The Competition Commission has said that budget carrier Ryanair must reduce its 29.8% stake in rival Aer Lingus to just 5%.

In its final report on the issue, the commission said that Ryanair’s shareholding could result in a substantial lessening of competition on routes between the UK and Ireland.

Ryanair chief executive Michael O'Leary said: "Ryanair's Michael O'Leary commented: "This report by the UKCC is bizarre and manifestly wrong but also entirely expected.  From the first meeting with the UKCC it has been clear to us that Simon Polito's and Roger Davis' minds had been made up in advance and no truth or evidence was going to get in the way of their story.  This prejudicial approach to an Irish airline is very disturbing, coming from an English government body that regards itself a model competition authority.
Meanwhile, Aer Lingus chairman Colm Barrington said: "The Competition Commission should be commended on its thorough investigation."

He added: "It was unacceptable that our principal competitor was allowed to remain on our share register with a shareholding of 29.8% and interfere with our business despite the European Commission blocking both Ryanair's first hostile takeover attempt six years ago and its most recent hostile takeover attempt earlier this year."

Simon Polito, the Competition Commission deputy chairman, said that there was a "tension" between Ryanair's position as a competitor and largest shareholder in Aer Lingus, and that Ryanair "has an incentive to weaken its rival's effectiveness as a competitor".