Ryanair's rival bid grounded

European competition regulators are launching a comprehensive investigation into Ryanair's €700m (£555m) takeover bid for its low-cost rival Aer Lingus.

The European Commission today said it had made the decision after a preliminary investigation suggested the tie- up could pose competition concerns.

Ryanair is attempting to buy Aer Lingus for the third time. The most recent failure came in 2007 when the European Commission blocked its attempt on fears over the combined airline's dominance of 35 routes.

"On a large number of European routes, mainly out of Ireland, the two airlines are each other's closest competitors and barriers to entry appear to be high. Many of these routes are currently only served by the two airlines," the commission said in a statement.

"The takeover could therefore lead to the elimination of actual and potential competition on a large number of these routes".

Ryanair said its latest offer for Aer Lingus has automatically lapsed as a result of the decision but it would re-bid if the takeover is cleared.

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