The Competition Commission (CC), the UK Independent watchdog on mergers, markets and the regulated industries, announced on Wednesday that it has advised Ryanair Holdings plc that it is required to cut its 29.8% shareholding in Aer Lingus Group plc down to 5%. The airline has also been ordered not to seek or accept board representation or acquire further Aer Lingus shares.
Ryanair acquired a stake in Aer Lingus in 2006 and later the same year it launched a public bid for the remaining shareholding in the airline. This bid was prohibited by the European Commission in June 2007, but in July 2010, the General Court ruled that the European Commission did not have the ability to examine or require divestment of minority shareholdings that do not confer ‘decisive influence’ for the purposes of the EU Merger Regulation. Ryanair made another bid last year for the remaining shareholding in Aer Lingus, which was again prohibited by the European Commission on 27 February 2013. An appeal was lodged by Ryanair against this decision on 8 May 2013. Following this the CC said it restarted an investigation into Ryanair’s stake in Aer Lingus in March this year.
In confirming its provisional findings that Ryanair’s minority shareholding may lead to a substantial lessening of competition between the airlines on routes between Great Britain and Ireland, the CC stated that it believes Ryanair’s minority shareholding will affect Aer Lingus’s commercial policy and strategy. The commission added that Ryanair’s minority shareholding was likely to prevent Aer Lingus from combining with, or being acquired by, another airline.
Ryanair is expected to lodge an appeal with the competition appeal tribunal in the near future.
CC Deputy Chairman and Chairman of the Ryanair/Aer Lingus Inquiry Group, Simon Polito, commented: “Ryanair proposed various remedies to us in an attempt to address our specific concerns. In a dynamic and uncertain sector such as the airline industry, however, it is inherently difficult to design remedies that would cater for all eventualities. We concluded that the effective and proportionate remedy that would address our concerns was to require a partial divestment of Ryanair’s shareholding to 5 per cent, facilitated by the appointment of a Divestiture Trustee. Aer Lingus would then be free to take actions to maintain and strengthen its competitive position in the future for the benefit of passengers on routes between Great Britain and Ireland.”