substantial number of Aer Lingus’s shares and by 5 October 2006 it held a shareholding of 19.16%. This prompted Ryanair to launch its first public bid for the entire share capital of Aer Lingus. The bid was announced on 5 October 2006 and the EU Commission received notification of it on 30 October 2006. Notwithstanding this Ryanair did not stop acquiring shares in Aer Lingus, in fact it continued doing so during the whole bid period and in the end, the airline had acquired an additional 6% which lead Ryanair to hold 25.17% of Aer Lingus’s share capital.
In light of such operations, although there was no need for Ryanair to voice its intentions, the airline confirmed in an official statement

The Commission found that pursuant to the EU Merger Regulation “the merger would have substantially impeded effective competition in the common market or in a substantial part thereof within the meaning of Article 2(3)”. This would have resulted in the creation of a dominant position, pursuant to Article 102 TFEU, of the two Irish airlines on 35 routes to and from Dublin, Shannon and Cork and also in the creation or strengthening of a dominant position on 15 other routes to and from Dublin. This decision was an unprecedented one because it was the first time that the Commission had blocked a merger in the airline

In fact, Aer Lingus asked the Commission to oblige Ryanair disinvest its minority shareholding in the company pursuant to Article 8(4) EUMR due to the fact that according to Aer Lingus, these shareholdings consisted in a de facto reportable concentration pursuant to EU Merger Control rules as well as in a partial implementation of the merger that had been deemed as unlawful by the Commission itself in its 2007 decision. However, the Commission, disagreed with Aer Lingus’s argument, and in its decision, which was adopted 11 October 2007, it argued that Ryanair had not acquired control over Aer Lingus, pursuant to Article 3(2) of the EU Merger Regulation, thus it could not order Ryanair to disinvest in the airline. The Commission extended in support of this decision, that Aer Lingus had other major shareholders besides Ryanair, such as the Irish Government, which held a shareholding comparable to the one held by the rival airline therefore the shareholding should have not been cause for