Ryanair to contest CMA order to cut its stake in Aer Lingus
- Credit: PA
Dublin-based budget airline Ryanair has vowed to fight a ruling by the UK’s competition authority that it must slash its stake in Irish rival Aer Lingus –The Competition and Markets Authority (CMA) today issued a “final order” to the no-frills carrier to slash its 29.8% stake in Aer Lingus to just 5%.
The CMA claims the holding is anti-competitive and allows Ryanair to “hold sway” over the future of Aer Lingus, which is currently the subject of a 1.4billion euro (£1bn) takeover approach by British Airways parent group International Airlines Group (IAG).
Ryanair boss Michael O’Leary said the fact that IAG had already bid for the Irish state’s 25% shareholding in Ryanair – a move backed by the Dublin government two weeks ago – left the CMS “attempting to defend the indefensible”.
“The sole basis for their 2013 divestment decision was that Ryanair’s minority stake was or would prevent any other airline making a bid for or acquiring control of Aer Lingus,” said Mr O’Leary.
“This bid process – which the CMA contended ‘could not take place’ – is now in fact taking place, but Mr (Simon) Polito and the CMA have again moved the goal posts to argue that Ryanair can somehow block an IAG bid for Aer Lingus from succeeding when it is patently clear that as a 29% shareholder, Ryanair cannot prevent IAG acquiring control of Aer Lingus.”
However, IAG’s bid, tabled on May 26, is conditional upon it receiving acceptances in respect of at leat 90% of Aer Lingus shares and Mr Polito, who headed the CMA’s investigation into the shareholding, said the IAG bid was dependent on securing Ryanair’s agreement to sell its shareholding.
“This recent development illustrates that Ryanair can decide whether a bid for its major competitor on UK/Irish routes succeeds or fails,” he said.
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“This concern was an important part of our decision to require Ryanair to reduce its shareholding. It’s not good for competition when one company holds such an influence over the future of one of its major competitors.”
He added: “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.”
Mr Polito said the CMA would work closely with other authorities to ensure Ryanair reduced its stake in Aer Lingus.
But Ryanair, which is the largester operator out of Stansted Airport, rubbished the CMA’s finding as “ridiculous” and vowed to mount a two-pronged appeal against the authority.
Robin Kiely, Ryanair spokesman, said the airline has instructed lawyers to take its case to the Competition Appeal Tribunal as well as the UK Supreme Court.
“Today’s CMA decision rejecting Ryanair’s request to review its order to divest Ryanair’s 29.8% minority stake in Aer Lingus is manifestly wrong and flies in the face of the current IAG offer for Aer Lingus,” he said.
Mr Kiely claimed the authority was unable to establish any “consumer harm” arising from Ryanair’s minority stake in Aer Lingus and instead resorted to “speculating” that would deter other airlines from merging with or bidding for Aer Lingus.
“IAG’s current offer for Aer Lingus proves that 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,” he said.
Last month, Ireland’s parliament voted in favour of selling off the State’s 25% share in Aer Lingus, clearing another hurdle for the controversial takeover deal which has been trenchantly attacked by Opposition parties.
Aer Lingus said it has noted the CMA’s latest decision.
Ryanair said the ruling had not changed its position in relation to the IAG takeover bid, repeating that it has not yet received any formal bid for its shares and would consider it in the best interests of its shareholders.