Member Article

CMA to go ahead with Aer Lingus inquiry despite Ryanair objection

The Competition and Markets Authority (CMA) has provisionally decided that it will go ahead with remedies in the Ryanair/Aer Lingus inquiry.

In February, Ryanair requested that the CMA re-examine its decision to require it to sell its 29.8% stake in Aer Lingus Group plc (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that IAG’s takeover proposed bid for Aer Lingus and the period of time that has elapsed since the decision was originally made by the Competition Commission in its report in August 2013, constitute ‘a material change of circumstances’ and, as a result, the CMA no longer had the power 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 considering this issue has provisionally decided that there is no material change in circumstances or special reason not to proceed to implement the remedies set out in the report.

The CMA will now consider further responses before taking its final decision.

Simon Polito, chairman of the Ryanair/Aer Lingus inquiry group, said: “Our provisional view is that the circumstances around IAG’s proposed bid are consistent with the findings in our report.

“As the decisions in our report made clear, without any action to reduce its shareholding, Ryanair would remain a significant hurdle to any merger because it has an incentive as a competitor of Aer Lingus and, by its shareholding, the ability to hinder Aer Lingus from implementing its own commercial strategy.

“We have carefully considered submissions from Ryanair and others and taken into account all the relevant circumstances, including the fact that the IAG bid is conditional on receiving an irrevocable commitment from Ryanair. 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.”

Ryanair’s Robin Kiely said: “The CMA’s provisional decision on Ryanair’s request for a review of its Final Report (ordering a divestment of Ryanair’s 29.8% minority stake in Aer Lingus) is manifestly wrong. Given that the only basis for the CMA’s original divestment ruling was that Ryanair’s minority shareholding was or would prevent other airlines making an offer for Aer Lingus, 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. The CMA speculated in its August 2013 Final Report that Ryanair’s 29.8% shareholding would deter other airlines from merging with or bidding for Aer Lingus. Clearly, IAG’s recent offers prove that the CMA’s findings were wrong, that circumstances have changed, and that the divestment remedy must be revoked in light of this compelling evidence.

“Ahead of the CMA’s final decision (expected in May), Ryanair will now once again explain to the CMA why the Final Report, which was based on bogus theories, secretive/redacted “evidence” and unsubstantiated assumptions, must now be amended, to revoke the divestment order. In parallel, Ryanair’s lawyers are currently seeking permission to appeal the Final Report to the UK Supreme Court.”

This was posted in Bdaily's Members' News section by Ellen Forster .