CASES

Ryanair Holding Plc v Office of Fair Trading [2011] CAT 23

28 June 2011

In its judgment in Ryanair v OFT, the Competition Appeal Tribunal stated its view as to how the UK's merger regime should interact with the EU merger regime in certain cases where a potential purchaser has built up a minority shareholding in a target company prior to launching a full public bid.

In the autumn of 2006, Ryanair began buying shares in its rival Aer Lingus. It accumulated a significant minority shareholding and launched a full public bid. In the summer of 2007, the European Commission issued two decisions: one prohibiting Ryanair from fully acquiring Aer Lingus, the other stating that it lacked jurisdiction to order Ryanair to divest its minority shareholding (as Aer Lingus wanted). Both airlines appealed. In the summer of 2010, the General Court issued judgments rejecting the appeals. When the appeal deadlines passed without any further appeals being lodged, the OFT wrote to Ryanair to say that it was examining Ryanair's minority shareholding under the domestic merger provisions in the Enterprise Act. Normally, the OFT only has four months from when a merger is completed to make a reference to the Competition Commission. However, s.122(4) provides that the period for making a reference may be extended where a reference could not have been made previously "because of the EC Merger Regulation or anything done under in or accordance with [it]". The OFT stated that it considered that in this case time had been extended because the OFT could not have investigated the minority shareholding while the appeals from the Commission's decisions were ongoing before the General Court. Ryanair disagreed, maintaining that the OFT was out of time, and brought an application for review.

The Tribunal upheld the OFT's position. Had the OFT opened an investigation while the EU appeal process was ongoing, there would have been a risk of inconsistent outcomes and a conflict of jurisdiction which Member State authorities are required to avoid as a result of the duty of sincere cooperation imposed on them by the Treaty on European Union. The Tribunal stated that s.122(4) was the statutory mechanism which allowed the UK competition authorities to avoid such conflict, and that the provision continued to apply until the Ryanair and Aer Lingus appeals had been completed.

Ryanair has stated that it intends to seek permission to appeal to the Court of Appeal.

To read the judgment, please click here.

Please click below for more information on:
John Swift QC
Daniel Beard QC
Alistair Lindsay
Josh Holmes
Julian Gregory