It does smell more and more of desperation with each passing day. As FR barters off bits of EI here and there to other carriers (why they lower themselves to get involved in this, I don't know - maybe desperation on BE's part?), it becomes more and more clear that FR's and MOL's aim is to kill Aer Lingus; it IS about stifling competition and frankly, I think we've got to the stage where if the EU Competition Commissioner were to approve this proposal, its reputation would be permanently tarnished.
I think EI-BUD hits the nail on the head when talking about EI Regional; this has been a big success. This has been a major thorn in FR's side and one can understand FR wanting to get rid of it. It is only likely to expand, thus putting further pressure on FR's Ireland-UK regional routes.
I think the question now is, what happens when the bid is rejected again? MO'L/FR can't be forced to sell, but might the UK OFT investigation be a weapon to force FR to sell up? Probably grasping at straws, but perhaps the OFT is taking note of the desperate means FR is using to destroy (not just take over) Aer Lingus and it must now be clear that FR is a hostile shareholder - and its continued shareholding of EI is not in the public interest.