Ryanair fails to overturn ruling demanding it cut shareholding in Aer Lingus

Ryanair may have just one last avenue of appeal open to it before the UK competition regulator forces the airline to cut its near 30 per cent stake in rival Aer Lingus to a maximum of 5 per cent.

The Competition Appeal Tribunal (CAT) yesterday dismissed Ryanair's challenge to last year's ruling by the UK's Competition Commission that its 29.8 per cent share in Aer Lingus gave it material influence over the smaller airline and should be cut to no more than 5 per cent .

Ryanair responded by saying it had instructed its lawyers to challenge this ruling in the UK Court of Appeal. However, Stephen Smith, competition law partner at London-based solicitor's firm Reynolds Porter Chamberlain, argued yesterday it is not certain it will get a hearing: "From what I have seen, I certainly would not say that it was a slam dunk."

End of litigation?
Mr Smith warned the court could refuse Ryanair leave to appeal, which would spell the end of any litigation and open the door for the UK's mergers watchdog to make a final order forcing the sale of most of Ryanair's holding in Aer Lingus.

“The commission has already begun consulting on what that final order will look like,” he said, adding it will be able to move quickly should Ryanair fail to get past the Court of Appeal.

Mr Smith explained an appeal can only go ahead if the court finds there is a point of law to be decided and there is a likelihood the case will succeed.

He said the law dealing with most issues on which Ryanair based its original appeal is well-established, but suggested the question of whether or not the Competition Commission had jurisdiction over an Irish-based firm could provide grounds for a challenge.

The UK Court of Appeal recently heard a case involving Dulux paints manufacturer, Akzo Novel, that dealt with the same issue and judgment is still pending. During the hearing last month, Ryanair indicated to the CAT it could raise this issue in the Court of Appeal.

The airline is also appealing an EU ruling that halted its third bid to buy Aer Lingus to the European Court of Justice. If this were to succeed it would allow it to make a fourth bid to buy its competitor outright.

A UK ruling that Ryanair should not be allowed to own 29.8 per cent of its rival would undermine this. The airline raised this with the CAT and argued the UK authorities have a duty of sincere co-operation with the EU.

The tribunal dismissed this claim and four others raised by Ryanair, including that the commission’s were not fair.

Aer Lingus chairman Colm Barrington welcomed yesterday's ruling, saying: "Today's CAT judgment is a key milestone on the path toward removing Ryanair from the Aer Lingus share register."

Competition on routes
In its original finding last August, the Competition Commission found Ryanair's influence over Aer Lingus lessened competition between the two on routes between Ireland and Britain. The ruling followed an 11-month investigation which focused only on services between the two countries. Ryanair chief executive Michael O'Leary described it as "bizarre and manifestly wrong".