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Ryanair and Aer Lingus merger consultation on the draft final order

11 November 2013

The Competition Commission (CC) has issued a draft final Order for public consultation setting out how it intends to implement the remedies set out in the Ryanair and Aer Lingus final report.

In its final report published in August, the CC decided that Ryanair’s minority shareholding in Aer Lingus had led or may be expected to lead to a substantial lessening of competition between the airlines on routes between Great Britain and Ireland.

As a result the CC requires Ryanair to sell its minority shareholding 29.8% stake in Aer Lingus down to 5%. As part of the remedy process a Divestiture Trustee should be appointed from the outset to sell the Divestment Shares to suitable purchasers.

The CC recognises that Ryanair has appealed the CC’s decision to the Competition Appeal Tribunal (the Tribunal) and is still awaiting the outcome but does not expect to make the final order seeking to implement the divestiture while the current appeal to the Tribunal is ongoing. However, according to the CC, there is no reason to delay consulting on the draft Final Order, so that the regulator is ready to implement the remedy if the Tribunal upholds the CC decision.

Chairman of the Ryanair/Aer Lingus Inquiry Group Simon Polito, said: ‘We see considerable merit in consulting on the draft Final Order at this stage to work through the detailed implementation of these measures and to avoid unnecessary delays in the event that the Tribunal upholds the CC’s final report. This is in line with our practice in other cases, for example the Payment Protection Insurance market investigation. We are now seeking comments on the draft order whilst awaiting the outcome of the Tribunal decision’.

On 28 August 2013, Governance & Compliance wrote: 

The Competition Commission (CC) has ruled that Ryanair must reduce its 29.8% stake in rival Aer Lingus down to 5%, however, the budget airline has stated that it will appeal the ruling.

The CC has also imposed additional obligations on Ryanair, which include not seeking or accepting board representation or acquiring further shares of Aer Lingus. 

The ruling came as a result of provisional findings released by the CC, which the regulator states found that Ryanair’s minority shareholding has led or may expect to lead to a substantial lessening of competition between the airlines on routes between Great Britain and Ireland. 

With the context that the importance of scale to airlines is clear from evidence of widespread industry consolidation in recent years, the CC’s view is that Aer Lingus’s commercial policy and strategy was likely to be affected by Ryanair’s minority shareholding, in particular because it was likely to impede or prevent Aer Lingus from being acquired by, or combining with another airline. 

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