Ryanair has been ordered to sell down its almost 30% stake in Aer Lingus to 5% after the UK Competition Commission ruled competition had lessened on routes between the UK and Ireland.
The Irish budget carrier will also be obligated not to seek or accept board representation or acquire further shares in Aer Lingus.
In its final report published today, the UK competition regulator says that Aer Lingus's commercial policy and strategy was likely to be "affected by Ryanair's minority shareholding, in particular because it was likely to impede or prevent Aer Lingus from being acquired by, or combining with another airline".
The body says Ryanair's minority shareholding allows it to block special resolutions, "restricting Aer Lingus's ability to issue shares and raise capital and to limit Aer Lingus's ability to manage effectively its portfolio of Heathrow slots".
The regulator further says Ryanair's shareholding increases the likelihood of Ryanair mounting further bids for Aer Lingus, "with the associated disruption to Aer Lingus's ability to implement its commercial strategy".
While it notes Ryanair's proposed competition remedies it adds that it is "difficult to design remedies that would cater for all eventualities."
While the deadline for Ryanair to divest its holding has not been made public the typical period is six months.
Ryanair called the decision a "baseless claim" and says competition concerns had been "manifestly disproven by a European Commission decision in February 2013 that competition had "intensified" since 2007. Ryanair says it will appeal the decision.
Aer Lingus welcomed the ruling.
Source: Air Transport Intelligence news
