BRITISH COMPETITION watchdog, the Office of Fair Trading (OFT), insists it has not missed a deadline to investigate Ryanair’s original purchase of a stake in Aer Lingus.
The OFT said yesterday it had written to Ryanair setting out the reasons why it believes it is “in time” to review the airline’s acquisition of a minority interest in Aer Lingus, built up between September 2006 and August 2007.
The OFT first announced it was beginning an investigation in October last year, prompting Ryanair to assert that it was “legally out of time” to do so.
The OFT’s decision to investigate the deal followed confirmation by the European General Court that the European Commission does not have the power to force Ryanair to sell down its minority shareholding because the stake did not confer it with “decisive influence” on the commercial policy of its rival.
The OFT said in a statement to the stock exchange yesterday that it believed it had been unable to act until the European-level appeals concluded.
To have opened an investigation while the European case was being heard, “would have been contrary to the duty of sincere co-operation set out in Article 4 of the Treaty on European Union”, the OFT said.
Under UK legislation, the OFT can investigate mergers within four months of their completion or within four months of the end of the European Commission’s involvement. It added that it was clarifying its position in relation to timing “given the highly exceptional nature of the facts in this case and the procedural benefits in addressing this point upfront”.
The OFT has a lower threshold of influence than the European General Court and can force Aer Lingus’s biggest shareholder to divest some or all of its stake if it finds that it has “material influence” and that this influence raises competition issues.
Sheldon Mills, director of mergers at the OFT, added that the organisation had opened the investigation into Ryanair’s 28.82 per cent stake in Aer Lingus because “it potentially raises competition concerns”.
Ryanair chief executive Michael O’Leary described the investigation as a “wild goose chase” and said the airline had instructed its lawyers to appeal immediately the OFT’s claim to be “in time” to the Competition Appeals Tribunal.
“This waste of time and resources by the OFT is remarkable when the case involves two Irish airlines whose combined share of the UK air travel market is less than 10 per cent,” Mr O’Leary said.
Aer Lingus welcomed the OFT’s statement and said it would continue to co-operate fully with its investigation.
