Ryanair fails to clip UK Competition Commission’s wings

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Ryanair's latest bid to block an investigation into its 29.8% shareholding in Aer Lingus by the UK's Competition Commission (CC) has failed.

The low-cost carrier had complained to the Competition Appeals Tribunal (CAT) that the CC lacked jurisdiction in its two-year-old investigation - originally filed by the Office of Fair Trading (OFT) - because of a newly launched, separate probe by the European Commission (EC).

In June, the EC was tasked with considering Ryanair's complete takeover bid for the Irish flag carrier - the third such attempt in six years - whereas the CC had merely been investigating its existing minority stake in Aer Lingus.

The failed CAT appeal was just the latest in a long line of attempts by the low-cost carrier to impede regulatory scrutiny of its relationship with Aer Lingus.

Ryanair had previously sought to block the OFT's referral of the issue to the CC in January 2011 via CAT and again in September 2011 via the Court of Appeal, arguing in both filings that the investigation was "out of time". When the latter complaint was thrown out in May 2012, it unsuccessfully attempted to file a higher appeal at the Supreme Court.

The latest ruling by CAT states: "Ryanair alleged that because it had also made a public bid for the entirety of the share capital in Aer Lingus, which is presently under consideration by the European Commission, the CC's decision to continue the investigation infringed either the exclusive jurisdiction of the European Commission ... and/or the duty of sincere cooperation ... of the Treaty on European Union."

CAT "unanimously dismissed the application," the judgement reads, adding that the EC Merger Regulation cited by Ryanair did not apply to the case because its minority shareholding "did not amount to a concentration with a [European] Community dimension".

The British CC and European EC probes will now proceed in parallel, the tribunal confirms, though it notes that the former should "avoid taking any decision running counter to" the findings of the latter.

Prior to its referral of the matter to the CC, the OFT had identified three competitive concerns arising from Ryanair's 29.8% minority stake in its rival. These were the ability to weaken Aer Lingus through the use of voting power at shareholder meetings; the potential to discourage foreign investment in the Irish flag carrier; and the reduction of incentives for the two rivals to proactively compete on pricing.

Aer Lingus and Ryanair collectively carry more than 80% of the 370,000 scheduled air passengers travelling between Ireland and the UK every month, the OFT noted.