Ryanair has been fined €255.8 million by Italy’s competition watchdog for abusing a dominant position in its dealings with travel agents.
The Italian Competition Authority (AGCM) said on Tuesday that the no-frills carrier had allegedly blocked or made it difficult, economically or technically, for travel agencies to offer Ryanair flights in combination with other airlines or other services.
Ryanair responded in a statement that it would immediately appeal what it called a “bizarre” and “unsound” ruling.
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Shares in the company were down 0.2 per cent in mid-morning trading, at €29.43.
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The Italian agency said its investigation revealed that, at the end of 2022, Ryanair began to explore ways to hinder travel agencies. From mid-April 2023, these plans were implemented through measures that intensified over time.
AGCM said it took issue with the airline initially introducing facial-recognition procedures, then blocking payments from online travel agencies (OTAs) and, finally, imposing partnership agreements with travel agents limiting their ability to offer Ryanair in travel packages.
“Its dominant position stems not only from its significant market share, which is continuing to grow, but also from numerous other indicators... [which] contribute to giving Ryanair significant market power and the ability to act independently of competitors and consumers,” the watchdog said in a statement.
The alleged abuse of a dominant position took place from April 2023 to at least April of this year, the regulator added.
However, Ryanair claimed the authority’s decision seeks to ignore – and overturn – a key Milan court ruling in early 2024, which declared that Ryanair’s direct distribution model “undoubtedly benefits consumers” and leads to “competitive fares”.
“If today’s legally unsound AGCM Ruling and fine is not appealed, then the AGCM proposes to set itself above the Milan courts in making competition decisions,” said Michael O’Leary, chief executive of the airline group.
“Ryanair has fought for many years for transparent pricing, and our approved OTA agreements – which have been agreed by almost every large OTA, with the notable exception of one Spanish OTA, who continues to overcharge its customers for flights and ancillary services – are manifestly and clearly pro-consumer.”
Ryanair claims that when it launched in 1985, 20 per cent of ticket revenues were “wasted” paying travel agents 10 per cent commissions, and global distribution systems – which are networks that connect agents to airlines – a further 10 per cent in commissions. While fares were high at the time, profit margins across the industry were less than 1 per cent.
“The internet and the Ryanair.com website have enabled Ryanair to distribute directly to consumers, and Ryanair has passed on these 20 per cent cost savings in the form of the lowest air fares in Italy and Europe,” it said.
The penalty announcement comes four months after the AGCM fined Ryanair €1.3 million for allegedly providing misleading information during the antitrust investigation into its practices with OTAs.
Officials from competition authorities from Ireland and Italy, accompanied by gardaí, carried out an unannounced inspection – or so-called dawn raid – at Ryanair headquarters in Dublin in March 2004 as part of an ongoing investigation. AGCM has alleged that the inspection uncovered documents the carrier had claimed did not exist.
The €255.8 million final fine eclipses the €107.8 million imposed by Spanish competition authorities late last year on Ryanair as part of an action against five low-cost carriers for imposing additional charges on passengers for extra hand luggage.
The Spanish fine was suspended in June following a Ryanair appeal. Meanwhile, the European Commission has since initiated infringement proceedings against Spain, saying airlines have the freedom to set baggage prices that exceed “reasonable” weights.
