Ryanair Holdings Plc v Office of Fair Trading and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lloyd,Lord Justice Elias,Lord Justice Kitchin,Lord Justice Hughes,Lord Justice McFarlane |
| Judgment Date | 22 May 2012 |
| Neutral Citation | [2011] EWCA Civ 1579,[2012] EWCA Civ 643 |
| Date | 22 May 2012 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: C3/2011/2506/OTTRF,Case No: C3/2011/2506A |
[2011] EWCA Civ 1579
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE COMPETITION APPEAL TRIBUNAL
MR JUSTICE BARLING, PRESIDENT, MR MICHAEL BLAIR Q.C.,
MR GRAHAM MATHER
[2011] CAT 23
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Lloyd
Lord Justice Elias
and
Lord Justice Kitchin
Case No: C3/2011/2506A
Lord Pannick Q.C. and Brian Kennelly (instructed by Covington & Burling LLP) for the Appellant
Daniel Beard Q.C. and Julian Gregory (instructed by the General Counsel, Office of Fair Trading) for the Office of Fair Trading
James Flynn Q.C., Kelyn Bacon and Daniel Piccinin (instructed by Cadwalader Wickersham & Taft LLP and Linklaters LLP) for Aer Lingus Group plc
Hearing date: 24 November 2011
Introduction
In this judgment I set out my reasons for making an order at the end of the hearing of an interim application by the appellant, Ryanair, on 24 November 2011. By that order, upon various undertakings, the court ordered that the application of the time-limit under sections 122 or 24 (or both) of the Enterprise Act 2002 to an investigation by the Office of Fair Trading, Case ME 4694/10, be suspended until the determination of Ryanair's appeal to this court or further order. One of the undertakings was given by the OFT, and was to stay its investigation, though subject to some qualifications.
The appeal in which this application is made is itself somewhat unusual. The application is decidedly unusual. The proceedings arise from the situation in which Ryanair holds just under 30% of the shares in the respondent Aer Lingus. I will start with as brief as possible a summary of the relevant history.
Ryanair bought its shares in Aer Lingus in 2006 with a view to a full take-over. In 2007 the European Commission refused to allow the take-over, but also refused to order Ryanair to sell its minority stake in Aer Lingus. Both parties appealed to the Court of First Instance (now the General Court), which dismissed both appeals in 2010. In September 2010 the OFT began an investigation under section 22 of the Enterprise Act 2002 into Ryanair's acquisition of the minority holding in Aer Lingus. That is the investigation referred to in the order, Case ME 4694/10. Such an investigation is as to whether a "relevant merger situation" has been created which may have adverse competition consequences. If specified criteria are satisfied under the Enterprise Act, the OFT may refer the matter to the Competition Commission (CC) for it to investigate.
Time limits apply to investigations by the OFT under section 22. The dispute which is at issue in the appeal is whether the time limit runs from when the European Commission concluded its investigation, as Ryanair contends, or from the time when, following the determination of the appeals by the General Court, no further appeal was possible to the Court of Justice of the European Union (CJEU), which is the OFT's contention. At the time of the hearing of this application, it was common ground that, if the OFT was right on this, there was still time for them to refer the matter to the CC, but that the period would run out on 30 November 2011. If Ryanair was right, the time had run out long since.
Unusually, the OFT made a formal decision, in the course of its investigation, to the effect that the time limit ran from the later date, so that the investigation was in time. Normally, the OFT does not make a preliminary ruling in the course of an investigation, but leaves all such matters to its final decision. Ryanair appealed against that preliminary decision to the Competition Appeal Tribunal, which upheld the OFT's position in its decision on 28 July 2011: [2011] CAT 23, the Tribunal consisting of the President, Mr Justice Barling, Mr Michael Blair Q.C. and Mr Graham Mather. On 7 November 2011, however, permission to appeal was given by Lord Justice Davis to Ryanair to appeal against the Tribunal's decision to the Court of Appeal. When the application was heard that appeal had been fixed to be heard in June 2012. Since then, as I understand it, the date for the hearing of the appeal has been brought forward to April 2012. Either way, however, the prospect was that, if the OFT decided to refer the matter to the CC on or before 30 November 2011, the CC would then start its investigation, to which time limits apply, but it might then transpire, on the determination of the appeal, that the OFT's own investigation had been out of time, in which case all the efforts of the OFT and the CC, and of the parties involved with each investigation, would have been futile and a waste of time.
