Ryanair challenges buyout refusal

Ryanair today challenged the European Commission’s refusal to allow the low-cost airline to buy the entire Aer Lingus share capital.

Lawyers were in court in Luxembourg in the latest legal wrangle between Ryanair and Brussels.

And tomorrow Aer Lingus itself will be in the same court contesting the Commission’s refusal to force Ryanair to divest itself of its current Aer Lingus stake of nearly 30%.

Eurocrats are caught between the two in a tussle which started when Ryanair bought a 19.16% share in Aer Lingus on the national carrier’s privatisation in 2006.

Soon afterwards, Ryanair launched a public bid for the entire share capital - but the Commission declared the proposed merger illegal under EU competition rules.

By then Ryanair’s share of Aer Lingus had risen to 29.4%, prompting Aer Lingus to ask the Commission to order Ryanair to sell its shareholding.

The Commission rejected the request on the grounds that it has no power under the EU rules to make such an order against a minority shareholder which does not have a controlling power in Aer Lingus.

Today it was the turn of Ryanair’s lawyers to challenge the Commission’s claim that Ryanair’s acquisition of all the Aer Lingus share capital would be incompatible with EU rules.

Tomorrow lawyers for Aer Lingus will take the floor in the European Court of First Instance, asking the judges to annul the Commission’s decision to refuse to order Ryanair “to divest itself of its shareholding in Aer Lingus”.

The Commission is expected to repeat in court its insistence to Aer Lingus that the Commission has no power under the EU Merger regulation “to order such a divestiture where the intended (entire share capital)acquisition had not been implemented and where Ryanair had only a minority shareholding which did not permit it to exercise ... control over Aer Lingus”.