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Ryanair Holdings Plc (RYA), Europe’s largest discount carrier, lost a court challenge against the European Union’s competition agency for failing to investigate a complaint alleging Deutsche Lufthansa AG (LHA) got illegal state aid.

Ryanair’s appeal “has become devoid of purpose” because the European Commission eventually opened a probe into possible aid for the German airline, the EU General Court in Luxembourg ruled today. At the same time, the court rebuked the regulator for taking too long to decide and ordered it to pay half of Ryanair’s legal costs.

After the EU agency’s decision to start a formal probe in July 2008, the court no longer needs to make a decision, it said, adding that Ryanair “cannot be criticized” for trying to “protect its rights without waiting for the commission to adopt its decision.”

Ryanair sued the Brussels-based commission in 2007 for failing to act upon a complaint two years earlier alleging Lufthansa benefited from unlawful state aid through its exclusive use of Munich airport’s Terminal 2, which was built with 1.5 billion euros ($2.1 billion) of financing from the German government and regional authorities.

The court “confirmed that the European Commission has unreasonably delayed an investigation into state aid to Lufthansa in connection with the development of Terminal 2 at Munich Airport,” Ryanair said in an e-mailed statement. “Ryanair welcomes the court’s order that the commission must pay half of Ryanair’s legal fees, having only launched an investigation into Lufthansa state aid after Ryanair filed its case.”

The case is T-423/07, Ryanair v. European Commission.

source: bloomberg