The Competition and Markets Authority issues “final order” demanding Ryanair sell its Aer Lingus holding to British Airways parent IAG
The Competition and Markets Authority has issued a final order that Ryanair sell down its stake in Aer Lingus, reducing its holding from 29.8 per cent to five per cent – but Ryanair has hit back at what it calls a "ridiculous" ruling.
It follows a decision by the Irish government last month to sell its 25 per cent stake in the national airline to British Airways parent company IAG, which is attempting to buy the carrier for €1.35bn.
That bid is dependent on securing Ryanair's agreement to sell its holding, but so far Ryanair boss Michael O'Leary has resisted.
Simon Polito, chairman of the CMA's Ryanair/Aer Lingus inquiry group, said: “Ryanair can decide whether a bid for its major competitor on UK/Irish routes succeeds or fails. It’s not good for competition when one company holds such an influence over the future of one of its major competitors.
“Although at this point Ryanair has yet to decide whether to sell its shares to IAG, we need to ensure that, whatever happens in relation to this particular transaction, Ryanair’s ability to hold sway over Aer Lingus is removed.
“It is clear that the timing of IAG’s bid has been influenced by the prospect of Ryanair being forced to sell the majority of its shareholding. IAG has said that it would not be interested in acquiring any airline with a significant minority investor. The conditional nature of IAG’s bid is consistent with this and our original assessment that Ryanair’s presence was likely to deter other airlines from entering into, pursuing or concluding combinations with Aer Lingus.
“In our view the circumstances of the IAG bid and other issues raised by Ryanair do not amount to a material change in circumstances or special reason not to take action to remedy the substantial lessening of competition identified in our 2013 report.”
Ryanair's Robin Kiely said the airline would appeal the CMA's "ridiculous" ruling, saying it was "manifestly wrong and flies in the face of the current IAG offer for Aer Lingus".
He added: "When the only basis for the CMA's original divestment ruling was that Ryanair's minority shareholding was or would prevent other airlines making an offer for Aer Lingus, the recent offers by IAG for Aer Lingus totally disprove and undermine the bogus theories and invented evidence on which the CMA based its untenable divestment ruling.
"Simon Polito and his group were unable to establish any consumer harm arising from Ryanair's minority stake in Aer Lingus and instead resorted to speculating that Ryanair's 29.8 per cent shareholding would deter other airlines from merging with or bidding for Aer Lingus.
"IAG's current offer for Aer Lingus proves that the the CMA's invented theory of harm was hopelessly wrong, and is now unsustainable given that the circumstances have manifestly changed, and accordingly the divestment remedy must be revoked in light of this compelling evidence."
Ryanair has instructed its lawyers to appeal the "factually unsustainable and legally flawed" ruling as the IAG offer for Aer Lingus proceeds.
In February Ryanair took its legal challenge over the CMA's ruling to the UK's Supreme Court, arguing that it was a human rights issue.
The report was “based on fanciful hypotheses, secretive 'evidence' and unsubstantiated assumptions”, the company said at the time.
But the CMA has rejected this, saying “there had been no material change in circumstances or special reason not to proceed to implement the remedies set out in the report.”