Ryanair Holdings plc v Office of Fair Trading
28 July 2011
The Competition Appeal Tribunal (CAT) gave judgment today in the case Ryanair Holdings plc v Office of Fair Trading.
Angus Coulter, a competition lawyer at Hogan Lovells commented:
"The CAT judgment today is an immediate win for the OFT. Subject to a Ryanair appeal, the OFT has been cleared to consider the Ryanair minority stake in Aer Lingus under the UK merger control rules.
"Essentially, the question about when the OFT should have stepped in has been answered - despite the OFT bending over backwards to avoid conflict with the EU and waiting four years to step in, the judgment confirms that they were right to wait. Ryanair argued that it needs more certainty than that - but this has fallen on deaf ears.
"The CAT found that the OFT was right to take a cautious approach to possible conflicts between EU and UK law. This was based both on the UK's general duty to give "sincere cooperation" to ensure that UK law is applied consistently with EU law, and the special merger control "one stop shop" principle which says that the UK cannot look at a merger being considered by Brussels.
"The CAT found that there was enough of a chance of such conflicts that the OFT could not even make an initial decision on the Ryanair stake until all possible EU appeals were finished.
"For example, the EU courts could have allowed Ryanair to buy the whole of Aer Lingus or ordered it to sell off some of its minority stake. This could have conflicted with either a UK investigation which ended either with an order for Ryanair to sell off some of its stake, or a clearance for it to keep that stake.
"There is potentially a large class of future cases which may be affected by the ruling. It is common practice for acquirers to build a stake in the open market before bidding for the whole of a target. Where the main bid is blocked by Brussels, the initial stake may fall to be inspected by the OFT. This ruling implies that the OFT cannot do so until any EU appeal is over.
"This may leave acquirers sitting on substantial stakes in competitors for many years before the OFT is able to start its own review and may itself encourage parties to make more tactical appeals to the EU courts."