The EU General Court decides that State aid may be granted to a single company that is important for the national economy and does not need to be granted to all competitors (Ryanair)

Individual Aid Measures to Combat Covid-19*

Aid to remedy a serious economic disturbance may be granted to a single company that is important for the national economy. EU law does not extend to competitors a right to the same aid.

Introduction

Between March 2020 and April 2021, the European Commission has authorised aid totalling more than EUR 2.5 trillion to remedy the serious economic disturbance caused by covid-19 or to compensate companies for the losses they suffered as a result of the pandemic.

Although this unprecedented amount of State aid is thought to be necessary to prevent the European economy from slipping into recession, doubts have been voiced as to the appropriateness of public support of individual companies. Since all companies suffer, why not extend similar support to all companies? Doesn’t individual aid violate the principle of non-discrimination?

On 14 April 2021, the General Court gave answers to these questions in its judgments in three related cases: T‑388/20, Ryanair v European Commission, [1] T-378/20, Ryanair v European Commission, [2] and T-379/20, Ryanair v European Commission [3]. The answers of the General Court were that State aid is inherently discriminatory (by being selective), but allowed under certain conditions; that Member States are not obliged to extend the same support to all companies; and that if they had to extend the support to all and, consequently, diluting the aid, they could not prevent the bankruptcy of companies which are important to the national economies.

The first case concerned aid that was granted by Finland to Finnair. The second and third case concerned aid granted by Denmark and Sweden, respectively, to SAS. The aid in the first case was based on Article 107(3)(b) TFEU. The aid in the second and third case was based on Article 107(2)(b) TFEU.

This article reviews the Finnish case and partly the Danish case, since the last two cases are very similar and certain parts of all three cases overlap. Two judgments on related issues [French aid to airlines based on Article 107(2)(b) and Swedish aid to airlines based on Article 107(3)(b)] were reviewed here on 23 February 2021 and 2 March 2021. They can be accessed, respectively, at:

https://www.lexxion.eu/en/stateaidpost/state-aid-may-be-limited-to-undertakings-with-close-links-with-the-national-economy-part-i/

and

https://www.lexxion.eu/en/stateaidpost/state-aid-may-be-limited-to-undertakings-with-close-links-with-the-national-economy-part-ii/

I. Aid to Finnair to remedy a serious economic disturbance

Ryanair contested the Commission decision in case SA.56809 which authorised State aid granted by Finland to Finnair. The State aid was in the form of a guarantee that covered 90% of a loan of EUR 600 million. The remaining 10% of the loan was covered by a commercial bank under market conditions. The aid was authorised on the basis of Article 107(3)(b) TFEU.

The first plea of Ryanair was divided in two parts. The first part argued that an individual measure in favour of Finnair was not appropriate to remedy a serious disturbance in the Finnish economy. With the exception of the banking sector, there have been very few cases of aid to individual undertakings under Article 107(3)(b) TFEU [the only case I can recall before the Temporary Framework was adopted was aid to the Greek rail operator which, like banks, had systemic significance. Had it been allowed to collapse, the whole economy would have been harmed]. The second part claimed that the Commission failed to balance the beneficial effects of the aid against its adverse effects on trade and competition.

Can individual measures remedy a serious economic disturbance?

The General Court began its analysis by recalling that as a derogation, Article 107(3)(b) TFEU had to be interpreted strictly. “(33) The Commission may declare aid compatible with Article 107(3) TFEU only if it can establish that the aid contributes to the attainment of one of the objectives specified, something which, under normal market conditions, the recipient undertaking would not achieve by using its own resources. In other words, an aid measure cannot be declared compatible with the internal market if it brings about an improvement in the financial situation of the recipient undertaking without being necessary to achieve the objectives laid down in Article 107(3) TFEU”.

“(34) In those circumstances, individual aid such as the one in the present case may be declared compatible with the internal market where it is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of the Member State concerned.”

At this point, it should be noted that the word “to remedy” can be interpreted in two very different ways. First, “to remedy” may mean to alleviate, neutralise or offset, the effects or the impact of a serious disturbance. Therefore, an individual measure may be appropriate to offset the impact of a serious disturbance on a company. Second, “to remedy” may mean addressing the cause, the root or the trigger of the serious disturbance. In this case, I think, it is much more difficult to prove that an individual measure can redress or neutralise a disturbance that affects or extends to the whole economy. However, we will see later on that the General Court interpreted the word “to remedy” to correspond to the first meaning as explained above.

