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UK Office of Fair Trading investigates Ryanair stake in Aer Lingus

1-Nov-2010 1:51 PM

UK Office of Fair Trading announced (29-Oct-2010) it has launched an investigation into Ryanair’s 29.82% shareholding in Aer Lingus to determine whether the airline has exerted "material influence" over the Aer Lingus’ strategy and if the shareholding has resulted in a substantial lessening of competition (BBC News/Irish Independent/Telegraph/Reuters, 29-Oct-2010). Despite Ryanair having held the stake for four years, the OFT’s decision follows a European General Court announcement that the European Commission cannot force Ryanair to divest its minority shareholding as the stake does not provide it with "decisive influence" over the commercial policy of Aer Lingus. However, the OFT has a lower threshold and the authority to force Ryanair to sell down some, or all, of its stake if it believes Ryanair has “material influence” over Aer Lingus’ commercial policy. Both airlines operate extensively between Ireland and the UK and if the OFT believes there is "a substantial lessening" of competition within any market or markets in the UK, it will refer it to the UK Competition Commission. The OFT will make its decision by Christmas on whether to refer the case to the Competition Commission.

Ryanair confirmed (29-Oct-2010) it has been contacted over the past 4 weeks by the UK Office of Fair Trading (OFT) in relation to Ryanair’s minority stake in Aer Lingus, and whether this gives Ryanair any material influence or control over Aer Lingus’ policy. The LCC stated it has made the following points to the OFT: [more]

  1. Even if the OFT had jurisdiction in this case back in June 2007, the OFT is now legally out of time and no longer has jurisdiction;
  2. Both the EU Commission and (under appeal by Aer Lingus) the European Courts have already carried out detailed and extensive investigations into Ryanair’s minority shareholding, and have conclusively ruled that Ryanair lacks influence or control over Aer Lingus;
  3. This out of time query by the OFT, into a failed 2006 merger offer, between two non-UK companies (where the issue of influence and control has already been investigated and dismissed by the EU Commission and the EU Courts), sets an alarming precedent for all current and future mergers involving non UK companies.

Ryanair: “We are surprised at this OFT query into a failed merger offer between two non UK companies, some four years after the offer, and some three years after the EU Commission has investigated and confirmed that Ryanair has no de jure or de facto control over Aer Lingus. We have asked our lawyers to liaise directly with the OFT to bring this out of time and unnecessary query to an early conclusion. Ryanair also calls on the OFT to close these queries without delay, and without wasting time or resources on what is clearly a non-existent issue over which the OFT clearly no longer has any jurisdiction.” Michael O'Leary, CEO. Source: Ryanair, 29-Oct-2010.