Ryanair Holdings Plc v The Competition And Markets Authority & Anor

In merger-control proceedings, an actual or prospective substantial lessening of competition is assessed on the balance of probabilities. Once that threshold is met, the remedial duty is not limited to reducing the risk below probability. The authority must take reasonable and practicable action to remedy or prevent the substantial lessening and seek a comprehensive solution. Procedural fairness requires disclosure sufficient for effective consultation, but not necessarily the identities of confidential third parties where their gist is disclosed and the identities add no material assistance. A divestiture remedy may address all realistic forms of anti-competitive effect. The duty of sincere co-operation does not require a national authority, exercising separate jurisdiction over a minority holding, to await an EU decision on a different proposed takeover.

Ryanair held 29.82% of Aer Lingus. Following a reference under the Enterprise Act 2002, the Competition Commission found a relevant merger situation and a substantial lessening of competition in scheduled air passenger services between Great Britain and Ireland. It required Ryanair to reduce its holding to 5%, subject to behavioural conditions.

Ryanair challenged the final report and remedy before the Competition Appeal Tribunal, alleging procedural unfairness from anonymised third-party evidence, breach of the duty of sincere co-operation because of EU takeover proceedings, and an unlawful or disproportionate remedy. The Tribunal rejected all three grounds in [2014] CAT 3. The appeal concerned disclosure, the proper remedial threshold, and the relationship between the domestic and EU competition jurisdictions.

1. The appeal was dismissed unanimously. Patten LJ gave the principal judgment, with Floyd LJ agreeing and Laws LJ agreeing in the result and for Patten LJ’s reasons.
2. Procedural fairness in the Competition Commission’s consultation was governed by the statutory disclosure framework in sections 237, 238 and 244 of the Enterprise Act 2002, read with the common-law requirement of fairness. The question was objectively whether the process enabled a fair and effective response. Applying the approach in R (Osborn) v The Parole Board [2013] UKSC 61, disclosure of the gist of the third-party evidence was sufficient. The identities of the airlines were not necessary because the case did not depend on any identified transaction and Ryanair could address the substance of the evidence without knowing those identities.
3. The actual or prospective existence of a substantial lessening of competition was assessed on the balance of probabilities: BSkyB v CC [2010] EWCA Civ 2. That standard determined the gateway for intervention, but did not confine the subsequent remedy. Under sections 35(3) and (4) and 41(2) and (4), the CMA had to take reasonable and practicable action to remedy or prevent the substantial lessening and its adverse effects, seeking as comprehensive a solution as possible. It was not enough merely to reduce the risk below probability.
4. The Commission had found that Ryanair’s holding could impede a wide range of combinations involving Aer Lingus. The proposed undertakings did not cover all realistic forms, including joint ventures. A reduction to 5% was therefore capable of removing any realistic ability to block special resolutions and was neither ultra vires nor disproportionate.
5. Article 4(3) TEU did not require postponement. The national and EU proceedings concerned different subject matter and non-overlapping jurisdictions. Clearance under Articles 8(1) or 8(2) of the Council Regulation 139/2004 did not establish an EU objective that the proposed takeover must actually occur or proceed without practical difficulty. No reference to the ECJ was necessary.
6. Laws LJ added that the general and open-ended terms of Article 4(3) TEU raised concerns about legal certainty and the rule of law. That was an additional observation and did not affect the disposition.

• Competition Appeal Tribunal: rejected Ryanair’s challenges to the Competition Commission’s final report and divestiture remedy in [2014] CAT 3.
• Court of Appeal (Civil Division): dismissed the appeal and upheld the Tribunal’s decision.