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Watchdog thinks Ryanair could become too big

Staff writer |
The U.K.'s antitrust watchdog said Ryanair should reduce its 29.8% stake in Aer Lingus because it is stifling competition on routes between the United Kingdom and Ireland.

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The provisional ruling is issued by the Competition Commission. One of the biggest budget carriers has taken advantage of cutbacks at other European national airlines and the collapse of several regional companies to become the biggest carrier of air travelers across Europe. Ryanair has tried to acquire Ireland's national airline three times since 2006.

The attempts to buy Aer Lingus faild over antitrust concerns among authorities in Dublin and Brussels, who are worried about the dominance Ryanair would have over air links between Ireland and Europe. The European Commission blocked Ryanair's latest 694 million euros ($898.04 million) takeover bid in February.

The Competition Commission said Ryanair's stake in Aer Lingus "obstructs Aer Lingus's ability to merge or combine with another airline to build scale and achieve synergies to remain competitive." Aer Lingus's other major shareholders include the Irish government and Etihad Airways from Abu Dhabi.

The U.K. commission, which expects to publish its final ruling by July 11, also said Ryanair's shareholding allows it to block special resolutions by Aer Lingus, votes passed by a majority of not less than 75%. That means that Ryanair could impact Aer Lingus' business by hindering any plans to issue shares and raise capital, it said.

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