Ryanair required to sell down shareholding in Aer Lingus to 5%

The UK Competition Commission (UKCC) has told Ryanair to reduce its 29.8% stake in Aer Lingus to 5%.

This will be accompanied by obligations on Ryanair not to seek or accept board representation or acquire further shares.

Ryanair boss Michael O’Leary has said he expected a negative result from the commission.

Before the UKCC formally released its report this morning, Mr O’Leary prepared a statement saying he would challenge a negative result which said that his 29.8% 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”.

The no-frills airline said the claim was baseless and was “manifestly disproven by seven years of evidence”.

In their criticism of the UK’s regulatory body, Ryanair cited a recent European Commission ruling that competition between Ryanair and Aer Lingus has “intensified” since 2007.

Describing the UKCC’s ruling as manifestly unjust, Ryanair said it will appeal the commission’s decision to the UK Competition Appeal Tribunal.

Aer Lingus has welcomed this morning’s ruling by the UK Competition Commission. Colm Barrington, Chairman of Aer Lingus, said:

“Today’s final report by the UK Competition Commission confirms that the minority shareholding in Aer Lingus held by our closest competitor, is anti-competitive and contrary to the interests of the approximately 14 million passengers who fly on routes between the island of Ireland and Great Britain. The Competition Commission should be commended on its thorough investigation and we look forward to the implementation of its findings.

It was unacceptable that our principal competitor was allowed to remain on our share register with a shareholding of 29.82% and interfere with our business despite the European Commission blocking both Ryanair’s first hostile takeover attempt six years ago and its most recent hostile takeover attempt earlier this year.

Aer Lingus remains focussed on financial and operational performance and our recent results for the first half of 2013 demonstrate that Aer Lingus continues to deliver an excellent overall performance to the benefit of its shareholders. The implementation of the Competition Commission’s decision that Ryanair must reduce its anti-competitive shareholding will position Aer Lingus for future growth and opportunities which will make it an even stronger competitor in the market.”