Ryanair look set to be forced to sell their Aer Lingus stake

Ryanair may soon be forced to sell their stake in Aer Lingus as the result of pressure put in place by the Competition Commission. The Commission is concerned that allowing Ryanair to get more than a 30% stake in their rival will weaken the competition.

As part of a preliminary ruling the commission explained that they are concerned that the 30% holding by Ryanair would weaken rivals on the direct flight routes between the Republic of Ireland and Britain. The decision is one more hurdle to Ryanair’s stab at purchasing Aer Lingus after its third takeover bid was rejected in February by European officials.

On Thursday Ryanair spoke out stating that the commission has violated EU law due to the fact that it did not first corroborate with the February findings of the European commission that competition between Ryanair and Aer Lingus had grown stronger in the past six years.

Michael O’Leary, the chief executive of Ryanair, stated that the provisional decision is obviously wrong and is very bizarre to have been announced at all. If the final decision in July is rendered against Ryanair then the company plans to take the commission’s decision before the UK Competition Appeals Tribunal.

Ryanair first purchased stake in Aer Lingus back in 2006 and soon launched a bid to purchase the entire company but was blocked by the EC. Since then the company has been stuck in appeals and investigations with the EC, the Competition Commission, and the Office of Fair Trading.

The Competition Commission stated this week that the minority stake owned by Ryanair would mean that it would be able to influence the strategy of its competitors therefore decreasing the competition of the air route. It could also become a problem if Aer Lingus were to raise capital, team with another airline, or sell of its slots at Heathrow Airport in London.