A report from the Reuters news agency says the European Commission has laid the legal groundwork to force Ryanair to sell some or all of its 25% stake in Aer Lingus if the EU turns down its takeover bid.
It quotes people familiar with the statement of objections as saying it concludes that Ryanair would lock up the Irish air market if it acquired its rival, leading to higher prices for travellers.
The commission will decide by 13 June whether Ryanair can take over Aer Lingus. Ryanair valued Aer Lingus at €1.48 billion in its original bid.
'It's fair to say that on the basis of its statement of objections, it looks like the EU is going to block the proposed merger,' Ryanair chief executive Michael O'Leary said this week, adding he intended to keep the minority stake anyway.
If it does block the merger, then Brussels would be poised to take the next step and order the sale of some or all of the shares.
The commission argues Aer Lingus and Ryanair are locked in a head-to-head combat, keeping each other in check but stopping attempts by other airlines to get a toehold in Dublin.
The two airlines have increased the routes on which they compete from eight to 37 over the past six years, driving down prices by up to 8%, the commission says.
'Removing such competition would leave Irish customers particularly vulnerable to price increases,' it argues.
The commission argues that other airlines would be unlikely to enter the market, as Ireland is such a small market.
