The EU General Court annuls for inadequate reasoning two COVID-19 related State aid decisions granted by the Netherlands and Portugal while also confirming in a third decision the legality of a Spanish State aid scheme in the air transport sector (Ryanair)

On 19 May 2021, the General Court (“GC”) annulled two decisions of the European Commission, following Ryanair’s challenges of State aid granted to respectively TAP (Portugal’s national airline) and KLM (subsidiary of the Air France-KLM holding company).

In June and July 2020, TAP and KLM received government cash injections through Portuguese and Dutch aid measures of respectively EUR 1.2 billion and EUR 3.4 billion to address immediate liquidity needs amid the COVID-19 outbreak.

In annulling the two decisions, the GC set out its view that the Commission had failed to provide adequate reasons for approving the aid measures:

  • Regarding the TAP decision, in the GC’s opinion, in particular, the Commission had merely provided details on the beneficiary’s financial situation and the difficulties caused by the COVID-19 pandemic, rather than conducting the requisite assessment (e.g., whether TAP belongs to a group and, if so, whether the difficulties faced by TAP were intrinsic and not the result of an arbitrary allocation of costs within the group and whether those difficulties were too serious to be dealt with by the group itself).
  • Regarding the KLM decision, in the GC’s opinion, in particular, the Commission had not adequately set out the elements necessary for assessing a complex situation, featuring the parallel grant of two State aid measures to two subsidiaries of the same holding company (in May 2020, Air France, another subsidiary of the same Air France-KLM holding company, had already received €7 billion in State aid). Rather, the Commission simply concluded that KLM was the beneficiary of the contested aid measure and that the Dutch authorities had confirmed that the financing granted to KLM would not be used by Air France. Nevertheless, the GC temporarily suspended the effects of the annulment of the two decisions pending the adoption of new Commission decisions.

The GC deemed that in light of the serious disturbances to the economy caused by the COVID-19 pandemic, calling into question such aid would have particularly damaging consequences for the Portuguese and Dutch economies and air transport services.

On the same day, the GC dismissed another Ryanair challenge to a EUR 10 billion Spanish solvency support fund for companies experiencing temporary difficulties due to the pandemic. The GC rejected all of Ryanair’s claims, indicating its view that the economic support granted by the Spanish government constitutes a State aid scheme that is proportionate and non-discriminatory.

Since 1 May 2020, Ryanair has brought a total of 21 appeals against Commission decisions authorizing State aid granted by Member States to the benefit of national air carriers.

On 17 February 2021 and 14 April 2021, the GC rejected five of those appeals. On 10 June 2020 and 13 July 2020, Ryanair appealed the first two GC rulings before the European Court of Justice.

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Renato Antonini, Kaarli Harry Eichhorn, Jörg Hladjk, Cristiana Spontoni, The EU General Court annuls for inadequate reasoning two COVID-19 related State aid decisions granted by the Netherlands and Portugal while also confirming in a third decision the legality of a Spanish State aid scheme in the air transport sector (Ryanair), 19 mai 2021, e-Competitions May 2021, Art. N° 101084

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