The General Court went on to note the “(36) the existence both of a serious disturbance in the Finnish economy […] and the significant adverse effects it has had on aviation in Finland”. Then, it pointed out that “(37) Finnair likely faced the risk of insolvency due to the sudden erosion of its business caused by the COVID-19 pandemic. […] Finnair’s insolvency would, in turn, contribute to the severe impact on the Finnish economy, including its supply chain security. Having an air transport network which functions correctly is instrumental for the economy of the country as a whole, and its potential disappearance would have harsh consequences for many regions. […] in view of its importance for the Finnish economy, Finnair’s insolvency would further aggravate the current serious disturbance in the country’s economy”. “(38) The essential purpose of the measure at issue is to ensure that Finnair has sufficient liquidity to maintain its viability and air services at a time when the COVID-19 pandemic is seriously disrupting the entire Finnish economy and to prevent Finnair’s possible insolvency from further disrupting the economy of the Member State concerned”.

So, State aid may be granted to alleviate or neutralise the effects rather than attack the cause or root of a serious economic disturbance. From the Finnair case we can certainly infer that for individual aid rather than aid schemes, the activities of the aid recipient must be of a certain level of significance to the national economy to prevent worsening of the overall economic situation. However, in the context of the Temporary Framework, the Commission has approved many schemes with a narrow scope such as spas or ski cable operators or with limited geographic coverage. The beneficiaries of these measures are unlikely to be important to the national economy. Perhaps, schemes can support less important companies. It should also be said that aid to individual companies to counter the effects of covid-19 has been authorised by the Commission on the basis of Article 107(2)(b) to compensate for damage.

The General Court went on to make an important clarification. I believe that it is the first instance of such an explicit statement on the meaning of “to remedy”.

“(41) It must be borne in mind that Article 107(3)(b) TFEU does not require that the aid in question is capable, in itself, of remedying the serious disturbance in the economy of the Member State concerned. Once the Commission has established the reality of a serious disturbance in the economy of a Member State, that State may be authorised, if the other conditions laid down in that article are also satisfied, to grant State aid, in the form of aid schemes or individual aid, which help to remedy that serious disturbance. It could therefore involve a number of aid measures, each contributing to that end. Therefore, for an aid measure to be validly based on Article 107(3)(b) TFEU, it cannot be required, in itself, to remedy a serious disturbance in the economy of a Member State.”

But by omitting to include, in paragraph 41 of its judgment, the word “effects” of a serious disturbance, the Court does not answer directly the question how an individual measure can “help to remedy that serious disturbance” and how it can be shown to be necessary, appropriate and proportional, if it is not the effects of the disturbance that are remedied. However, it may be possible to infer from the very next paragraph that it is the effects of the disturbance that are remedied, although the systemic significance of the aid recipients is still an open question as the Court referred to a “a number of aid measures, each contributing”. Finnair was significant, but is this an element that must be required of all recipients of individual aid under Article 107(3)(b)?

“(42) In so far as the applicant claims that the aid at issue is not appropriate to remedy the serious disturbance in the Finnish economy, it is necessary to examine whether, in the contested decision, the Commission sufficiently established that, because of Finnair’s importance for the Finnish economy, that measure was in fact intended to remedy the serious disturbance in the Finnish economy caused by the COVID-19 outbreak.”

In paragraphs 43 to 55 of the judgment, the General Court recounted the findings of the Commission concerning Finnair’s importance to the Finnish economy and rejected Ryanair’s argument that, because Finnair was still very small in relation to the whole economy, the aid to Finnair could not by itself remedy the serious disturbance. According to the General Court the relevant element was that “(56) in view of Finnair’s importance in the Finnish economy, its insolvency would have had serious consequences for the Finnish economy in a crisis context and that, therefore, the measure at issue, in so far as it sought to maintain Finnair’s operations, was appropriate to contribute to remedying the serious disturbance in that economy.” “(57) In essence, Finnair is important for the proper functioning of the Finnish air transport network, which is itself essential to the Finnish economy. At the time the contested decision was adopted, Finnair was uniquely positioned among all the airlines operating in Finland.”

In other words, even though the aid does not in itself have to remedy the disturbance, the Court held, in paragraphs 56 & 57, that the aid could prevent the worsening of the economic situation in the country.

Consequently, the first part of the first plea was rejected.

Must the beneficial effects of the aid be balanced against its adverse effects?

