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Ryanair may be forced to sell Aer Lingus stake Ryanair may be forced to sell Aer Lingus stake
(about 2 hours later)
Budget airline Ryanair may have to sell its entire stake in Aer Lingus after the Competition Commission said it could reduce competition. The budget airline Ryanair may have to sell its entire stake in Aer Lingus after the Competition Commission said it could reduce competition.
The commission said Ryanair's near 30% holding was likely to weaken its main competitor on routes between Britain and the Republic of Ireland.The commission said Ryanair's near 30% holding was likely to weaken its main competitor on routes between Britain and the Republic of Ireland.
The provisional decision will provide yet another obstacle to Ryanair's bid to acquire rival Aer Lingus following the rejection of its third takeover bid by European officials in February.The provisional decision will provide yet another obstacle to Ryanair's bid to acquire rival Aer Lingus following the rejection of its third takeover bid by European officials in February.
Ryanair hit back on Thursday, saying the commission's decision was in breach of EU law because it failed to corroborate the European commission's findings in February that competition between Ryanair and Aer Lingus had "intensified" since 2007. Chief executive Michael O'Leary said: "This provisional decision is bizarre and manifestly wrong." Ryanair hit back on Thursday, saying the commission's decision was in breach of EU law because it failed to corroborate the European commission's findings in February that competition between Ryanair and Aer Lingus had intensified since 2007.
The chief executive, Michael O'Leary, said: "This provisional decision is bizarre and manifestly wrong."
The commission, which is due to publish its final report in July, said Ryanair's near 30% stake meant it could influence commercial decisions made by its main competitor on these routes, and could prove problematic if Aer Lingus wanted to team up with another airline.The commission, which is due to publish its final report in July, said Ryanair's near 30% stake meant it could influence commercial decisions made by its main competitor on these routes, and could prove problematic if Aer Lingus wanted to team up with another airline.
Simon Polito, deputy chairman of the commission, said: "We were particularly concerned about Ryanair's influence over Aer Lingus's ability to be acquired by, merge with, or acquire another airline. We thought it likely that such a combination would be necessary to increase Aer Lingus's scale and achieve synergies to allow it to remain competitive in future."Simon Polito, deputy chairman of the commission, said: "We were particularly concerned about Ryanair's influence over Aer Lingus's ability to be acquired by, merge with, or acquire another airline. We thought it likely that such a combination would be necessary to increase Aer Lingus's scale and achieve synergies to allow it to remain competitive in future."
The commission said that one effective remedy to the "substantial lessening of competition" would be to sell the entire 28.9% stake. It is seeking views on other remedies, such as Ryanair selling part of its stake. The commission said one effective remedy to the "substantial lessening of competition" would be to sell the entire 28.9% stake. It is seeking views on other remedies, such as Ryanair selling part of that stake.
Ryanair argued that the issue should be of no interest to the Competition Commission as Aer Lingus accounts for less than 1% of the UK's total air traffic and therefore the case has "little if any impact on UK consumers".Ryanair argued that the issue should be of no interest to the Competition Commission as Aer Lingus accounts for less than 1% of the UK's total air traffic and therefore the case has "little if any impact on UK consumers".
O'Leary said: "UK taxpayer interests would be better served if the UK Competition Commission investigated (rather than ignored) BA's recent takeovers of BMI, Iberia and Vueling, instead of wasting time pursuing this Irish case, which is of no consequence to UK consumers."O'Leary said: "UK taxpayer interests would be better served if the UK Competition Commission investigated (rather than ignored) BA's recent takeovers of BMI, Iberia and Vueling, instead of wasting time pursuing this Irish case, which is of no consequence to UK consumers."