Ryanair is appealing directly to the UK Supreme Court to try to stop the Office of Fair Trading from investigating the airline’s shareholding and attempted takeover of Aer Lingus six years ago.
The OFT has won a court of appeal judgment that ruled it was “in time” to investigate Ryanair’s acquisition of a minority stake. Ryanair has taken the challenge to a higher court in an attempt to halt any investigation.
A Ryanair spokesperson said: “The EU Commission prohibited Ryanair’s takeover offer for Aer Lingus in June 2007. The Commission confirmed that Ryanair could not be forced to sell its 29% minority stake, since Ryanair did not have de facto or de jure control of Aer Lingus.”
However, the OFT is not focused on whether Ryanair has control over Aer Lingus as it uses a less stringent test then the EU’s measure of decisive control. The OFT can investigate any minority shareholding where the shareholder has the ability materially to influence the behaviour and policy of the target company including the target company’s strategic direction and commercial objectives.
There is already a precedent in the British commercial courts from a case taken arising from BSkyB’s stake in ITV. The UK Competition Commission and secretary of state, upheld by the Court of Appeal, ruled that BSkyB’s 17.9% stake in ITV gave rise to a substantial lessening of competition such as to require remedial action.
Aer Lingus has welcomed the court’s ruling that the OFT is in time to investigate Ryanair. Aer Lingus CEO Christoph Mueller described the ongoing situation as unacceptable intolerable and even anti-competitive.
“It is unacceptable that our principal competitor has been allowed to remain as a significant shareholder on our share register even though the European Commission blocked their hostile takeover almost five years ago. This intolerable situation cannot be allowed to continue and today’s judgment confirms that the OFT has the jurisdiction to investigate the anti-competitive effects of Ryanair’s minority shareholding in Aer Lingus. The OFT can now proceed swiftly to complete its investigation into Ryanair’s shareholding which is contrary to the interests of consumers and the majority of our shareholders,” he said.
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