Airline Saga Takes Off Again

Author:Mr John Kettle, Niall Collins and Anthony Burke
Profession:Mason Hayes & Curran
 
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On 15 June 2012, the UK Office of Fair Trading (the "OFT") announced its decision to refer Ryanair's acquisition of a minority shareholding in Aer Lingus to the UK Competition Commission (the "CC"). The OFT is concerned that Ryanair's shareholding may give it the ability to exercise "material influence" over Aer Lingus and that there is a realistic prospect that its shareholding may result in a substantial lessening of competition on a number of routes between Ireland and the UK. The CC's investigation represents the latest competition law obstacle for Ryanair in its ongoing attempts to take over Aer Lingus.

Background

Ryanair currently owns 29.82 per cent of Aer Lingus. Between 27 September and 5 October 2006, Ryanair acquired 19.2 per cent of the issued share capital of Aer Lingus. Ryanair subsequently made a public bid for the remaining shareholding. In 2007, following a second stage investigation by the European Commission (the "Commission"), the Commission prohibited the proposed concentration on the grounds that it would have harmed consumers by removing competition and creating a monopoly, or a dominant position, on 35 routes operated by the two airlines.

Ryanair applied to the European Court of First Instance seeking an annulment of the Commission's prohibition decision. In 2010, the EU General Court dismissed Ryanair's application. Once the matter had run its course through the EU Courts, the OFT proceeded with its investigation into Ryanair's minority shareholding.

Ryanair appealed to the Competition Appeal Tribunal (the "CAT"), claiming that the OFT was out of time to consider the acquisition. The CAT adjudged the OFT to be in time to investigate the acquisition. Following further appeals by Ryanair, the Court of Appeal of England and Wales endorsed the CAT's ruling and denied Ryanair permission to appeal. Following its initial investigation, the OFT decided to refer the matter for an in-depth investigation by the CC.

OFT concerns

In accordance with the UK Enterprise Act 2002 (the "Enterprise Act"), the OFT has a duty to make a reference to the CC if it believes that it is or may be the case that a "relevant merger situation" has been created, and that it has resulted in, or may be expected to result in, a substantial lessening of competition within any market or markets in the UK.

Ryanair and Aer Lingus are, by far, the two largest scheduled airlines operating between Ireland and the UK accounting, together, for over 80...

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