Regulators could force Ryanair to sell its entire stake in rival Aer Lingus

Ryanair could be forced to sell its entire stake in Aer Lingus after regulators today said the holding could damage competition on fares and routes.

Ryanair could be forced to sell its entire stake in Aer Lingus after regulators today said the holding could damage competition on fares and routes.

But the budget carrier’s chief executive Michael O’Leary immediately spat back that the Competition Commission’s provisional decision on its near-30 per cent stake in Aer Lingus was “bizarre and manifestly wrong” and “yet another enormous waste of UK taxpayer resources on a case which has little if any impact on UK consumers”.

The CC said Ryanair’s 29.8% slice of its Irish rival could hit competition on routes between the UK and Ireland and warned: “the shareholding gives Ryanair the ability to influence the commercial policy and strategy of Aer Lingus, its main competitor on these routes.

“It allows it to block special resolutions by Aer Lingus and to hinder its plans to issue shares and raise capital; it could also prevent its rival from disposing of its valuable slots at Heathrow airport.”

But since the CC started looking at Ryanair’s stake in June 2012, the carrier has made its third bid for Aer Lingus, a €694 million (£594 million) offer that was blocked by the European Commission in February. Today the budget airline used the findings of that case to condemn the UK regulator’s latest decision.

Ryanair said the CC’s decision was in breach of EU law, with O’Leary claiming: “In February the European Commission found that competition between Ryanair and Aer Lingus has ‘intensified’ since 2007. [So this] decision by the CC will clearly breach the EU Treaty duty of sincere cooperation between the EU and the UK. Ryanair therefore calls on the Competition Commission to abide by this overriding legal principle and end this bogus and baseless enquiry into a six-and-a-half-year-old minority shareholding between two Irish airlines.”

Ryanair said the idea that its stake held back Aer Lingus’s ability to attract other airlines was disproved by Etihad’s £12 million purchase of a 3 per cent stake last May. O’Leary added: “Aer Lingus accounts for less than 1 per cent of the UK’s total air traffic… [This case] is yet another enormous waste of UK taxpayer resources on a case which has little if any impact on UK consumers.”

Ryanair said it will take the case to the UK Competition Appeals Tribunal if the CC confirmed its decision in July, and “thereafter, if necessary, to the Court of Appeal”.

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Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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