Ryanair boss Michael O’Leary has pledged to fight a “bizarre and manifestly wrong” ruling requiring his airline to sell the majority of its 30% stake in rival Irish carrier Aer Lingus.
Regulators at the Competition Commission said Ryanair’s 29.82% holding weakened its main competitor, could prevent it combining with another airline to grow its scale, and damaged competition on routes between the UK and Ireland.
They ordered Ryanair to cut its interest in Aer Lingus valued at around £225 million at current market rates to just 5%, following an investigation which has lasted more than a year.
But Mr O’Leary, whose firm has also seen repeated attempts to takeover Aer Lingus blocked by the European Commission, immediately announced that it would be appealing the findings.
He said the decision had been expected, and claimed the UKCC had made its mind up in advance.
“This prejudicial approach to an Irish airline is very disturbing, coming from an English Government body that regards itself a model competition authority,” he said, citing already-proposed remedies to mitigate any anti-competitive effects.
“It would appear to be a case of one rule for the UK airlines but an invented set of rules for two Irish airlines,” he added.
Aer Lingus chairman Colm Barrington said the ruling showed the actions of its rival were against the interests of the 14 million passengers who fly between the UK and Republic of Ireland each year.
He said the Irish flag-carrier, in which the Irish Government also holds a minority stake, was now in a position to become a stronger competitor in the marketplace.
“It was unacceptable that our principal competitor was allowed to remain on our share register … 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,” he said.
The competition watchdog has also ordered Ryanair not to seek or accept board representation or acquire further shares in Aer Lingus.
Its ruling, which confirmed a provisional decision earlier this year, also highlighted concerns that the Ryanair stake was likely to affect Aer Lingus’s commercial strategy by allowing Mr O’Leary’s company to block special resolutions, restrict Aer Lingus’s ability to issue shares and raise capital, and limit Aer Lingus’s ability to effectively manage its portfolio of Heathrow slots.
Simon Polito, the commission’s deputy chairman and chairman of the inquiry group, said there remained intense competition between the two airlines on UK-Ireland routes.
“Ryanair proposed various remedies to us in an attempt to address our specific concerns. In a dynamic and uncertain sector such as the airline industry, however, it is inherently difficult to design remedies that would cater for all eventualities,” he said.