Judgment summary
Ryanair DAC brought an action under Article 263 TFEU seeking annulment of Commission Decision C(2024) 2339 final of 15 April 2024 concerning State aid SA.109677 (2023/N), by which the Commission decided not to raise objections to the extension and amendment of an Italian compensation scheme for airlines affected by the COVID-19 pandemic [1], [9].
The applicant relied on five pleas: infringement of the freedom to provide services and freedom of establishment; infringement of Article 8 of the Rome I Regulation; infringement of Article 107(2)(b) TFEU; infringement of its procedural rights; and failure to state reasons [14].
The General Court decided to examine the pleas without first ruling on the admissibility of the action, since the action was in any event unfounded [13].
The Court rejected all five pleas and dismissed the action in its entirety [130]. Ryanair DAC was ordered to bear its own costs and to pay those of the Commission and the interveners [131].
Background
By Decree-Law No 34 of 19 May 2020, as amended and converted into 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 during the COVID-19 pandemic [2].
On 15 October 2020 the Italian Republic notified the Commission of an aid scheme paid from that fund, intended to make good damage suffered by eligible airlines in the period from 1 March to 15 June 2020 [3]. The eligibility conditions included that the airline hold a valid air operator's certificate and an Italian licence, that aircraft capacity exceed 19 places, and a minimum remuneration requirement for employees whose home base is located in Italy [4].
On 22 December 2020 the Commission, by its initial decision, decided not to raise objections to the scheme on the basis of Article 107(2)(b) TFEU. The Italian authorities had identified three airlines meeting the eligibility conditions, namely Blue Panorama Airlines SpA, Air Dolomiti SpA and Neos SpA [5]. On 9 August 2021 the Commission decided not to raise objections to an extension of the scheme covering 16 June to 31 December 2020 [6].
In its judgment of 24 May 2023 (T‑268/21), the General Court annulled the initial decision, finding an insufficient statement of reasons concerning the minimum remuneration requirement. The Commission then adopted an amended initial decision on 26 March 2024 [7]. On 23 January 2025 the Court of Justice, in Neos v Ryanair and Commission (C‑490/23 P), set aside the General Court's judgment [43].
On 13 October 2023 the Italian Republic notified the extension and amendment of the scheme to cover damage suffered from 1 January to 31 December 2021. The amendment increased the budget by EUR 100 million and altered the parameters for calculating aid, while maintaining the eligibility conditions [8].
Core dispute
The applicant sought annulment of the contested decision, arguing that the Commission had wrongly declined to raise objections to the amended scheme [10].
Central to the dispute was the minimum remuneration requirement, being the eligibility condition requiring beneficiaries to apply to employees with a home base in Italy remuneration not lower than the minimum established by the applicable national collective agreement [4]. The applicant contended that this requirement infringed the freedom to provide services and the freedom of establishment, and Article 8 of the Rome I Regulation, and that the Commission had failed to assess its justification [15], [46].
The applicant also challenged the Commission's examination under Article 107(2)(b) TFEU, alleging manifest errors of assessment regarding the causal link between the travel restrictions and the damage and the proportionality of the scheme, including alleged failures to take account of Blue Panorama's pre-existing financial difficulties and other State aid received by the Lufthansa Group to which Air Dolomiti belongs [65], [66].
Court findings
On the first plea, the Court held that the applicant had failed to explain how the minimum remuneration requirement made cross-border provision of services more difficult or was liable to prohibit, impede or render less advantageous the activities of a provider established in another Member State [35]. The requirement applied only to workers with a home base in Italy and did not target posted workers [39]. The Court held that the Commission was not required to carry out an in-depth assessment of the justification for the requirement, consistent with the Court of Justice judgment in Neos v Ryanair and Commission (C‑490/23 P) [43]. The arguments on freedom of establishment were rejected for the same reasons [44].
On the second plea, the Court found that the applicant had not provided specific and substantiated arguments explaining how the requirement limited the choice of law applicable to employment contracts or deprived employees of protection under Article 8 of the Rome I Regulation. The risk of a breach of that article was not demonstrated [61], [62], [63].
On the third plea, the Court held that since the amended scheme was an aid scheme and not an individual aid measure, the Commission was not required to examine the specific situation of Blue Panorama or the risk of a cumulation of aid for Air Dolomiti [77], [88]. The methodology excluded costs related to insolvency proceedings [79], and the applicant had not identified any specific expenditure that should have been excluded [80]. The Court noted safeguards against overcompensation, including a reporting commitment and an ex post recovery mechanism [90], [104]. The principle in TWD v Commission was held not applicable, because the recapitalisation aid to Deutsche Lufthansa had not been considered incompatible and no recovery had been ordered when the contested decision was taken [92]. The methodology's use of retention rates was found to exclude passengers who would not have travelled regardless of the restrictions [102].
On the fourth plea, the Court held that the applicant had reproduced its earlier arguments and had not put forward specific elements demonstrating that the Commission had encountered serious difficulties [115].
On the fifth plea, the Court held that the statement of reasons enabled the applicant to exercise its right to an effective remedy and the Court to exercise its review, satisfying Article 296 TFEU [126], [127], [128].
Outcome
The General Court dismissed the action in its entirety [130]. It 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 [131].
Major issues / areas of contention
- Whether the minimum remuneration requirement for employees with a home base in Italy infringed the freedom to provide services under Article 56 TFEU and Article 15 of Regulation (EC) No 1008/2008 and the freedom of establishment under Article 49 TFEU.
- Whether the Commission was required to assess the appropriateness, necessity and proportionality of the minimum remuneration requirement.
- Whether the minimum remuneration requirement infringed Article 8(1), (2) and (4) of the Rome I Regulation concerning the law applicable to individual employment contracts.
- Whether the concept of 'home base' was equivalent to the 'place where the employee habitually carries out his work'.
- Whether the Commission committed manifest errors of assessment under Article 107(2)(b) TFEU regarding the causal link between the travel restrictions and the damage and the proportionality of the scheme.
- Whether the Commission was required to take account of Blue Panorama's pre-existing financial difficulties and other State aid received by the Lufthansa Group.
- Whether the applicant's procedural rights were infringed by the Commission not initiating the formal investigation procedure.
- Whether the Commission fulfilled its obligation to state reasons under Article 296 TFEU.