Ryanair to appeal if ordered to sell stake in rival

Ryanair says it will appeal if it ordered by the Competition Commission to sell its near 30% stake in rival Irish carrier Aer Lingus.

In its provisional ruling published today, the regulator said the stake, built up during a failed takeover bid for Aer Lingus in 2006, enabled Ryanair to influence the commercial policy and strategy of the former Irish flag carrier.

The Competition Commission also said Ryanair’s holding prevented Aer Lingus from merging with another airline and could prevent it from issuing new shares or raising capital.

"Our provisional view is that Ryanair’s shareholding is likely to weaken its main competitor on routes between Great Britain and the Republic of Ireland," said Simon Polito, deputy chairman of the Competition Commission.

"Whilst not giving it control over the day to day running of its rival, Ryanair’s minority shareholding can influence the major strategic decisions that could be crucial to Aer Lingus’s future as a competitive airline on these and other routes."

The regulator, which began investgating the stake last year before Ryanair made a third bid for Aer Lingus (later blocked by the European Commission on competition grounds) will publish its full ruling in July.

Ryanair claimed the Competition Commission’s provisional findings into its 29.8% stake in Aer Lingus contradicted a ruling by the EC in February that competition between the two airlines had intensified since 2007.

It said the Competition Commision’s provisional finding was in "breach of EU law" and it would appeal any final ruling.

"This provisional decision by the UK Competition Commission is bizarre and manifestly wrong," said Ryanair chief executive Michael O’Leary.

"The Competition Comission’s finding that Ryanair’s shareholding obstructs Aer Lingus’ ability to attract other airlines was disproved by Etihad’s purchase of a 3% stake and the evidence submitted by other large EU airlines, which confirmed that Ryanair’s shareholding was not a barrier to other airlines acquiring a stake in Aer Lingus.

"In February 2013 the European Commission found that competition between Ryanair and Aer Lingus has "intensified" since 2007.  A decision by the Competition Commission that Ryanair’s 29.8% stake in Aer Lingus may lead to a lessening of competition 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 6½ year old minority shareholding between two Irish airlines."