OFT to probe Ryanair stake in Aer Lingus

image captionRyanair made an unsuccessful takeover bid in 2007

Britain's Office of Fair Trading (OFT) has launched an investigation into Ryanair's minority stake in fellow Irish airline Aer Lingus.

The low-fares carrier owns 29.82% of Aer Lingus and previously made a bid to buy-out the airline.

The hostile takeover bid of £1.48bn was blocked by the European Commission.

Ryanair boss Michael O'Leary said he was surprised at the OFT's query into the failed merger offer between two non-UK companies four years ago.

Mr O'Leary said it was also three years since the EU Commission investigated and confirmed that Ryanair has no de jure or de facto control over Aer Lingus.

"We have asked our lawyers to liaise directly with the OFT to bring this out of time and unnecessary query to an early conclusion," Mr O'Leary said.

"Ryanair also calls on the OFT to close these queries without delay, and without wasting time or resources on what is clearly a non-existent issue over which the OFT clearly no longer has any jurisdiction."

While listed as Irish companies, both airlines serve customers across the UK.

The OFT said its investigation will initially centre on whether it has jurisdiction under the Enterprise Act 2002 to review the acquisition as a relevant merger situation.

If so, it will then probe whether the acquisition raises competition issues that give rise to a duty to refer the acquisition to the Competition Commission.

However, Ryanair maintains this must be done within four months of a merger.

Aer Lingus said it welcomed the investigation under the UK's merger control legislation.

A spokeswoman said: This investigation follows confirmation by the EU General Court in its decision earlier this year that, while the EU Merger Regulation does not give the EU Commission power to address such minority shareholdings, individual member states remain free to apply their national competition law to Ryanair's shareholding.

"Aer Lingus will cooperate in full with the OFT in this investigation."

In July the European Commission, which rarely blocks takeovers, refused to allow Ryanair's hostile takeover bid and said it would create a monopoly for flights from Dublin airport.

Aer Lingus had wanted Ryanair to be forced to offload its shares in the company.

Ryanair acquired a partial stake in Aer Lingus after its privatisation in 2006, then notified the European Commission that it was seeking a takeover.

In 2007 the European Commission declared the takeover bid was incompatible with EU competition rules.

Ryanair challenged that decision and in the meantime brought its shareholding up to 29.9%.

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