Clearyed for take-off

Boss O’Leary hopes rare sighting of his wallet will help Ryanair takeover bid fly

Cleary Gottlieb Steen & Hamilton has beaten Covington & Burling to one of the plum competition mandates of the year – Ryanair’s third attempt to buy out rival Aer Lingus.

Chief executive Michael O’Leary will hope that his investment in a Cleary team including partner Nicholas Levy, counsel Christopher Cook and associate Paul Gilbert, will finally pay off with merger clearance.

Levy acted for Ryanair on its second, abortive bid for Aer Lingus in 2009. He says its bigger office and “experience in issues raised by the 2009 transaction” had given it the edge over Covington, which is acting for Ryanair in the UK competition legal action. He added that it was an “efficient” option.

A fresh pair of eyes may help. Ryanair was certainly unhappy with the outcome of the UK competition side of the case – in which it was advised by Covington – after it was defeated by the OFT over its minority stake in Aer Lingus.

Parallel proceedings began in 2010 over whether the OFT could investigate Ryanair’s 30 per cent stake in Aer Lingus as anti-competitive under UK competition rules. It was expected that Covington might have taken this aspect further, to the Competition Commission, but O’Leary’s move to go for a 100 per cent purchase has effectively put the UK side on ice and edged Covington out of the game, although the firm says it continues to be active in the background.

The decision to go back to Cleary to run the Brussels side was described as a “sensible choice” by one senior City competition lawyer, who argued that it would have been a “stretch” for Covington, which, despite its impeccable antitrust pedigree in the US where it acts for Microsoft, is less established in Brussels than Cleary, a giant of the EU competition scene.

He said: “This is a classic O’Leary move, very smart in that he’s neutered the Competition Commission by going over its head and putting its investigation into the deep freeze.”

Although O’Leary’s company is known for penny pinching, he is obviously prepared to spend money when he needs to – Cleary doesn’t come cheap.