European Merger Regulation Allows Ryanair’s Partial Acquisition of Aer Lingus Despite ‘Prohibition’

(by Bruce Lyons) The European General Court has today announced two judgments in relation to the Commission’s prohibition of Ryanair’s hostile bid to acquire Aer Lingus. Both decisions support the Commission but only one judgment is based on good economics. That is the decision to uphold the prohibition. The worrying judgment is the one that allows Ryanair to retain a 29.8% stake in its rival duopolist out of Dublin airport. 

Dodgy Plumbing: Why Europe’s Willingness to Grant Bankruptcy Discounts is Bad for Cartel Enforcement

(by Andreas Stephan) A speech by the European Commissioner for Competition may signal a greater willingness to grant discounts in cartel fines on the grounds of financial constraints. Reluctance to fine firms out of business is understandable, but may weaken enforcement at a time when cartel infringements are more likely.

World Championship Airliner Subsidy Fight (Refereed by WTO) Round 1: USA Wins on Points

(by Bruce Lyons) Just six years after the USA first complained about State aid to Airbus, the WTO has today found 16 specific subsidies to be illegal.  Another 11 measures were found not to have broken the rules.   The WTO also decided that the effects had included displaced Boeing exports to Europe and third countries, and reduced potential Boeing sales in the USA.  However, it did not find that the subsidies either had significant price effects or caused Boeing material injury.  The latter conclusion appears to be because Boeing sales and orders grew substantially 2004-06, despite the fact that Airbus had increased its US market share from c.30% in 2001 to c.50% in 2005.