Ryanair may be forced to trim Aer Lingus stake

Ryanair may be ordered to sell some, if not all, of its shares in Aer Lingus following a probe by the competition commission in Britain into its near 30% stake in the Irish flag bearer.

Commission deputy chairman Simon Polito said Ryanair had undue influence on the strategic decisions of its rival. “Whilst not giving it control over the day-to-day running of its rival, Ryanair’s minority shareholding can influence the major strategic decisions that could be crucial to Aer Lingus’ future as a competitive airline,” he said.

The commission said they felt ordering a change in Ryanair’s behaviour would not be a significant enough remedy.

In a notice of possible remedies the commission said: “The competition commission is not, at this stage, proposing behavioural remedies on their own for discussion as none appears to be effective in addressing the substantial lessening of competition.

“However, the competition commission remains willing to consider any practical alternative remedies that the main parties or other persons would like to propose which they consider would remedy the significant lessening of competition identified.”

Aer Lingus welcomed the provisional findings of the investigation into Ryanair’s minority shareholding, and said it looked forward to working with the commission as it draws up its final findings.

However, Ryanair’s CEO, Michael O’Leary, claimed the decision was wrong and that the commission would be in breach of EU law if it ruled while an EU court was considering the same question.

He said: “This provisional decision by the UK competition commission is bizarre and manifestly wrong. The competition commission’s finding that Ryanair’s shareholding obstructs Aer Lingus’s ability to attract other airlines was disproved by Etihad’s purchase of a 3% stake and the evidence submitted by other large EU airlines, which confirmed that Ryanair’s shareholding was not a barrier to other airlines acquiring a stake in Aer Lingus.”

Head of EU and anti-trust with Mason Hayes and Curran, Niall Collins, said Ryanair’s claims that the commission did not have jurisdiction to investigate the airline are wrong.

“The competition commission is operating fully within its jurisdiction to demand the sale- down of part, or the entirety, of Ryanair’s stake in Aer Lingus. Under the EU merger control rules, the acquisition of ‘control’ is defined by reference to the ability to exercise ‘decisive influence’ over the affairs of company.

“However, UK merger control rules are centred around the ability to exercise material influence, which is a lesser standard,” he said.

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