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Ryanair chief vows to fight Competition Commission findings.

LOW-COST airline Ryanair could be forced to sell-down its stake in rival Aer Lingus after the competition watchdog said it potentially distorted the market for flights between Ireland and Britain.

The UK's Competition Commission said in provisional findings that Ryanair's 29.8% shareholding in Aer Lingus was likely to "weaken its main competitor" and could hold it back from remaining competitive by threatening to block any merger or acquisition deals with other airlines.

Ryanair boss Michael O'Leary vowed to appeal any final decision that it will have to reduce its stake in Aer Lingus, claiming the initial findings were "bizarre and manifestly wrong".

The commission is considering whether Ryanair, which has held a stake in Aer Lingus for six-and-a-half years, should cut its holding to below 25% to reduce its influence on the Irish rival and is seeking views on appropriate levels.

Simon Polito, deputy chairman of the Competition Commission and chairman of the inquiry group, said: "We recognise that there has been competition between Aer Lingus and Ryanair since 2006. However, without Ryanair's minority shareholding, competition might have been more intense and may be restricted in the future.

"Passengers on routes between Great Britain and Ireland will benefit from Aer Lingus continuing to compete vigorously with Ryanair and so Aer Lingus needs to be free to take any actions that will strengthen its position in the future."

The commission is particularly concerned that Ryanair could prevent Aer Lingus from joining forces with other airlines to increase its scale and competitiveness, while also potentially blocking moves to raise capital from shareholders or selling valuable take-off and landing slots at Heathrow.

Aer Lingus said it "looks forward to continuing to assist the UK Competition Commission in its investigation".

The Competition Commission is expected to publish its final report by July 11.

If Ryanair is forced to reduce its stake, it could end any hopes the group has of buying Aer Lingus, having tried three times to take over the carrier.

All three bids have been blocked by regulators on competition grounds, with the European Commission (EC) prohibiting such a deal in February - a decision Ryanair is appealing against.

But Mr O'Leary said the Competition Commission contradicts findings by EC that competition between the two airlines has continued and possibly increased since 2007.
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Title Annotation:Business
Publication:Western Mail (Cardiff, Wales)
Date:May 31, 2013
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