Airlines to hear EU court judgment

THE European Court of Justice is to deliver an important ruling today that could impact on Ryanair’s controversial shareholding in Aer Lingus.

The Luxembourg-based court will deliver its substantive judgment on separate but related cases brought by Ryanair and Aer Lingus over the former’s stakeholding in the latter.

The court has been asked by Aer Lingus to force Ryanair to divest itself of any shares which it owns in the airline. In turn, Ryanair has challenged a decision by the European Commission to block its proposed takeover of Aer Lingus on anti-competition grounds.

The case has its origins in Ryanair’s acquisition of a 19.16% stake in Aer Lingus after the Government’s decision in 2006 to allow for the privatisation of the state-owned airline.

Ryanair subsequently launched a bid for the entire share capital of Aer Lingus in October 2006, and sought approval from the commission under EU regulations governing mergers.

During the bid period, Ryanair increased its shareholding in Aer Lingus to 25.17%. However, the commission ruled in June 2007 that Ryanair’s bid to take over its main rival in the Irish aviation market was incompatible with rules on the common market.

It claimed the proposed takeover of Aer Lingus by Ryanair would significantly impede competition because of the dominant position held by both airlines in routes to and from Dublin, Cork and Shannon.

Ryanair, whose shareholding in Aer Lingus has now risen to more than 29%, has appealed the commission’s decision to the ECJ.

Separately, the commission rejected a subsequent request by Aer Lingus to order Ryanair to sell its shareholding on the basis that it does not have powers to compel shareholders to divest themselves of a minority interest.

The commission also pointed out that Ryanair does not exercise control over Aer Lingus. The ECJ will also deliver its ruling on a challenge by Aer Lingus to that decision this morning.


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