The interim application was intended to avoid the need for the OFT to refer the matter by 30 November 2011. Accordingly, the issue was whether the court could (and if so should) achieve a position in which time stopped running for the OFT to refer the matter to the CC, pending the determination of the appeal. If that were possible, as Ryanair and the OFT contended, then the OFT was content that it should be done and, on that basis, to pause in its investigation. Aer Lingus, on the other hand argued that it could not be done and that, even if it could, it should not be done, or, if at all, only on different terms from those proposed by Ryanair.
The application was plainly urgent. An early hearing date was arranged. The parties were represented at the hearing by Lord Pannick Q.C. with Mr Kennelly for Ryanair, by Mr Daniel Beard Q.C. with Mr Gregory for the OFT and by Mr James Flynn Q.C., with Ms Bacon and Mr Piccinin for Aer Lingus. I am grateful to all Counsel for their able, realistic and well-focussed oral submissions, amplifying appropriately the skeleton arguments.
Having heard argument for the best part of the day on 24 November we concluded that power to achieve the suspension of the running of time did exist, that it was appropriate to exercise the power, and that we should do so on the terms proposed by Ryanair and the OFT. We made an order accordingly. I will now explain the basis for this. I will begin with the material provisions of the relevant legislation.
The starting point is section 22(1) of the Enterprise Act:
"(1) The OFT shall, subject to subsections (2) and (3), make a reference to the Commission if the OFT believes that it is or may be the case that—
(a) a relevant merger situation has been created; and
(b) the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services."
Section 23 explains when a relevant merger situation is created. Subject to a threshold of value and to other factors which I do not need to mention, it is if "two or more enterprises have ceased to be distinct enterprises at a time or in circumstances falling within section 24": section 23(1)(a).
I will set out section 24(1); the rest of the section does not matter for present purposes:
"(1) For the purposes of section 23 two or more enterprises have ceased to be distinct enterprises at a time or in circumstances falling within this section if—
(a) the two or more enterprises ceased to be distinct enterprises before the day on which the reference relating to them is to be made and did so not more than four months before that day; or
(b) notice of material facts about the arrangements or transactions under or in consequence of which the enterprises have ceased to be distinct enterprises has not been given in accordance with subsection (2)."
That is subject to section 122, headed "Primacy of Community law", of which subsections (3) and (4) are relevant:
"(3) The duty or power to make a reference under section 22 or 45( 2) or (3), and the power to give an intervention notice under section 42, shall apply in a case in which the relevant enterprises ceased to be distinct enterprises at a time or in circumstances not falling within section 24 if the condition mentioned in subsection (4) is satisfied.
(4) The condition mentioned in this subsection is that, because of the EC Merger Regulation or anything done under or in accordance with them, the reference, or (as the case may be) the reference under section 22 to which the intervention notice relates, could not have been made earlier than 4 months before the date on which it is to be made."
It is common ground that, while the European Commission was proceeding with an investigation into Ryanair's acquisition of shares in Aer Lingus and its proposed take-over, the OFT could not investigate the same matter itself. That period of time falls within the scope of section 122(4). The issue on the appeal is whether the same applies to the time occupied by the respective parties' appeals against the Commission's rulings, and to the period within which the parties would have been in time to appeal further to the CJEU.
Under section 25 the four month time limit may be extended in certain defined circumstances. If the OFT and the relevant enterprises agree, they can extend the period by no more than 20 days, but they can do so only once: see subsections (1) and (12). If the OFT considers that any of the persons carrying on a relevant enterprise has failed to provide information requested in a notice under another section, it can give notice extending the time until the information is provided or earlier cancellation of the notice: subsections (2) and (3). This provision was used in the present case to stop time running on account of what the OFT...
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