The Irish government is reported to have urged the UK Competition and Markets Authority to force Ryanair to sell most of its stake in Aer Lingus.
It is the latest chapter in an ongoing attempt by British Airways owner International Airlines Group to persuade the Dublin government that it should sell its 25.1% shareholding in Aer Lingus and approve the takeover of the airline.
The UK competition watchdog should not be swayed from its previously stated position that Ryanair must be forced to cut its stake in Aer Lingus from nearly 30% to no more than 5%, according to a letter from a senior Irish transport department official to the CMA.
The CMA’s predecessor, the Competition Commission, ordered Ryanair to reduce its Aer Lingus holding two years ago, citing competition concerns. The watchdog also claimed that because Ryanair was such a big shareholder in Aer Lingus, it was likely to deter other airlines from making a bid to buy Aer Lingus.
Ryanair has claimed the fact that International Airlines Group has since made an approach to buy Aer Lingus negates a fundamental plank of the CMA decision to make it cut its stake in its smaller rival.
But the Irish Department of Transport said it agrees with the original finding and that it should still stand, the Irish Independent reported.
“The department considers that the IAG proposal confirms that merger and acquisition opportunities exist for Aer Lingus but that it also confirms that interest in acquiring Aer Lingus is contingent on Ryanair exiting Aer Lingus’ share register,” the letter to the CMA is reported to state.
“I can confirm that it remains the position of the government that it is unlikely to sell its shareholding in Aer Lingus while Ryanair continues to be a significant minority shareholder.
“The department considers that the CMA should…proceed with the remedial action.”
The CMA is proposing that a trustee be appointed to oversee the sale of the bulk of Ryanair’s holding in Aer Lingus.
However, IAG has asked the CMA that it instead give Ryanair permission to sell the entire Aer Lingus holding to IAG.
Ryanair has insisted it has strong grounds for not being forced to reduce its Aer Lingus stake.
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