Judgment summary
Ryanair DAC brought an action under Article 263 TFEU seeking annulment of Commission Decision C(2020) 9625 final of 22 December 2020 on State aid SA.59029 (2020/N), which concerned an Italian COVID-19 compensation scheme for airlines with an Italian operating licence [1]. The Commission had decided not to raise objections to the scheme, finding it compatible with the internal market on the basis of Article 107(2)(b) TFEU [6].
The case reached the General Court following referral by the Court of Justice. In the initial judgment of 24 May 2023 (T-268/21), the General Court had upheld part of the fourth plea relating to the obligation to state reasons [8]. On appeal by Neos, the Court of Justice, by judgment of 23 January 2025 (C-490/23 P), set aside the initial judgment and referred the case back [9].
On referral, the General Court was required to examine the first three pleas and the second part of the fourth plea [16]. The Court declined to rule on the admissibility of the action and examined the pleas on their merits in the interests of procedural economy [18].
The General Court rejected each of the pleas and dismissed the action in its entirety [174].
Background
By Decree-Law No 34 of 19 May 2020, as amended and converted into law by Law No 77 of 17 July 2020, the Italian authorities established a fund of EUR 130 million to compensate damage suffered by the air transport sector in the context of the COVID-19 pandemic [2].
By Decree-Law No 104 of 14 August 2020, the Italian authorities authorised, pending completion of the Article 108(3) TFEU procedure, the Minister for Infrastructure and Transport to grant subsidies in advance up to a total amount not exceeding EUR 50 million to airlines meeting the eligibility conditions set out in Article 198 of Decree-Law No 34 [3].
On 15 October 2020, Italy notified the Commission of an aid scheme consisting of subsidies paid out of the fund created by Decree-Law No 34, the legal basis of which was Article 198 of that decree-law [4].
The eligibility conditions included that the airline hold a valid air operator's certificate and an Italian licence, that its aircraft capacity be greater than 19 places, and that it apply to employees whose home base is located in Italy remuneration not lower than the minimum established by the applicable national collective agreement, referred to as the minimum remuneration requirement [5].
The Italian authorities identified three airlines meeting the eligibility conditions, namely Air Dolomiti SpA - Linee Aeree Regionali Europee, Blue Panorama Airlines SpA and Neos SpA, which were interveners in the case [6].
Core dispute
Ryanair raised four pleas. The first alleged infringement of the principles of non-discrimination, the freedom to provide services and the freedom of establishment. The second alleged infringement of Article 107(2)(b) TFEU and a manifest error of assessment of the proportionality of the aid in the light of the damage caused by the COVID-19 pandemic. The third alleged infringement of its procedural rights. The fourth alleged a failure to state reasons [13].
Ryanair contended that the scheme discriminated in favour of airlines holding an Italian licence to the detriment of operators from other Member States, and that the minimum remuneration requirement gave rise to discrimination against airlines established in other Member States [20][43].
Ryanair also argued that the Commission had wrongly assessed the damage caused by travel restrictions, including for the periods from 1 to 9 March and from 3 to 15 June 2020, and had failed to take account of other aid measures possibly granted to the groups to which the beneficiaries belonged [90][91][119].
Court findings
On the principle of non-discrimination, the Court held that Article 107(2) and (3) TFEU derogations must be regarded as special provisions within the meaning of the first paragraph of Article 18 TFEU, so it was necessary only to examine whether the difference in treatment was permitted under Article 107(2)(b) TFEU [33][34]. The Court found the scheme's objective of making good damage caused by the exceptional occurrence of the COVID-19 pandemic met the requirements of that provision, and that the eligibility condition of holding an Italian licence was appropriate and did not go beyond what was necessary [35][41][42].
The Court held the minimum remuneration requirement was not inherent in the objective of the scheme, so the Commission was entitled to examine its compatibility with provisions of EU law other than Articles 107 and 108 TFEU [48]. The scope of the requirement was determined by the home base of employees, not the nationality of the airline, so the alleged discrimination had no basis in fact [49].
On the freedom to provide services and freedom of establishment as regards the Italian licence, the Court found the licence criterion was indissolubly linked to the object of the scheme, and Ryanair had not demonstrated restrictive effects going beyond those inherent in State aid granted under Article 107(2)(b) TFEU [61][63].
On the minimum remuneration requirement and the freedom to provide services, the Court held the requirement applied only to workers with a home base in Italy and did not target posted workers, and that Ryanair had failed to show how it made cross-border service provision more difficult [78][82][88]. The Court held the Commission was not required to carry out an in-depth assessment of the justification for the requirement [86].
On the assessment of damage, the Court found the Commission was fully entitled to authorise aid covering the damage suffered during the entire period at issue from 1 March to 15 June 2020, given the rapid deterioration in travel conditions and the widespread application of travel restrictions [103][104][105]. The Court found the assessment of avoided costs was set out in a sufficiently clear and precise manner, and rejected as speculative and unsubstantiated the arguments concerning postponement of cost-cutting measures [113][117].
On other aid to the beneficiaries' groups, the Court held that, for an aid scheme, the Commission was required only to study the characteristics of the scheme and was not required to assess the risk of a spill-over of aid to the groups [127][129]. Ryanair's arguments regarding a particular risk for Air Dolomiti and the Lufthansa Group were purely speculative [132].
On procedural rights, the Court found Ryanair had not demonstrated serious difficulties requiring the Commission to initiate the formal investigation procedure, including as regards the compatibility of the minimum remuneration requirement with Article 8 of the Rome I Regulation [161].
On the duty to state reasons, the Court found the contested decision contained a sufficient statement of reasons [173].
Outcome
The General Court dismissed the action in its entirety [174].
The Court ordered Ryanair DAC to bear its own costs and to pay those incurred by the European Commission, Neos SpA and Air Dolomiti SpA - Linee Aeree Regionali Europee relating to the procedure on referral before the General Court in Case T-268/21 RENV, to the appeal proceedings before the Court of Justice in Case C-490/23 P and to the initial proceedings before the General Court in Case T-268/21. Ryanair was also ordered to pay the costs incurred by Blue Panorama Airlines SpA relating to the initial proceedings before the General Court [177].
Major issues / areas of contention
- Whether the scheme's eligibility condition of holding an Italian operating licence infringed the principle of non-discrimination under Article 107(2)(b) TFEU.
- Whether the minimum remuneration requirement gave rise to discrimination against airlines established in other Member States.
- Whether the scheme and the minimum remuneration requirement infringed the freedom to provide services under Article 15 of Regulation No 1008/2008 and the freedom of establishment.
- Whether the Commission committed a manifest error in assessing the damage caused by travel restrictions during the period from 1 March to 15 June 2020, including the causal link and the assessment of avoided costs.
- Whether the Commission should have examined the risk of aid spilling over to the groups to which the beneficiaries belonged.
- Whether the Commission encountered serious difficulties requiring it to initiate the formal investigation procedure, thereby infringing Ryanair's procedural rights.
- Whether the minimum remuneration requirement complied with Article 8 of the Rome I Regulation.
- Whether the contested decision satisfied the obligation to state reasons under Article 296 TFEU.