Minority Shareholdings, Material Effects?

Bojana Ignjatovic, Derek Ridyard, Jan 10, 2012

In a speech delivered in March 2011, Commissioner Almunia indicated a concern that EU merger control, in contrast to some national merger control regimes, is unable to investigate minority equity stakes as mergers.He has instructed Commission staff to consider this “gap” in enforcement and whether it needs to be closed. As a result, the European Commission, in November 2011, announced its intention to conduct a study on the economic importance of minority shareholdings in the EC economy and on the need for the Commission to have the power to review the purchase of minority shareholdings.

The interest in this topic appears to have been ignited by the Ryanair/Aer Lingus merger case, which was blocked by the Commission in 2007, a decision subsequently upheld by the General Court in July 2010. However, the Court also agreed that the Commission was powerless to investigate the 29 percent equity stake that Ryanair continues to hold in Aer Lingus. In contrast, the Office of Fair Trading (“OFT”) in the United Kingdom (which, along with Germany, is a Member State with powers to consider acquisitions that fall short of control) has announced an intention to investigate that situation-though currently its attempts to do so have been held up by a legal challenge concerning the long time delay that has elapsed since the Commission Decision. The OFT’s desire to review the minority stake in Ryanair/Aer Lingus has nevertheless raised important issu…

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