UK says may force Ryanair to sell Aer Lingus stake

DUBLIN Thu May 30, 2013 2:32am EDT

DUBLIN May 30 (Reuters) - Britain's Competition Commission said it was considering forcing Ryanair to sell its entire 30 percent stake in Aer Lingus, which it said allows the low-cost airline to influence its Irish rival's strategy.

Ryanair's chief executive Michael O'Leary responded by saying the competition commission was in breach of EU law.

In a preliminary ruling, the competition commission said the 29.8 percent shareholding obstructs Aer Lingus' ability to merge with another airline, raise capital or sell its valuable slots at London's Heathrow Airport.

"Whilst not giving it control over the day-to-day running of its rival, Ryanair's minority shareholding can influence the major strategic decisions that could be crucial to Aer Lingus's future as a competitive airline," Competition Commission Deputy Chairman Simon Polito said in a statement.

The ruling listed three options, including the sale of the Ryanair's full stake, which would be worth around 240 million euros ($311.21 million) at Aer Lingus' current market value.

It said a partial sell-off may be enough and a series of "behavioural remedies" might also be considered.

Ryanair will be given an opportunity to respond to the provisional ruling before a final decision is made in July.

Ryanair says the UK probe should be halted while it appeals a decision by EU antitrust regulators in February to block its attempt to buy Aer Lingus.

($1 = 0.7712 euros) (Reporting by Conor Humphries; Editing by Helen Massy-Beresford)

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