France summoned to recover illegal state aid paid to Ryanair and Transavia

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State aid: Commission adopts package of decisions regarding aid to airports and airlines in France and Germany; asks France to recover incompatible aid granted to airlines

The European Commission has adopted six decisions concerning public support granted to airports and airlines in France and Germany. The decisions are based on the Commission’s new guidelines on state aid to airports and airlines (see IP/14/172) adopted in February 2014 as part of its State Aid Modernisation (SAM) strategy.

The Commission has taken into consideration the importance of regional airports for local accessibility and economic development as well as the need to preserve a level playing field in the sector. The Commission has approved the state aid granted to the airports of Dortmund, Leipzig Halle, Niederrhein-Weeze, Pau, Angoulême and Nîmes, and found it to be in line with the Commission’s guidelines.

However, in the cases of Pau, Nîmes and Angoulême, the Commission has concluded that Ryanair, and, in the case of Pau, Transavia, received state aid which is incompatible with EU rules. The Commission’s analysis has demonstrated that these airlines paid less than the additional costs linked to their presence in the airport. These airlines therefore benefitted from an undue economic advantage, distorting competition in the Single Market. France must now recover the incompatible aid from the companies that received it in order to restore the level playing field.

Commission Vice President Joaquín Almunia in charge of competition policy said: EU state aid rules in the aviation sector allow public authorities to grant support where it is justified, namely where it improves the accessibility of a region and meet citizens’ transport needs. However, taxpayers’ money should not be used to grant an undue advantage to certain airlines, distorting competition in the Single Market“.

The Commission has also extended the scope of its investigation concerning possible state aid to Ryanair at Klagenfurt airport (Austria).

For more details on the decisions adopted today, see MEMO/14/498.

There are still 11 ongoing formal investigations about State aid to airports and airlines.

Background

The new guidelines (see IP/14/172, Memo/14/121 and also the Policy Brief on the guidelines) provide Member States with flexibility for granting necessary investment aid to regional airports. Moreover, operating aid can be granted for airports with less than 3 million passengers during a transitional period of 10 years. Airports with less than 700 000 passengers can benefit from operating aid without transitional period.

The objective of these guidelines is to preserve the accessibility of regions, whilst avoiding the duplication of unprofitable airports, a waste of public resources and undue distortions of competition.

The new guidelines also bring more legal certainty concerning the financial relationships between airports and airlines. The guidelines clearly specify that when setting up agreements with an airline, the airport needs to ensure that the expected costs generated by the agreements will be covered by the corresponding expected revenues. When this is not the case, the airline benefits from an undue advantage which in principle constitutes incompatible State aid.

Since the beginning of 2014 and before today’s decisions, the Commission had already adopted eleven decisions concerning State aid to airports and/or airlines: Berlin Schönefeld (IP/14/173), Aarhus (IP/14/174), Marseille (IP/14/175), Ostrava (IP/14/176), Groningen (IP/14/403), Stretto (IP/14/660), Isles of Scilly (IP/14/533), Canary Islands (IP/14/401), Verona (IP/14/402), Gdynia (IP/14/138) and Dubrovnik (case SA.38168).

Brussels, 23 July 2014

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State aid: Commission refers France to Court for failure to recover incompatible aid from airlines

The European Commission has referred France to the European Court of Justice for failing to recover incompatible aid received by Ryanair and its subsidiary Airport Marketing Services (AMS) for using Pau, Nîmes and Angoulême airports, as well as Transavia for using Pau airport.

The Commission decisions of 23 July 2014 (see also MEMO) required France to recover close to €10 million in total of incompatible state aid from the airlines. This is because through various contractual and marketing arrangements with the airports, the airlines paid less than the additional costs linked to their presence in the airport. The airlines had therefore benefitted from an undue economic advantage, which has to be recovered to remedy the resulting distortion of competition.

On the basis of the information currently at available to the Commission, France has failed to fully recover the incompatible aid within the required period of 4 months. The French authorities have sent out the recovery orders but have not been able to execute them under national law because they are under appeal by the beneficiaries. Under a provision of French law recovery orders are automatically suspended in case of appeal. However, this goes against established European case law on the implementation of recovery decisions by Member States, which prevents national courts from applying such provisions when deciding on appeals against recovery orders.

In order to ensure its state aid decisions are fully implemented the Commission has therefore decided to refer France to the European Court of Justice.

 

Background

Ryanair has also appealed two out of the three Commission’s decisions (concerning Pau and Angoulême) before the EU General Court. These appeals also do not have a suspensory effect under EU law, meaning that France continues to be under an obligation to recover the incompatible aid.

In particular, the Commission decisions required France to recover €0.87 million for Angoulême (from Ryanair and AMS jointly), €2.8 million for Pau (€0.42 million from Ryanair, €1.97 million from Ryanair and AMS jointly and €0.43 million from Transavia) and €6.3 million for Nîmes (from Ryanair and AMS jointly).

Member States have to recover state aid that has been found incompatible by the Commission, within the deadline set in the Commission decision. This is very important because delays in the recovery of unlawful subsidies maintain the distortion of competition created by the aid. That is why Article 14 of Regulation n° 659/99 and the Notice on the implementation of decisions ordering the recovery of unlawful or incompatible aid (also see Press release) provide that Member States should effectively recover the aid from the beneficiary without delay. In particular, according to the Scott case law (C-232/05), any law impeding the effective and immediate implementation of the Commission recovery decision should be left unapplied.

If a Member State does not implement a recovery decision, the Commission may refer the matter to the Court of Justice under Article 108(2) of the Treaty on the Functioning of the European Union (TFEU) that allows the Commission to directly refer cases to the Court for violations of EU state aid rules.

If a Member State does not comply with the judgment, the Commission may ask the Court to impose penalty payments under Article 260 TFEU.

Brussels, 27 July 2015

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