Judgment

Neutral citation:

[2011] CAT 23

Published:

28 Jul 2011

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Summary:

Judgment of the Tribunal on an application by Ryanair Holdings plc (“Ryanair”) for a review under section 120 of the Enterprise Act (“the Act”) of the decision of the Office of Fair Trading (“OFT”) that it was not out of time to consider making a reference to the Competition Commission under section 22 of the Act in respect of Ryanair’s acquisition of a minority shareholding in one of its competitors, Aer Lingus Group plc (“Aer Lingus”).

In October 2006 Ryanair launched a public bid for the entire share capital of Aer Lingus. Shortly before and after the announcement of the bid, Ryanair separately acquired a stake in Aer Lingus of 25.2%. In June 2007 the European Commission decided to block the merger as it would significantly impede effective competition on a number of air routes to and from Dublin airport. Later that year the Commission rejected Aer Lingus’s request to require Ryanair to divest its minority stake on the basis that it did not have the power to restore the position that existed prior to the acquisition. Ryanair appealed to the General Court against the European Commission’s decision prohibiting the merger (“Ryanair Appeal”) and Aer Lingus appealed against the Commission's decision not to require Ryanair to divest its minority stake (“Aer Lingus Appeal”). Both appeals were rejected by the General Court in July 2010. The time appealing the General Court's judgments expired on 17 September 2010.

In October 2010 the OFT announced that it had begun a merger investigation under the Act into the acquisition of Ryanair's minority shareholding. The OFT subsequently agreed to Ryanair’s request to consider as a preliminary issue whether the OFT’s investigation was out of time. In January 2011 the OFT wrote to Ryanair setting out its view that its investigation was not time-barred under the Act. The OFT considered that it was unable to investigate until the applications for annulment in the General Court had been determined due to the risk of inconsistent outcomes between any actions taken under the Act and any action that the EU courts may have required the European Commission to take following the appeals.

The Tribunal concluded that the Ryanair Appeal and the Aer Lingus Appeal each gave rise to potential conflicts with a decision taken pursuant to (or with the outcome of) a reference to the Competition Commission under section 22 of the Act, and those potential conflicts were such that the duty of sincere cooperation under Article 10 EC (now Article 4(3) TEU) required the UK merger control authorities to avoid them. In the case of the Aer Lingus Appeal, the potential conflicts also included a risk of infringement of article 21(3) of the Merger Regulation. The Tribunal further held that subsection 122(4) of the Act is the means provided by Parliament for enabling the OFT to comply with the duty of sincere cooperation and avoid the risk of impermissible conflicts with article 21(3) of the Merger Regulation and/or between decisions taken (or to be taken) under the EU merger control system (including, where relevant, judgments of the EU courts) and decisions of the UK competition authorities, whilst preserving the possibility of a reference under section 22 pending the final resolution of the EU process. For the purposes of subsection 122(4), a reference under section 22 could not have been made earlier than 17 September 2010, and Ryanair was not entitled to any of the relief sought in its Notice of Application.

This is an unofficial summary prepared by the Registry of the Competition Appeal Tribunal.