The General Court, first, stressed that “(65) it follows from the wording of [Article 107(3)(b) TFEU] that its authors considered that it was in the interests of the European Union as a whole that one or other of its Member States be able to overcome a major or even an existential crisis which could only have serious consequences for the economy of all or some of the other Member States and therefore for the European Union as a whole. That textual interpretation of the wording of Article 107(3)(b) TFEU is confirmed by comparing it with Article 107(3)(c) TFEU concerning ‘aid to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest’, in so far as the wording of the latter provision contains a condition relating to proof that there is no effect on trading conditions to an extent that is contrary to the common interest, which is not found in Article 107(3)(b) TFEU”.

Then the Court referred to the specific criteria for the application of Article 107(3)(b). “(66) In so far as the conditions laid down in Article 107(3)(b) TFEU are fulfilled, that is to say, in the present case, that the Member State concerned is indeed faced with a serious disturbance in its economy and that the aid measures adopted to remedy that disturbance are, first, necessary for that purpose and, second, appropriate and proportionate, those measures are presumed to be adopted in the interests of the European Union, so that that provision does not require the Commission to weigh the beneficial effects of the aid against its adverse effects on trading conditions and the maintenance of undistorted competition, contrary to what is laid down in Article 107(3)(c) TFEU. In other words, such a balancing exercise would have no raison d’être in the context of Article 107(3)(b) TFEU, as its result is presumed to be positive. Indeed, the fact that a Member State manages to remedy a serious disturbance in its economy can only benefit the European Union in general and the internal market in particular.”

Interestingly, the General Court also noted, in paragraph 68, that the Temporary Framework contains no balancing test and that the single sentence referring to ‘the need for close European coordination of national aid measures” does not constitute a requirement for such a test.

Consequently, the second part of the first plea was rejected too.

Were the principles of non-discrimination, freedom to provide services and freedom of establishment infringed?

The second plea of Ryanair was that the aid measure violated the principle of non-discrimination, as enshrined in Article 18 TFEU, because the measure was not open to all airlines and, as a consequence, it created an obstacle to the free movement and free establishment in the internal market.

The General Court recalled that “(77) the procedure under Article 108 TFEU must never produce a result which is contrary to the specific provisions of the Treaty. Accordingly, State aid, certain conditions of which contravene other provisions of the Treaty, in particular those relating to the freedom to provide services and the freedom of establishment, cannot be declared by the Commission to be compatible with the internal market.”

In the landmark case C-594/18 P, Austria v Commission [Hinkley Point C], the Court of Justice elaborated at length how and why State aid must not infringe other provisions of EU law. The other seminal case on this issue is C-390/06, Nuova Agricast.

Then the Court noted that “(81) individual aid such as the one at issue, by definition, benefits only one undertaking, to the exclusion of all other undertakings, including those in a situation comparable to that of the recipient of that aid. Thus, by its nature, such individual aid introduces a difference in treatment, or even discrimination, which is nevertheless inherent in the individual character of that measure. To maintain, as the applicant does, that the individual aid at issue is contrary to the principle of non-discrimination in essence amounts to calling into question systematically the compatibility with the internal market of any individual aid solely on account of its inherently exclusive and thus discriminatory character, even though EU law allows Member States to grant individual aid provided that all the conditions laid down in Article 107 TFEU are satisfied.”

Indeed, State aid is, by definition, discriminatory because a public measure can be classified as State aid only when it is selective, i.e. when it differentiates between undertakings which are in a similar situation.

But the Court considered necessary to examine whether the aid went beyond the limits of its “inherent” discriminator nature. Those limits are determined by the objective of the aid itself. “(82) That being said, […] it is necessary to ascertain whether [the discrimination in favour of Finnair] is justified by a legitimate objective and whether it is necessary, appropriate and proportionate in order to attain that objective. […] Therefore, it is important to ascertain whether that difference in treatment is permitted under Article 107(3)(b) TFEU, which is the legal basis for the contested decision. That examination means, first, that the objective of the measure at issue satisfies the requirements of that provision and, second, that the detailed rules for granting the measure at issue, namely, in the present case, the fact that it benefits only Finnair, are such as to enable that objective to be achieved and do not go beyond what is necessary in order to attain it.”

With respect to the objective of the measure, the General Court held that “(84) in view of Finnair’s importance for the Finnish economy, the objective of the measure at issue satisfies the conditions laid down by Article 107(3)(b) TFEU.”

With respect to the question whether the measure is capable of attaining that objective and does not go beyond what is necessary, the Court held that “(85) the grant of the State guarantee only to Finnair is appropriate to achieve the objective pursued by the measure at issue and to satisfy the conditions laid down in Article 107(3)(b) TFEU.”

