Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: EC approves acquisition of Aer Lingus by IAG, (Jul 15, 2015)

By Linda O’Brien, J.D., LL.M.

The European Commission (EC) has cleared under the European Union (EU) merger regulation the proposed acquisition of Irish airline Aer Lingus by International Consolidated Airlines Group (IAG), the EC announced today.

Aer Lingus Group plc is the national flag carrier airline of Ireland. It operates a fleet of mostly Airbus aircraft, serving Europe, North Africa, Turkey, and North America. Based in London, IAG is the multinational airline holding company of British Airways, Iberia, and Vueling.

The clearance is conditional upon commitments offered by the parties to address the Commission’s concerns regarding the transaction as notified. The EC had concerns that the merged entity would have faced insufficient competition on several routes. The Commission also found that the merged entity would prevent Aer Lingus from continuing to provide traffic to the long-haul flights of competing airlines on several routes. The commitments offered by the parties addressed those concerns.

European Commissioner in charge of competition policy Margrethe Vestager said: "By obtaining significant concessions from the airlines the Commission has ensured that air passengers will continue to have a choice of airlines at competitive prices after IAG's takeover of Aer Lingus. The five million passengers travelling each year from Dublin and Belfast to London will be able to choose among several strong carriers. And we are also protecting passengers travelling on connecting flights between Ireland and the rest of the world."

Following the EC decision to approve IAG’s bid for Aer Lingus, the U.K. Competition and Markets Authority (CMA) has moved to grant Ryanair the necessary approvals to sell its 29.8% stake in Aer Lingus to IAG.

In February 2015, Ryanair had requested that the CMA re-examine its decision to require it to divest its 29.8% stake in Aer Lingus down to 5% on the basis that there had been a material change of circumstances since the publication of the Competition Commission’s final report. This request followed the judgment of the Court of Appeal dismissing Ryanair’s legal challenge to the final report.

Ryanair had appealed against the CMA’s decision in June that there was no material change of circumstances for it not to require Ryanair to reduce its shareholding in Aer Lingus to 5%. The Supreme Court on July 14 refused Ryanair’s application for permission to appeal the Court of Appeal’s decision. Since that decision, Ryanair has announced its intention to sell its shareholding to IAG.

In light of this, the CMA has decided to grant Ryanair approval to sell its shareholding to IAG as a suitable purchaser and to use its vote as an Aer Lingus shareholder to support Aer Lingus’s Board’s recommendations at tomorrow’s extraordinary general meeting (EGM). The CMA has also decided to suspend the requirement to appoint a divestment trustee to carry out the sale.

Companies: Aer Lingus Group plc; International Consolidated Airlines Group, S.A.

News: AcquisitionsMergers Antitrust