A Long Flight
Ryanair's proposed acquisition of Aer Lingus was first announced on 5 October 2006. Its appeal against the Competition Commission's recent decision ordering it to lower its holding in Aer Lingus from 29.8% to 5% will be heard over three days, from 12-14 February 2014.
This seven year battle has generated a number of interesting issues and points of note. These include:
- Ryanair has made three separate attempts to acquire Aer Lingus. The first and third attempts were scuppered by the European Commission. The second attempt was aborted because the Irish Government, which holds a 25.1% stake in Aer Lingus, indicated that it would not support the deal.
- Former EU Competition Commissioners Mario Monti and Karel van Miert are reported to be advisors to Goldman Sachs. Goldman Sachs is an advisor to Aer Lingus.
- The European Commission blocked Aegean's proposed acquisition of Olympic Airways in 2011. At that time, the route overlap shares were not dissimilar to those for Ryanair and Aer Lingus. On 9 October this year, the Commission cleared Aegean's proposed acquisition of Olympic on the basis that absent the acquisition, Olympic would be likely to fail and may exit the Greek market altogether.
- The European Commission's frustration at not being able to force Ryanair to divest or reduce its 29.8% stake in Aer Lingus means that the EU's merger control rules will almost certainly be changed to expand the powers of the Commission to review non-controlling minority interests, i.e. something short of decisive influence which is a jurisdictional trigger under the EU Merger Regulation at present. A public consultation on proposals has recently closed. The suggested changes were either to extend the pre-notification system to cover 'structural links' or to introduce a transparency/self-assessment system, under which the Commission could choose to investigate structural links. However, it is arguable that the Commission already has sufficient powers to deal with anticompetitive structural links under Articles 101 and 102. This was alluded to by the President of the General Court in one of the hearings relating to an application for interim measures by Aer Lingus. Unfortunately, hard cases tend to make bad law.
If you would like to discuss these issues, please do not hesitate to contact me.