“(88) Moreover, as the Commission rightly submits in its defence, there was no obligation for the Commission to examine whether, in addition to Finnair’s continuity, the Member State concerned had to widen the circle of beneficiaries of the aid, since the contested decision establishes to the requisite legal standard the need to preserve Finnair’s contribution to the Finnish economy. The applicant’s arguments on that point must therefore be rejected.”

With respect to the proportionality of the aid, the Court recalled that “(90) the principle of proportionality, which is one of the general principles of EU law, requires that acts adopted by EU institutions do not exceed the limits of what is appropriate and necessary in order to attain the legitimate objectives pursued by the legislation in question […]; where there is a choice between several appropriate measures, recourse must be had to the least onerous, and the disadvantages caused must not be disproportionate to the aims pursued”.

“(91) In the present case, […] the grant of the State guarantee only to Finnair did not exceed the limits of what was appropriate and necessary to achieve the legitimate objectives pursued by the Republic of Finland and was not therefore disproportionate, contrary to what the applicant claims.”

I really do not understand why the General Court adopted this kind of approach to reject the arguments of Ryanair. Aid that is unnecessary, inappropriate or disproportional is automatically incompatible with the internal market. It means that the aid measure discriminates to a degree that goes beyond the discrimination that is inherent in State aid. That is why compatible aid is an exception. Therefore, the Court could have simply said that compatible aid is compliant with Article 18. Or, compatibility necessarily minimises the discriminatory element of State aid.

Infringement of the freedom to provide services?

With regard to the alleged infringement of the freedom to provide services, as enshrined in Article 56 TFEU, and of the freedom of establishment, the General Court pointed out that “(101) while it is true that the measure at issue relates to individual aid which benefits only Finnair, the applicant has not shown how that exclusive character is such as to deter it from providing services from Finland and to Finland, or from exercising its freedom of establishment in that Member State. In particular, it fails to identify the elements of fact or law which cause the individual aid at issue to produce restrictive effects that go beyond those which trigger the prohibition in Article 107(1) TFEU, but which, […] are nevertheless necessary and proportionate to remedy the serious disturbance in the Finnish economy caused by the COVID-19 pandemic, in accordance with the requirements of Article 107(3)(b) TFEU.” “(102) Consequently, the measure at issue does not constitute a restriction on the applicant’s freedom of establishment or freedom to provide services. Furthermore, the applicant cannot criticise the Commission for not having expressly examined the compatibility of that measure with the freedom of establishment and the freedom to provide services.”

The General Court also rejected a third plea alleging infringement of Article 108(2) TFEU [because the Commission did not open the formal investigation procedure] and a fourth plea claiming that the Commission failed to state reasons for its decision. The Court found that, as the measure was necessary, appropriate and proportional, the Commission was justified not to have doubts as to its compatibility with the internal market and that the reasoning of the Commission was sufficient.

Since all the pleas of Ryanair were rejected, the Court dismissed in its entirety the application of Ryanair.

II. Aid to compensate SAS for damage it had suffered as a result of travel restrictions

Ryanair contested the Commission decision in case SA.56795 which authorised aid for SAS in the form of a guarantee on a revolving credit facility of up to SEK 1.5 billion. The purpose of the guarantee was to compensate SAS for part of the damage it suffered as a result of cancellation of its flights after the imposition of travel restrictions.

Is aid to make good the damage suffered by a single undertaking compatible with Article 107(2)(b)?

Ryanair claimed that the purpose of aid granted under Article 107(2)(b) TFEU cannot be to make good the damage suffered by a single undertaking.

The General Court noted that “(20) the applicant is correct in observing that SAS is not the only company, nor the only airline, to be affected by the exceptional occurrence at issue.” “(21) However, […] there is no requirement for Member States to grant any aid to make good the damage caused by an exceptional occurrence within the meaning of Article 107(2)(b) TFEU.” “(22) While Article 108(3) TFEU requires Member States to notify their plans as regards State aid to the Commission before they are put into effect, it does not, however, require them to grant any aid”. “(24) Consequently, […] Member States […] cannot be required to grant aid to all of the victims of that damage.”

This is an important statement, as it is often wrongly believed that undertakings have a right to State aid. [At this point, the General Court cited case C-481/17, Yanchev, paragraph 22.]

Was the aid proportionate to the damage suffered by SAS?

