The Office of Fair Trading has referred Ryanair’s 29.8 per cent stake in Irish rival Aer Lingus to the Competition Commission to look at its impact on the airline market between the UK and Ireland.
The OFT has been investigating the effects of Ryanair’s shareholding on competition grounds since 2010 but the probe has been delayed by a series of factors including a legal challenge by Ryanair, which was thrown out by the Court of Appeal last month.
The two airlines are the only scheduled carriers on five routes between the UK and Ireland, according to the OFT, and carry a combined 370,000 passengers per month between the two countries.
Amelia Fletcher, chief economist at the OFT and decision maker in this case, said: “Ryanair and Aer Lingus are key rivals on routes between the UK and Ireland, together carrying over 80 per cent of traffic.
“This OFT investigation has been into the acquisition of a minority stake in Aer Lingus. We are concerned that Ryanair's shareholding places it in a position to influence the commercial policy and strategy of Aer Lingus in a number of different ways that could dampen competition to the disadvantage of UK passengers.
“We therefore believe it is important for the Competition Commission to investigate this shareholding in more detail. The time that has elapsed since the acquisition took place does not make it any less important to passengers that our competition concerns are considered.”
Ryanair first took a minority shareholding in Aer Lingus in 2006 and tried to take over the carrier until the European Commission decided to ban the bid in 2007.
Today's decision by the OFT was condemned by Ryanair as a “waste of public time and resources” and a “wild goose chase”.
Chief executive Michael O’Leary said: “We are confident that the CC will find that since Ryanair has no control and no influence over Aer Lingus, the status quo will remain unchanged.
“We continue to be critical of the remarkable contradiction between the OFT's recent acceptance of BA's takeover of Bmi which the OFT declared that the EU Commission was "best placed" to rule on.
“We do not believe that this is a sensible or useful expenditure of UK taxpayers' monies or resources, when this six-year-old 29 per cent shareholding has no material effect on UK air travel, UK aviation or UK consumers.”
But Aer Lingus has welcomed the referral and said it was “confident” that Ryanair would be ordered to sell the stake.
CEO Christoph Mueller added: "Today's decision by the OFT supports our view that Ryanair's shareholding in Aer Lingus is contrary to the interests of consumers and the majority of our shareholders.
“It is unacceptable that our principal competitor has been allowed to remain on our share register even though the European Commission blocked their hostile takeover almost five years ago.
“We look forward to co-operating with the Competition Commission in its investigation which we are confident will result in Ryanair being ordered to dispose of its shareholding.”