United States: Antitrust Alert: UK Competition Commission Requires Ryanair To Sell Most Of Its Minority Shareholding In Rival Aer Lingus

Last Updated: September 18 2013
Article by Matt Evans and Marguerite Lavedan

Last week the UK Competition Commission (CC) required airline Ryanair to reduce its 29.8% shareholding in rival Aer Lingus to 5 per cent. The CC ruled that Ryanair's gradual acquisition of its existing minority shareholding (i) created a relevant merger situation and (ii) had led or may be expected to lead to a substantial lessening of competition between the airlines. The decision follows the prohibition by the European Commission (EC) of Ryanair's third attempt to acquire Aer Lingus. It highlights the difference in treatment of minority shareholding acquisitions under EU and UK merger laws and reminds companies to tread carefully when acquiring even small stakes in a competitor.

The European saga: three unsuccessful bids but minority shareholding intact

Ryanair built up a stake of 19.2% in Aer Lingus before launching its first public offer for the airline in October 2006. It continued to build its stake, to just over 29%, only for the EC to block the deal under EU merger law. Ryanair appealed this decision to the EU General Court. During the EC's merger review, Aer Lingus asked the EC to force Ryanair to sell its minority shareholding should the merger be prohibited. However, the EC ruled that the acquisition of the minority shareholding – including the shares acquired following the bid announcement – did not trigger the application of the EU Merger Regulation (EUMR) and that it therefore did not have the power to require a sale of the shares. Aer Lingus, anxious to rid itself of a rival it believed interfered with its business, appealed that decision. After a long delay, the General Court rejected both Ryanair's and Aer Lingus' appeals in 2010.

Meanwhile, Ryanair increased its stake in Aer Lingus to 29.8% and launched a second bid for the remaining shares in December 2008 only to drop it the following month after the Irish Government, Aer Lingus' second largest shareholder, indicated its opposition.

In July 2012 Ryanair notified the EC of a third bid for Aer Lingus. The EC again blocked the deal, in February 2013. Ryanair has appealed that decision to the General Court.

EUMR vs UK merger control

Following the 2010 General Court ruling upholding the EC's decision that Ryanair's acquisition of a minority stake had not triggered the EUMR, the UK Office of Fair Trading (OFT) asserted jurisdiction on the grounds that the stake created a "relevant merger situation" for the purposes of UK merger control. The EUMR provides a one-stop shop for qualifying mergers giving the EC, with limited exceptions, exclusive jurisdiction over merger control within the EU. However, where the EUMR is not triggered, national merger control rules come into play.

This case highlights the difference between the EU and UK merger control regimes as to what constitutes a notifiable merger. Under the EUMR, assuming certain annual sales tests are met by the merging parties, the acquisition of a minority shareholding will only be notifiable if it confers "decisive influence," for example where special rights are attached to the minority stake, such as veto rights over strategic commercial decisions. The EC is powerless to review simple minority shareholdings under the EUMR.

Unlike the EUMR, national merger control in some Member States – notably Austria, Germany and the UK – gives the local competition authority greater scope to review minority shareholdings. Under UK law, the OFT has jurisdiction over a transaction where (i) two enterprises cease to be distinct and (ii) either the turnover or share of supply tests are met. Ryanair and Aer Lingus between them account for more than 25% of passengers flown between the UK and Ireland. This met the share of supply test. Two enterprises will cease to be distinct if they are brought under common ownership or control. Three levels of control are recognized:

(a) a controlling interest (de jure control);

(b) the ability to control policy (de facto control); and

(c) the ability to materially influence policy (material influence).

The OFT will presume that a shareholding of more than 25 per cent confers material influence, because under UK law law it generally enables the holder to block special resolutions.

The OFT raised concerns about Ryanair's 29.8% stake and referred its investigation to the CC for an in-depth review. The CC confirmed that Ryanair had the ability materially to influence Aer Lingus, in particular by blocking special resolutions and the sale of slots at Heathrow airport.

Substantial lessening of competition on routes between Great Britain and Ireland

The CC confirmed that Ryanair's minority shareholding had led or may be expected to lead to a substantial lessening of competition between the airlines on routes between Great Britain and Ireland. It found that Ryanair would have the incentive to use its influence to weaken Aer Lingus' effectiveness as a competitor, in particular by impeding or preventing Aer Lingus from merging with another airline. In addition, the CC found that Ryanair's minority shareholding could affect the commercial policies and strategies available to Aer Lingus by limiting its ability to manage its portfolio of Heathrow slots, and restricting it from optimizing its route network and timetable across London airports.

The CC considered that these concerns could be addressed by a partial divestiture of Ryanair's shareholding in Aer Lingus to a level which, taking into account historic voter turnout and voting patterns at shareholder meetings, would remove the risk that Ryanair could block a special resolution or otherwise restrict Aer Lingus' commercial policy. It set that level at 5%, together with a ban on Board representation.


This is not the first time UK merger control has applied to low minority shareholdings. The previous most notable case occurred in 2007 when the CC held that BSkyB's acquisition of a 17.9% share in rival broadcaster ITV gave it material influence and might be expected to result in a substantial lessening of competition. BSkyB was required to divest its shares to a level below 7.5%.

The BSkyB and Ryanair cases are exceptional insofar as the low shareholdings they were permitted to retain reflect particular concerns arising from the fact that they were investing in competitors. Such concerns are less likely to arise in a typical private equity minority investment. Nevertheless, companies seeking to buy a minority stake should always make sure that they do not trigger merger control laws and if they are investing in a competitor extra care should be taken to assess the likely impact of that investment on the target company.

The CC's decision does not mark the end of the Ryanair / Aer Lingus saga. Ryanair will appeal the CC's decision and already has an appeal pending against the EC's prohibition of its full takeover of Aer Lingus. In the meantime, the EC is consulting on extending the scope of the EUMR, to enable it to extend its jurisdiction over the acquisition of non-controlling minority shareholdings. If its jurisdiction is extended in this way, merger control in Europe may become even more of a tangled web than it is today.

The UK Competition Commission's 28 August 2013 final report and other documents from this matter can be found here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Matt Evans
Marguerite Lavedan
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.