Ryanair has confirmed it will appeal the EU Commission's decision to block its proposed takeover of Aer Lingus to the European Court of First Instance.
The European Commission has formally blocked an attempted Ryanair acquisition of Aer Lingus.
The airline's chief executive Michael O'Leary said he was confident the European courts would overturn this "unprecedented and unlawful" prohibition.
Speaking in Dublin today, Mr O'Leary said this was the first time that the Commission had prohibited a merger between two companies which combined would have less than 5 per cent of the EU market.
Earlier the Commission formally announced its decision to prohibit the takeover, marking only the second merger prohibition by the EU executive in four years.
The Commission said the move would destroy competition at Dublin Airport and on the busy Dublin-London route.
"The acquisition would have combined the two leading airlines operating from Ireland which currently compete vigorously against each other," it said in a statement.
"The Commission concluded that the merger would have harmed consumers by removing this competition and creating a monopoly or a dominant position on 35 routes operated by both parties."
But EU Competition Commissioner Neelie Kroes said the EU's top antitrust body could not force Ryanair to sell its 25 per cent stake in Aer Lingus.
Brussels lawyers and Commission watchers had expected such a divestiture. The stake gives Ryanair veto power over some decisions by the rival carrier.
"Since Ryanair is not in a position to exercise de jure or de facto control of Aer Lingus ... the Commission is not in a position to require Ryanair to divest its minority share," she told reporters.
Ryanair shares in Dublin were unchanged on the day at €5.00 but outperforming a 1.8 per cent fall in the broader Irish market. Aer Lingus was down 0.76 per cent at €2.6.
Ryanair's offer, originally valued at €1.48 billion, becomes only the 20th prohibition among more than 3,000 cases reviewed by the European Union executive since 1990.
Ms Kroes praised Ryanair for taking advantage of liberalisation in the airline industry to slash prices and give choice to consumers.
"Ryanair has provided consumers with more competition and more choice, but, and that is crucial, Ryanair cannot now take away that choice," she said.
But Mr O'Leary claimed the prohibition would leave Aer Lingus "exposed as a small, peripheral loss making regional airline which cannot compete with Ryanair on price or punctuality from Dublin".
He dismissed Aer Lingus claims that the prohibition was a boost for Aer Lingus and its customers as "nonsense".
He claimed Aer Lingus had wasted almost €20m of shareholders' funds to oppose a bid of €2.80 per share when its share price is just €2.60.
He also suggested customers would miss out on Ryanair's guarantee of lower Aer Lingus fares and the elimination of fuel surcharges.
Fine Gael's Olivia Mitchell said said that allowing the takeover to proceed would have led to a virtual monopoly where the consumer would ultimately lose out.
Labour's Roisin Shortall welcomed the decision, saying the acquisition attempt by Aer Lingus's main competitor demonstrated the total folly of the Government's decision to sell the airline.