The second plea of Ryanair was that the Commission authorised possible overcompensation of the damage suffered by SAS.

It is a fundamental principle of Article 107(2)(b) that overcompensation can never be compatible with the internal market. The problem in this case was that the calculation of the damage was provisional and ex ante, rather than ex post; i.e. before the full extent of the damage was known.

The Court, first, reiterated the established principle in the case law that “(30) aid likely to exceed the losses incurred by its beneficiaries is not covered by Article 107(2)(b) TFEU”.

“(31) Although […] the extent of the damage suffered by SAS was not yet known when that decision was adopted, […] what was at issue was ‘the loss of added value’, consisting of the difference between revenue for the period from March 2019 to February 2020 and that from March 2020 to February 2021, excluding, first, avoided variable costs, calculated on the basis of the costs incurred between March 2019 and February 2020, and, secondly, the profit margin relating to the loss in revenue. The damage was provisionally assessed by reference to a fall in air traffic of between 50 and 60% for March 2020 to February 2021 in comparison with the period from March 2019 to February 2020 and amounted to between SEK 5 and 15 billion.”

“(32) In those circumstances, […] even if the quantum of aid stemming from the measure at issue was the same as the amount guaranteed, namely SEK 1.5 billion, that would still be lower than the damage suffered by SAS. […] The Kingdom of Denmark had committed to carry out an ex post assessment of the damage actually suffered by SAS by no later than 30 June 2021 and to request the repayment of any aid received which exceeds that damage, taking into account all the aid liable to be granted to SAS owing to the Covid-19 pandemic, including by foreign authorities, the Norwegian authorities among them.”

“(36) Consequently, it must be held that, having regard to the circumstances of the case, characterised by the exceptional occurrence, within the meaning of Article 107(2)(b) TFEU, caused by the Covid-19 pandemic, its evolving nature and the fact that the quantification of the damage caused and the amount of aid finally granted is necessarily prospective in nature, the Commission set out in the contested decision, in sufficiently precise terms, a method of calculation for assessing the damage suffered by SAS.”

“(39) As regards, […] the damage suffered by the other airlines in Denmark, the applicant submits, […] that the Commission was obliged to take into account all the victims of the exceptional occurrence at issue covered by Article 107(2)(b) TFEU. However, it must be borne in mind that, […] the Member States are not required to grant aid to all the victims of damage caused by such an exceptional occurrence. Consequently, in contrast to what is claimed by the applicant, the award of aid to SAS alone did not depend on the Commission showing that the damage caused by that occurrence affected only that company.”

Could the proportionality of the aid be calculated ex ante?

Ryanair argued that it was not possible for the Commission to determine ex ante the proportionality of the aid; i.e. before March 2021.

The Court, first, noted that “(41) the maximum amount of aid, that is to say, the guaranteed amount of SEK 1.5 billion, will be paid only if SAS is not able to repay all the sums which it borrowed.” Then the Court pointed out that according to the 2008 Commission Notice on reference and recovery rates, “(42) the amount of aid for SAS corresponded, in fact, to the difference in the interest rate given to SAS with or without the measure at issue on the date of the adoption of the contested decision.” “(43) The Commission calculated the maximum interest rate, in the absence of the measure at issue, as being 10.26%, which the applicant has not disputed. Consequently, the amount of aid paid to SAS cannot exceed SEK 153.9 million in the first year, from which the cost of that measure charged to SAS should also be deducted, which, according to the contested decision, amounts to at least SEK 15 million per annum, in addition to the interest rate negotiated by SAS, taking into account the adoption of that measure.” “(45) The Commission found, in any event, that the damage suffered by SAS, estimated to be at least SEK 5 billion, would be greater than the amount guaranteed by the measure at issue, that is to say, SEK 1.5 billion. Although the calculation of the damage depends on forecasts relating to the fall in air traffic, the applicant adduces no evidence capable of calling that assessment into question.” “(46) In those circumstances, the applicant is not justified in disputing the proportionality of the measure at issue.”

Advantage v economic benefit

Ryanair also argued that the Commission failed to take into account the economic [commercial] benefits resulting from the measure at issue.

The Court replied that “(51) for the purposes of assessing the compatibility of aid with the internal market, the advantage procured by that aid for the recipient does not include any economic benefit the recipient may have enjoyed as a result of exploiting the advantage. That benefit may not be the same as the advantage constituting the aid, and there may indeed be no such benefit, but that cannot justify a different assessment of the compatibility of the aid with the internal market”. “(52) Consequently, it must be held that the Commission, correctly, took account of the advantage procured for SAS, resulting from the measure at issue, […] However, the Commission cannot be criticised for not having determined the existence of any possible economic benefit resulting from that advantage.”

