Court Of Appeal Dismisses Ryanair’s Appeal In Connection With A Divesture Order Requiring Ryanair To Reduce Its Stake In Aer Lingus To No More Than 5%

On Feb. 12, 2015, the Court of Appeal to England and Wales dismissed Ryanair's appeal against a judgment of the UK's Competition Appeal Tribunal ("CAT").1 The CAT had, on May 7, 2014, rejected Ryanair's application for review of the findings of the Competition Commission ("CC") in connection with Ryanair's acquisition of a minority shareholding in Aer Lingus.2 In its final report, dated Aug. 28, 2013, the CC found that Ryanair and Aer Lingus had ceased to be distinct as a result of Ryanair's minority shareholding (29.82%) that gave it the ability to exercise material influence over the policy of Aer Lingus. The CC reached its view by having regard to Ryanair's ability to block special resolutions and the sale of slots at London Heathrow Airport. The CC then concluded that the minority stake resulted in a substantial lessening of competition because, in particular, Ryanair's incentives as a competitor were likely to outweigh its incentives as a shareholder. The CC decided that a reduction of Ryanair's holding to 5% would be an effective remedy.

The Court of Appeal rejected all three of Ryanair's challenges to the CAT's judgment. Ryanair's arguments concerned its procedural rights during the CC's investigation; the proportionality of the divesture remedy; and an alleged breach of the duty of sincere co-operation contained in EU law.

Ryanair has so far launched three takeover bids for Aer Lingus: the bids made in 2006 and 2012 were prohibited by the Commission, and the bid in 2009 was withdrawn.3 The Commission's second prohibition of the deal is currently on appeal to the General Court. Ryanair argued that there was a material risk of conflict between the divesture order and a future decision of the Commissionfollowing the appeal to the General Courtpermitting Ryanair to bid for 100% of Aer...