Ryanair CEO Michael O’Leary has tried to buy Aer Lingus on two prior occasions. His attempt in 2013 was blocked by the European Commission, which concluded that the merger would have harmed consumers by creating a monopoly on the 46 routes where the two companies competed against each other.
Soon after, the Competition Commission ordered Ryanair to sell down its stake in Aer Lingus to five per cent.
The watchdog claimed that because Ryanair was such a big shareholder in Aer Lingus, it was likely to deter other airlines from making a bid to buy the company. In February 2015, Ryanair requested that the CMA re-examine its decision. However, the CMA has recently made its final ruling, stating that it is sticking with its previous verdict. This marks Ryanair’s ninth consecutive court defeat when it comes to its stake in Aer Lingus.
The move comes after the Irish government agreed to sell its 25 per cent stake in Aer Lingus to British Airways owner International Airlines Group (IAG). According to Simon Polito, chairman of the Ryanair/Aer Lingus inquiry group, the CMA’s ruling on IAG’s bid for Aer Lingus was an important part of the body’s decision to require Ryanair to reduce its shareholding.
He added: “Although at this point Ryanair has yet to decide whether to sell its shares to IAG, we need to ensure that, whatever happens in relation to this particular transaction, Ryanair’s ability to hold sway over Aer Lingus is removed.”
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Ryanair suggested the fact that IAG had made a bid on Aer Lingus negates the CMA’s decision to make it cut its stake in its smaller rival. Polito, however, explained that IAG would be reluctant to acquire an airline with a significant minority investor.
“The conditional nature of IAG’s bid is consistent with this and the CMA’s original assessment that Ryanair’s presence was likely to deter other airlines from entering into, pursuing or concluding combinations with Aer Lingus,” he said.
The CMA said it was not good for competition when one airline could decide if a bid for its major competitor succeeded or failed.
Ryanair said the decision was “manifestly wrong”. In a statement, the company suggested the decision was “ridiculous” and said that it would appeal the ruling.
When 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 evidence on which the CMA based its divestment ruling, the statement said.
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