Antitrust Law Daily Wrap Up, ANTITRUST NEWS: U.K. Competition Commission requires Ryanair to reduce stake in Aer Lingus, (Aug 28, 2013)

By Jeffrey May, J.D.

In a long-running dispute, the United Kingdom Competition Commission (CC) has issued a final report concluding that Ryanair Holdings plc's seven-year-old, 29.8 percent stake in Aer Lingus Group plc threatens competition between the airlines on routes between Great Britain and Ireland. The agency announced today that it will require low cost carrier Ryanair to reduce its interest in Irish flag carrier Aer Lingus to five percent and to refrain from seeking or accepting board representation or acquiring further shares.

According to the CC, Aer Lingus’s commercial policy and strategy was likely to be affected by Ryanair’s minority shareholding. It was likely to impede or prevent Aer Lingus from being acquired by, or combining with, another airline. The CC also expressed concern that Ryanair’s minority shareholding might restrict Aer Lingus’s ability to issue shares and raise capital and to limit Aer Lingus’s ability to manage effectively its portfolio of slots at London’s Heathrow Airport. Ryanair’s shareholding also increased the likelihood of Ryanair mounting further bids for Aer Lingus, it was noted.

Both carriers are major players in the Irish passenger air transport services market. Ryanair recently contemplated acquiring the remainder of Aer Lingus; however, the European Commission in February prohibited the proposed takeover on the basis of the EU Merger Regulation.

Ryanair response. Ryanair has pledged to appeal the CC's determination. Ryanair noted that the CC had rejected its offer to unconditionally sell its minority stake to any other airline that makes a bid for Aer Lingus and obtains acceptances from 50.1% of Aer Lingus’ shareholders. Ryanair also offered to support Aer Lingus’ rights issues and any disposal of Aer Lingus’ Heathrow slots. Ryanair’s Michael O’Leary described the CC report as “bizarre and manifestly wrong but also entirely expected.”

Companies: Ryanair Holdings plc; Aer Lingus Group plc

News: Antitrust