Ryanair will fight order to slash its Aer Lingus stake
The UK's Competition and Markets Authority (CMA) yesterday said it has provisionally upheld a 2013 ruling it made ordering Ryanair to cut its stake in Aer Lingus to no more than 5pc.
The CMA's predecessor made the 2013 order on foot of competition concerns, and also because it believed that Ryanair's presence as a significant minority shareholder in Aer Lingus might put other airlines off making a takeover bid for the smaller airline.
In February, the UK Court of Appeal upheld the CMA decision, but last month Ryanair asked the competition authority to reassess its 2013 order because, the airline claimed, there had been a material change in circumstances in that IAG had made a takeover approach for Aer Lingus.
Ryanair has claimed the fact IAG has made an approach to buy Aer Lingus negates a core plank of the CMA reasoning for forcing Ryanair to reduce its stake in its smaller rival. But in a provisional decision made yesterday, the CMA said it was upholding its 2013 order and the plan to make Ryanair sell most of its Aer Lingus shares.
"We have carefully considered submissions from Ryanair and others and taken into account all relevant circumstances, including the fact that the IAG bid is conditional on receiving an irrevocable commitment from Ryanair," said Simon Polito, chairman of the CMA Ryanair/Aer Lingus inquiry group.
"Having done so, our provisional view is that neither recent events nor the time that has passed since our final report are reasons not to implement the divestment remedy," he said.
Ryanair criticised the decision as "manifestly wrong" and will also try to reverse the UK Court of Appeal decision at the UK Supreme Court.
"The recent offers by IAG for Aer Lingus totally disprove and undermine the bogus theories and unsubstantiated evidence on which the CMA's final report was based," said Ryanair spokesman Robin Kiely.
Both Aer Lingus and the Department of Transport urged the CMA last month to proceed with its order forcing Ryanair to cut its stake.
Aer Lingus declined to comment yesterday.
But Ryanair insisted that IAG has made its approach to buy Aer Lingus for reasons including the fact that a long-running pensions problem at the airline was being resolved.
"This provides yet more evidence that the willingness of airlines to consider a merger with Aer Lingus is determined by factors that are completely distinct from, and entirely unrelated to, Ryanair's shareholding," Ryanair said in a document filed with the CMA.
The CMA will now solicit further comments from interested parties before making its final decision on whether a change of material circumstances exist. Those submissions are due by May 11.
The Government is due to decide in the next couple of weeks whether or not it will sell the State's 25.1pc stake in Aer Lingus to IAG.
It's anticipated that the decision could be made prior to the annual general meeting of Aer Lingus, which is on May 1.
IAG, which owns British Airways, also wants an irrevocable commitment from Ryanair that it will sell its Aer Lingus shares to IAG before it makes a formal offer to buy Aer Lingus.