Competition – news story

CMA confirms requirement for Ryanair to reduce Aer Lingus shareholding

The CMA has decided that there is no material change in circumstances or special reason for it not to require Ryanair to reduce its shareholding in Aer Lingus to 5%.

This follows the Competition and Markets Authority’s (CMA) provisional decision in April 2015.

The CMA has also today published the final order requiring Ryanair Holdings plc (Ryanair) to sell its 29.8% stake in Aer Lingus Group plc (Aer Lingus) down to 5%.

In the light of IAG’s current bid for Aer Lingus, the CMA will ensure that implementation of this remedy interacts effectively with the bid process and the assessment of the bid by the European Commission.

Simon Polito, Chairman of the Ryanair/Aer Lingus inquiry group, said:

IAG’s bid for Aer Lingus is 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.

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.

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.

We will liaise closely with other authorities to ensure that our requirement for Ryanair to reduce its stake in Aer Lingus works effectively alongside shareholders’ consideration of the IAG bid and assessment of the bid by the European Commission.

In February 2015, Ryanair had requested that the CMA re-examine its decision to require it to sell its 29.8% stake in Aer Lingus down to 5%. This followed a judgment from the Court of Appeal dismissing Ryanair’s legal challenge to this decision.

Ryanair argued in particular that IAG’s proposed bid for Aer Lingus and the period of time that has elapsed since the decision was originally made by the Competition Commission in its report in August 2013, constituted a material change of circumstances and that the CMA was no longer entitled to impose a divestment remedy on Ryanair.

After receiving that request, the CMA invited submissions from interested parties. After considering responses from Aer Lingus, IAG and the Irish government – and further submissions from Ryanair – the inquiry group of independent CMA panel members provisionally decided that there had been no material change in circumstances or special reason not to proceed to implement the remedies set out in the report. Following that provisional decision, which was published in April 2015, the CMA considered further submissions before coming to its final decision.

The decision document, final order and all information on the Ryanair/Aer Lingus inquiry can be found on the case page.