Tommy Broughan (Dublin North East, Labour)
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Question 568: To ask the Minister for Transport the national policy directions he has given to the three Government appointed directors to the board of Aer Lingus in relation to a company's (details supplied) proposed takeover bid for Aer Lingus; his position on the company's proposal to take over Aer Lingus; if his Department has carried out research on the impact of the takeover proposal on the strategic national aviation interest and connectivity; and if he will make a statement on the matter. [1560/09]

Noel Dempsey (Meath West, Fianna Fail)
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Under Company law all directors are obliged to pursue the best interests of the Company. Subject to that duty, in January 2008 the State's nominees on the Board of Aer Lingus were issued with a mandate to ensure that all future decisions of the company that have significant implications for wider Government, aviation or regional development policies are considered at Board level. In accordance with the mandate the State's nominees are directed to seek to reconcile commercial and public policy objectives. I did not give any further directions to the State's nominees on the Board in relation to Ryanair's recent Cash Offer for Aer Lingus.

The Board of Aer Lingus rejected the Offer in its defence document published on 22 December 2008 and recommended to shareholders that they take no action in relation to the Offer. As the Deputy will be aware, the Government has rejected Ryanair's Cash Offer of €1.40 per share for the State's 25.1% shareholding in Aer Lingus. Government took the view that the Ryanair Offer greatly undervalued Aer Lingus. Competition in the Irish airline sector was also a major consideration. The virtual monopoly that would have resulted if the Offer had been accepted would not have been in the best interests of Irish consumers. In 2007 the EU Commission blocked the previous bid by Ryanair for Aer Lingus following an extensive investigation of the bid under the EU Merger Regulation. At that time the Commission concluded that a merger of the two companies would have harmed consumers by removing competition and creating a monopoly or dominant position on 35 routes operated by both companies. The competition rules and the same competition considerations applied to the latest bid also and no remedies were offered by Ryanair to address these competition concerns.

Other considerations also taken into account in reaching the decision to reject the most recent Offer were the impact of the takeover on airports policy and consequently on regional development policy. Government was also mindful of the importance of ensuring maximum connectivity for Irish air travellers and concluded that this was best ensured in a competitive market.