UK’s OFT To Probe Ryanair’s Aer Lingus Stake
Published: May 23, 2012
Ryanair faced increased pressure to sell its minority stake in rival Aer Lingus at a loss after a British court on Tuesday gave the competition regulator the green light to investigate whether the stake is curbing competition.
Britain’s Office of Fair Trading last year launched a probe into whether Ryanair’s 29.8 percent holding in Aer Lingus gave it the power to influence the former state carrier’s commercial policy and hampered competition.
The Court of Appeal on Tuesday rejected an attempt by Ryanair to challenge the OFT move, saying the investigation was “in time” despite the fact that Ryanair began to build up its stake in 2006, the two airlines said.
Ryanair said it would appeal the decision to the supreme court.
Ryanair mounted a public takeover for all of Aer Lingus in October 2006, but the European Commission investigated the bid and decided to prohibit it in June 2007.
The commission ruled, however, that Ryanair could not be forced to sell its stake, since Ryanair did not have de facto or de jure control of Aer Lingus.
The OFT says it is investigating whether the stake would harm UK consumers as both airlines have significant operations in the United Kingdom.
It does not have the power to force Ryanair to divest its stake, but it can refer its decision to the competition commission, which can order divestments.
Aer Lingus’ share price is less than half the level it was when Ryanair began building up its stake in 2006 and would likely face a heavy loss if it sold its stake.
Aer Lingus welcomed Tuesday’s court of appeal decision, saying Ryanair’s stake in a key competitor was “contrary to the interests of consumers and the majority of our shareholders.”