Ryanair faces a competition investigation by the Office of Fair Trading over a minority stake in Irish rival Aer Lingus acquired more than four years ago.
The no-frills carrier, which owns 29.8 percent of Aer Lingus, is to appeal against the OFT’s decision on the grounds that the probe has come too long after the event.
Aer Lingus welcomed the OFT move and said it would co-operate fully with the watchdog.
Ryanair mounted a public takeover for all of Aer Lingus in October 2006, but the European Commission investigated the bid and blocked it in June 2007.
The OFT said Ryanair’s Aer Lingus stake raised potential competition concerns.
OFT director of mergers Sheldon Mills said: “The OFT opened an investigation into Ryanair’s minority stake in Aer Lingus because it believes that it potentially raises competition concerns.
“We recognise that this case raises important legal and policy issues in relation to whether competition authorities should be able to apply national merger control legislation whilst related appeals are ongoing under the EC Merger Regulation.
“We believe that an interpretation of the law that could lead to inconsistent outcomes at national and European level risks undermining the coherence of merger control in the EU.
“We have considered this issue carefully and it is appropriate and fair to Ryanair to inform them, at this point, that we believe we are ‘in time’ to review the minority stake.”
The OFT opened its investigation into Ryanair’s minority interest in October following the conclusion of appeals of European Commission decisions relating to Ryanair’s full bid for Aer Lingus and its retained minority shareholding.
Ryanair said: “Ryanair adamantly maintains that even if the OFT had jurisdiction back in June 2007, it is now legally out of time because it failed to investigate this offer within four months of the EU prohibition in June 2007.”
The OFT said it is normally able to refer mergers to the UK Competition Commission within four months of completion or from the time material facts about the merger are made public.
But a section of the 2002 Enterprise Act allows for it to refer deals outside this timetable if a reference could not have been made earlier because of EC merger regulation.