* EU says deal could have led to higher prices for consumers
* Ryanair to challenge European Commission ruling
* Lawyer sees possible implications for Greek airline deal
By Foo Yun Chee and Conor Humphries
BRUSSELS/DUBLIN, Feb 27 EU antitrust regulators
have blocked a third attempt by Ryanair to buy Irish
rival Aer Lingus, a ruling Europe's biggest low-cost
airline called politically motivated and vowed to challenge in
The European Commission, which vetoed Ryanair's first
takeover bid for Aer Lingus in 2007, said on Wednesday Ryanair
had not offered sufficient concessions to allay concerns about
the combined company's dominance or monopoly on 46 routes.
It said the 694 million euro ($907 million) bid, which was
opposed by the Irish government, could hurt competition and lead
to over 11 million passengers paying more.
"For (Irish and European passengers), the acquisition of Aer
Lingus by Ryanair would have most likely led to higher fares,"
EU Competition Commissioner Joaquin Almunia said.
Ryanair, which owns 30 percent of Aer Lingus and has been
battling to buy Ireland's 75-year-old former flag carrier to
strengthen its market position, had promised to divest some of
Aer Lingus's routes to British airline Flybe and
British Airways in an attempt to win over regulators.
Ryanair described its concessions as unprecedented and
rejected the Commission's arguments.
"We believe that we have strong grounds for appealing and
overturning this politically-inspired prohibition," it said.
Ryanair's appeal could scare off other possible strategic
investors in Aer Lingus and frustrate the Irish government's
efforts to divest its 25 percent stake in Aer Lingus, part of
Ireland's 85-billion-euro EU/IMF bailout.
Ryanair shares closed down 1 percent at 5.60 euros. Aer
Lingus's were up 0.4 percent at 1.245 euros.
UK COMPETITION PROBE
The Irish government welcomed the Commission's decision.
"The government's view very strongly was that we want to see
lots of airlines flying in and out of Ireland, lots of
competition and lots of routes," Transport Minister Leo Varadkar
told Irish national broadcaster RTE.
"Ryanair spends a lot of time and money in the courts and
generally doesn't get much success from their actions. But
that's a decision for them," he said of Ryanair's appeal.
Aer Lingus chief executive Christoph Mueller said Ryanair's
appeal was motivated by a desire to derail a probe undertaken by
Britain's Competition Commission into Ryanair's stake in the
The Competition Commission probe was paused after Ryanair
challenged it jurisdiction to make a ruling while the European
Commission was investigating a merger.
It has indicated, however, that an appeal by Ryanair over
the European Commission decision was unlikely to delay its
John Schmidt, a partner at London-based Shepherd and
Wedderburn said the European Commission decision would likely
make it more likely to rule that Ryanair's 30 percent stake
gives it unfair influence over its rival.
"Given the case on substance and the Commission's margin of
discretion I am not sure an appeal will ultimately be
successful," Schmidt said.
Some antitrust lawyers said the Commission's decision could
have implications for another airline merger in the pipeline.
"The Greek carriers Olympic and Aegean will be following
this closely for pointers as to how their planned tie-up will be
analysed," said Paul McGeown, a partner at Wilson Sonsini
Goodrich & Rosati in Brussels.
Aegean Airlines unveiled its 72-million-euro bid
for Olympic Air in October last year, two years after
the Commission rejected its first offer. Aegean said its latest
proposal aims to ensure its survival in a shrinking market.
The companies are now in informal discussions with the EU
competition authority and are expected to formally file for
approval of the deal in the coming days.