By Jonathan Davies

The Competition and Markets Authority (CMA) has issued a final order to Ryanair to reduce its stake in Irish airline Aer Lingus from 29.8% to 5%.

Aer Lingus is currently the subject of a takeover bid from IAG, the owners of British Airways. Aer Lingus and the Irish government, which also holds a 25% stake, have already agreed to the deal.

Ryanair has previously said it would listen to any offers.

In February, Ryanair requested a review of the CMA's decision to order it to reduce its stake.

In the light of IAG’s current bid for Aer Lingus, the CMA will ensure that implementation of this remedy interacts effectively with the bid process and the assessment of the bid by the European Commission.

Simon Polito, Chairman of the Ryanair/Aer Lingus inquiry group, said: "IAG’s bid for Aer Lingus is dependent on securing Ryanair’s agreement to sell its shareholding. This recent development illustrates that Ryanair can decide whether a bid for its major competitor on UK/Irish routes succeeds or fails.

"This concern was an important part of our decision to require Ryanair to reduce its shareholding. It’s not good for competition when one company holds such an influence over the future of one of its major competitors.

"Although at this point Ryanair has yet to decide whether to sell its shares to IAG, we need to ensure that, whatever happens in relation to this particular transaction, Ryanair’s ability to hold sway over Aer Lingus is removed.

"It is clear that the timing of IAG’s bid has been influenced by the prospect of Ryanair being forced to sell the majority of its shareholding. IAG has said that it would not be interested in acquiring any airline with a significant minority investor. The conditional nature of IAG’s bid is consistent with this and our original assessment that Ryanair’s presence was likely to deter other airlines from entering into, pursuing or concluding combinations with Aer Lingus.

"In our view the circumstances of the IAG bid and other issues raised by Ryanair do not amount to a material change in circumstances or special reason not to take action to remedy the substantial lessening of competition identified in our 2013 report.

"We will liaise closely with other authorities to ensure that our requirement for Ryanair to reduce its stake in Aer Lingus works effectively alongside shareholders’ consideration of the IAG bid and assessment of the bid by the European Commission."