Thursday 21 September 2017

Ryanair's Aer Lingus stake at risk after UK court ruling

Peter Flanagan

Peter Flanagan

RYANAIR could be forced to sell its stake in Aer Lingus after a UK court said regulators there could investigate whether the airline should hold such a large stake in its rival.

In a decision yesterday, the British Court of Appeal ruled the Office of Fair Trading (OFT) could launch a probe into Ryanair's 30pc stake in Aer Lingus and could ultimately force Michael O'Leary's company to sell its stake in the former national carrier.

Appealed

Ryanair immediately appealed yesterday's ruling to the UK Supreme Court, ensuring it would be some time before the OFT is given the final go-ahead to begin its investigation process.

The probe dates back to a 2010 decision by the OFT to investigate whether or not Ryanair should be forced to sell its stake in Aer Lingus after its bid for the carrier was blocked by the European Commission in 2007.

The OFT's original investigation was to decide whether it has jurisdiction over the matter, and if so, whether the Ryanair stake allows it to exercise "material influence" over Aer Lingus.

Under normal takeover rules, a company can be forced to sell its share of a company if it is prohibited from taking over the entire business, especially when that holding is as large as Ryanair's presently is in Aer Lingus.

That decision would normally be made within four months of the takeover bid failing, however.

In a statement issued yesterday, Aer Lingus boss Christoph Mueller welcomed the decision, calling it "unacceptable" that its "principle competitor" should still hold Aer Lingus shares.

"This intolerable situation cannot be allowed to continue . . . (the OFT must) investigate the anti-competitive effects of Ryanair's minority shareholding in Aer Lingus," said the company's chief executive in his statement.

Ryanair criticised the ruling and said the OFT is "out of time" to investigate Ryanair's stake in the former State-owned airline.

"In June 2007, the European Commission confirmed that Ryanair could not be forced to sell its minority stake, since Ryanair did not have de facto or de jure control of Aer Lingus," the company said.

Ryanair fell 0.97pc to €4 and Aer Lingus slid 1.5pc to 97c in trading on the Dublin stock market following the court decision.

Irish Independent

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