EU regulators yesterday blocked low-fare airline Ryanair Holdings PLC's hostile bid for Ireland's Aer Lingus Group PLC, saying the deal would cut consumer choice and likely lead to higher prices.
Together, the two airlines would control more than 80 percent of all European flights to and from Dublin airport, the European Commission said.
New airlines were unlikely to muscle in because of Ryanair's reputation for "aggressive retaliation" and the ability to temporarily slash fares and launch new routes to protect a powerful market position, it claimed.
"Our decision to prohibit this merger was essential to safeguard Irish consumers who depend heavily on air transport," EU Competition Commissioner Neelie Kroes said. "Any monopoly -- even if advertised as low-cost and low-fare -- is bad for consumers. The reality is that prices are higher and quality is lower when there is no competition."
This is only the second time the EU has blocked a deal since 2001.
The 1.48 billion euro (US$1.9 billion) takeover already seemed doomed after nearly half of Aer Lingus shareholders vowed to block it and Ryanair's share offer found few takers.
But Ryanair complained on Tuesday that the EU decision was politically motivated and aimed to please the Irish government. It vowed to take regulators to court, claiming they were wrong to block the takeover.
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