A previous Ryanair move was rejected on EU competition grounds
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The Irish government has formally rejected Ryanair's bid for Aer Lingus, saying the offer "greatly undervalues" the Irish flag carrier.
It also expressed concerns that competition would suffer if the deal were to go ahead.
The hostile bid, valuing Aer Lingus at 748m euros (£701m), was made in December and has been rejected by the Aer Lingus board and its shareholders.
An attempt by Ryanair to acquire Aer Lingus in 2006 was blocked by the EU.
On that occasion, the offer valued Aer Lingus at 1.5bn euros.
The Irish government still owns a 25% stake in the formerly state-controlled airline.
Transport Minister Noel Dempsey said: "The cornerstone of Irish aviation policy is, and has been for many years, to encourage competition."
"A monopoly in this area would not be in the best interests of Irish consumers."
Ryanair will now decide whether to make an improved offer.
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