Victoria Moores
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Ryanair Boeing 737-800
By Rob Finlayson
Ryanair has vowed to fight a UK Competition Commission (UKCC) ruling instructing it to sell its 29.8% Aer Lingus stake down to 5%.
“After careful consideration we confirmed our provisional view that Ryanair’s minority shareholding has resulted, or may be expected to result, in a substantial lessening of competition between the airlines,” said UKCC deputy chairman Simon Polito, who has led the Ryanair/Aer Lingus Inquiry Group.
Polito said this decision, based on competitive concerns on routes between Great Britain and Ireland, was consistent with the European Commission (EC) blocking Ryanair’s three Aer Lingus takeover attempts.
“We consider that there is a tension between Ryanair’s position as a competitor and its position as Aer Lingus’ largest shareholder, and that Ryanair has an incentive to weaken its rival’s effectiveness as a competitor. Ryanair’s minority shareholding affects Aer Lingus’ commercial policy and strategy in various ways that could be crucial to Aer Lingus’ future as a competitive airline,” Polito said, reiterating concerns that the shareholding could hinder Aer Lingus’ chances of consolidating with another carrier.
Ryanair offered to sell its Aer Lingus stake to any carrier that acquires more than 50.1% of Aer Lingus’ shares to address this concern, but Polito rejected this and other remedies saying it was “inherently difficult to design remedies that would cater for all eventualities.”
The UKCC has therefore ordered the partial divestment, which will be overseen by an independent divestiture trustee rather than Ryanair itself. In addition, Ryanair has been blocked from taking any seats on Aer Lingus’ board and from re-acquiring the Aer Lingus shares unless the European Commission gives the green light for a takeover.
Aer Lingus chairman Colm Barrington welcomed the decision, saying: “It was unacceptable that our principal competitor was allowed to remain on our share register with a shareholding of 29.82% and interfere with our business despite the European Commission blocking both Ryanair’s first hostile takeover attempt six years ago and its most recent hostile takeover attempt earlier this year.”
However, Ryanair CEO Michael O’Leary vowed to challenge the findings of the investigation, which he described as “a corrupt and politically biased charade.”
“In February 2013, the European Commission found that competition between Ryanair and Aer Lingus has ‘intensified’ since 2007. The UKCC’s failure to accept this finding is a breach of its legal duty of sincere cooperation between the UK and the EU competition authorities and will form the basis for Ryanair’s appeal against this bizarre and manifestly unsound ruling, which our lawyers will lodge with the Competition Appeal Tribunal in the coming weeks,” O’Leary said.
He also said the UKCC “inexplicably dismissed” its remedies package, which included the offer to sell its Aer Lingus stake to another airline, as well as supporting any rights issues and any disposal of Aer Lingus’ London Heathrow Airport slots.
“While Ryanair is one of the UK’s largest airlines, Aer Lingus has a tiny presence in the UK, serving just six routes to the Republic of Ireland, a traffic base that has declined over the past three years and now accounts for less than 1% of all UK air traffic. This case, involving two Irish airlines where one (Aer Lingus) accounts for less than 1% of the UK’s total air traffic and concerns very few UK consumers, is yet another enormous waste of UK taxpayer resources from a body which took no action whatsoever when the two main UK airlines (BA and bmi) merged. It would appear to be a case of one rule for the UK airlines but an invented set of rules for two Irish airlines,” O’Leary said.
Ryanair added the UKCC cannot enforce the ruling until it has completed its appeal against the EC over the blocking of its latest Aer Lingus takeover attempt.
via Ryanair ordered to sell Aer Lingus stake down to 5% | Finance & Data content from ATWOnline.