I do not think that the argument of Ryanair is relevant in the context of Article 107(2)(b), nor is it clear why the Court did not say so explicitly. It is already recognised in the case law that the advantage conferred by State aid is not necessarily the same as the economic benefit that the aid recipient eventually enjoys. The latter depends on how the recipient exploits the aid to strengthen its market position or how it fails to do so by mismanaging the aid. Nonetheless, Article 107(2)(b) does not require a distinction between advantage and benefit. Nor, does any other provision in Article 107(2) or (3) impose an obligation on the Commission to differentiate between advantage and benefit. However, in weighing the positive and negative effects of aid under Article 107(3)(c), the Commission has to assess the impact of the aid on trade and competition. In practice this exercise does entail that the Commission considers how the recipient may use the aid to the detriment to its competitors. But still it does not have to determine whether somehow the commercial benefit that is eventually reaped by the recipient exceeds the advantage conferred by the aid.

Was the principle of non-discrimination infringed?

Ryanair argued that the compensation to SAS was discriminatory and as such it was not necessary for achieving the objective of the measure to make good the damage caused by covid-19.

The General Court recalled that “(58) the principle of non-discrimination requires that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment is objectively justified”.

Then it responded to the argument of Ryanair that Denmark should have taken into account other airlines as they represented 68% of the country’s total domestic and international passenger air traffic by noting that “(62) the objective of the measure at issue is not, aside from compensating SAS in part for the damage arising from the Covid-19 pandemic, to preserve the connectivity of Denmark”. “(63) The measure at issue is intended solely to compensate SAS in part for the damage arising from the cancellation or rescheduling of its flights”.

The Court added that “(65) individual aid, such as that at issue, by definition benefits only one company, to the exclusion of all the other companies, including those in a situation comparable to that of the recipient of that aid. Consequently, such individual aid, by its nature, brings about a difference in treatment, or even discrimination, which is however inherent in the individual character of that measure. To argue, as the applicant does, that the individual aid at issue is contrary to the principle of non-discrimination amounts, in essence, to calling into question systematically the compatibility of any individual aid with the internal market solely on account of its inherently exclusive and thus discriminatory nature, even though EU law allows Member States to grant individual aid, provided that all the conditions laid down in Article 107 TFEU are met.”

Since all airlines in Denmark suffered as a result of travel restrictions, the Court held that “(68) even if, as the applicant submits, the difference in treatment brought about by the measure at issue, in that it benefits only SAS, may amount to discrimination, it is necessary to ascertain whether it is justified by a legitimate objective and whether it is necessary, appropriate and proportionate for achieving that objective […] Therefore, it is important to ascertain whether that difference in treatment is permitted under Article 107(2)(b) TFEU, which is the legal basis for the contested decision. That examination requires, first, that the objective of the measure at issue satisfies the requirements laid down in that provision and, secondly, that the conditions for granting the measure at issue, namely, in the present case, that it benefits only SAS, are such as to enable that objective to be achieved and do not go beyond what is necessary to achieve it.”

The General Court found, in paragraphs 69-72, the compensation for damage resulting from the travel restrictions to fall within the scope of Article 107(2)(b) as covid-19 was classified as an exceptional occurrence and that SAS was more affected because of its larger market share. “(74) Consequently, it must be held that the difference in treatment in favour of SAS is appropriate for the purpose of making good the damage resulting from those restrictions and does not go beyond what is necessary to achieve that objective”.

But does the conclusion of the Court in paragraph 74 mean that Member States must prioritise compensatory aid to the companies that have suffered the largest damage? Since Member States are not under obligation to grant State aid, can they choose to compensate the losses of a company that has suffered less than another?

The Court also held, in paragraphs 76-81, that the aid did not infringe the freedom of establishment and the free provision of services because it did not create any barriers affecting foreign airlines.

In the end the General Court rejected the application of Ryanair in its entirety.

*Article published on Lexxion (click here), republished in e-Competitions with the courtesy of the author(s). The original title of this article appears below the e-Competitions title. Authors are welcome to write an alternative article on this case/text, provided

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Phedon Nicolaides, The EU General Court decides that State aid may be granted to a single company that is important for the national economy and does not need to be granted to all competitors (Ryanair), 14 avril 2021, e-Competitions April 2021, Art. N° 100483

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