Ryanair and Aer Lingus have lost separate European Union court appeals related to Ryanair's 2007 hostile takeover bid for its rival.
Ryanair had sought to overturn an EU antitrust ruling blocking the takeover while Aer Lingus had sought a court order forcing Ryanair to sell its 29.9 per cent stake in the airline.
The EU's General Court, the region's second-highest court, said the veto of the deal by European regulators was valid, rejecting all arguments to the contrary by Ryanair.
"Those dominant positions are monopolistic or very significant and are sufficient, in themselves, to validate the commission's finding that the ... merger must be declared incompatible with the common market," a court statement said.
Aer Lingus welcomed the judgment dismissing Ryanair's appeal against the prohibition of its takeover bid.
"This decision confirms the EU Commission's findings that consumers would be harmed by such a takeover which would remove the competition between Aer Lingus and Ryanair on Irish routes," the company said in a statement.
Ryanair has attempted to buy its rival twice, but has failed both times. The European Commission blocked the first bid in 2007, saying the proposed takeover would have allowed Ryanair to dominate 35 routes and would have eliminated its main competitor in Ireland.
The commission four months later refused to force Ryanair to sell the shares it acquired in Aer Lingus because the holding wasn't a controlling stake.
However, Aer Lingus argued that following its ruling that blocked Ryanair's first takeover, the commission should have compelled Ryanair to sell its stake in the airline under EU merger regulations. Its appeal was also rejected today, with the court saying the Commission had legal and factual justification not to order Ryanair to sell its shares in the Irish former state carrier after the bid failed.
Aer Lingus said it would consider in detail the judgment on Ryanair's stake in the company, before deciding whether to make a further appeal to the European Court of Justice.
"It is regrettable that the court has not taken this opportunity to take the further step necessary to address the anti-competitive effects of Ryanair's minority shareholding in Aer Lingus which is contrary to the interests of the majority of our shareholders," said chairman Colm Barrington.
Ryanair currently has a shareholding of 29.8 per cent in Aer Lingus. A second bid in 2008 to buy Aer Lingus was abandoned after the Government, which owns a 25 per cent stake in Aer Lingus, said it undervalued the airline.The airline today welcomed the ruling that allowed it to retain its stake, and said it would study the details of the decision against its own action.
"This will not prevent Ryanair making a future offer for Aer Lingus, but obviously any such offer will have to take account of the court’s detailed ruling," said Ryanair chief executive Michael O'Leary.
"Ryanair has no immediate plans to make a third offer for Aer Lingus, which in any event would be unlikely to succeed unless the Irish Government decides to sell its 25 per cent stake.
Last month, Ryanair blocked two motions at Aer Lingus’s annual meeting that would have allowed Aer Lingus to issue new shares and to amend its articles of association.
Ryanair rose 5 cents, or 1.4 per cent, to €3.72 at 8.55am in Dublin trading, while Aer Lingus climbed 2 cents, or 2.5 per cent, to 83 cents.
Additional reporting: Bloomberg, Reuters