Opinion of Advocate General Mengozzi delivered on 5 July 2016.

• Jurisdiction: European Union
• Celex Number: 62015CC0164
• ECLI: ECLI:EU:C:2016:515
• Court: Court of Justice (European Union)
• Date: 05 July 2016
• Docket Number: C-165/15,C-164/15
• Procedure Type: Recurso de casación - infundado

OPINION OF ADVOCATE GENERAL

MENGOZZI

delivered on 5 July 2016 ( 1 )

Joined Cases C‑164/15 P and C‑165/15 P

European Commission

v

Aer Lingus and Ryanair

‛Appeal — State aid — Irish tax on air passengers — Application of differentiated rates — Reduced rate for flights to destinations no more than 300 km from Dublin — Advantage — Selective nature — Assessment where the fiscal measure is likely to constitute a restriction on the freedom to provide services — Recovery — Excise duties — Passing the advantage on to the beneficiary undertaking’s customers’

In the present joined cases, the Commission is seeking the partial annulment of the judgments handed down by the General Court on 5 February 2015 in Cases T

1. ‑473/12Aer Lingus v Commission (EU:T:2015:78: ‘the Aer Lingus judgment’) and T‑500/12Ryanair v Commission (EU:T:2015:73: ‘the Ryanair judgment’) (when both judgments are referred to: ‘the judgments under appeal’). The appeals raise the question of whether, and to what extent, the Commission is required to take into account, when calculating the amount of aid to be recovered, the fact that the beneficiaries passed on to their customers the economic advantage which they had obtained.

2. Aer Lingus and Ryanair (when both are referred to: ‘the appellants’) have each lodged a cross-appeal, raising various issues pertaining to the classification of a State measure as aid, particularly where the measure is likely at the same time to constitute a restriction on a fundamental freedom.

I – Background to the disputes

3. As set out in the judgments under appeal, the background to the disputes may be summarised as follows.

4. As of 30 March 2009, Ireland introduced an excise duty, known as the air travel tax (‘the ATT’), payable by every passenger embarking on an aircraft departing from an Irish airport and collected directly from the airlines. ( 2 ) At the time of its introduction, the ATT was calculated on the basis of the distance between the departure airport and the arrival airport, and was set at the rate of EUR 2 in the case of a flight to an airport located no more than 300 km from Dublin airport and EUR 10 in all other cases.

5. Ryanair lodged two separate complaints with the Commission regarding the ATT, one alleging a breach of the rules on State aid and the other based on Article 56 of the Treaty on the Functioning of the European Union (‘the TFEU’) and on Regulation No 1008/2008. ( 3 ) In response to the second complaint, the Commission initiated an investigation regarding possible infringement of the provisions on freedom to provide services and, on 18 March 2010, sent the Irish authorities a letter of formal notice (‘the letter of formal notice addressed to the Irish authorities’). Ireland then amended, as of 1 March 2011, the rules on calculating the ATT and introduced a single rate of EUR 3, applicable regardless of the distance travelled. ( 4 ) The Commission then concluded its investigation.

6. On 13 July 2011, the Commission opened a formal investigation procedure, pursuant to Article 108(2) TFEU, in respect of the lower rate of the ATT applied between 30 March 2009 and 1 March 2011. On 25 July 2012, the Commission adopted Decision 2013/199/EU concerning State aid SA.29064 (11/C, ex 11/NN) — Differentiated air travel rates implemented by Ireland (‘the contested decision’). ( 5 ) According to Article 1 of the decision, the aid in the form of a lower travel tax applicable to all flights operated by aircraft capable of carrying more than 20 passengers and not used for State or military purposes, departing from an airport handling more than 10000 passengers a year to a destination located no more than 300 km from Dublin airport between 30 March 2009 and 1 March 2011, unlawfully put into effect by Ireland in breach of Article 108(3) TFEU was incompatible with the internal market. Article 4(1) required Ireland to recover the aid. Recital 70 in the preamble set the amount of the aid as the difference between the lower rate of the ATT and the standard rate of EUR 10 (that is to say, EUR 8 per passenger) and listed the appellants among the beneficiaries.

II – Procedure before the General Court and the judgments under appeal

7. On 1 November 2012 and 15 November 2012 respectively, Aer Lingus and Ryanair brought actions before the General Court seeking to have the contested decision annulled. Each appellant raised five pleas in law in support of its action.

8. In the judgments under appeal, the General Court examined and rejected, in each of the applications, the fifth plea in law, alleging a breach of the obligation to state reasons, ( 6 ) and Ryanair’s fourth plea in law, alleging a failure on the part of the Commission to give notification of the decision to recover the aid. ( 7 ) The cross-appeals do not relate to those parts of the judgments under appeal. The General Court then considered and rejected, in each of the actions, the first plea in law, by which the appellants, in essence, disputed the classification of the reduced rate of the ATT as aid. Those parts of the judgments under appeal form the subject matter of the cross-appeals. Lastly, the General Court examined and partially upheld the third and fourth pleas of Aer Lingus and the second and third pleas of Ryanair, which related to the methods of calculating the amount of aid. The appeals lodged by the Commission concern those parts of the judgments under appeal.

9. By point 1 of the operative part of the judgments under appeal, the General Court annulled Article 4 of the contested decision ‘in so far as it orders the recovery of the aid from the beneficiaries for an amount that is set at EUR 8 per passenger in recital 70 of that decision’. The judgments under appeal dismiss the actions as to the remainder (point 2 of the operative part of the judgments) and order the Commission to pay, in addition to its own costs, half of the costs incurred by Aer Lingus and Ryanair (point 3 of the operative part of the judgments).

III – Analysis

10. The Commission’s appeals are directed against point 1 of the operative part of the judgments under appeal. Supported by Ireland, the Commission claims that the Court should annul that point of the operative part, dismiss in their entirety the actions before the General Court or, in the alternative, refer the cases back to the General Court and order Aer Lingus and Ryanair to pay the costs (or reserve the costs if the cases are referred back to the General Court). In support of its appeals, the Commission relies on a single ground of appeal, alleging a breach, by the General Court, of Article 108(3) TFEU and Article 14 of Regulation No 659/1999. ( 8 )

11. The cross-appeals are, on the other hand, directed against point 2 of the operative part of the judgments under appeal, by which the General Court dismissed ‘as to the remainder’ the actions by Aer Lingus and Ryanair. The cross-appeals contend that the Court should annul that point of the operative part, annul the contested decision and order the Commission to pay the costs. Both cross-appeals raise a single ground of appeal, subdivided into four parts and directed against the rejection, by the General Court, of the pleas in law relied on by Aer Lingus and by Ryanair concerning the classification of the reduced rate of the ATT as State aid.

12. I shall begin by analysing the cross-appeals, as they relate to an aspect of the judgments under appeal (the classification of the measure at issue as aid) which logically precedes the issue raised in the main appeals (the legality of the recovery order).

A – The cross-appeals

13. The complaints set out by Aer Lingus and Ryanair in their respective appeals and the arguments put forward in their support broadly overlap. For the sake of simplicity, I shall, where possible, group and examine them together.

1. The complaint alleging that the General Court erred in law in taking the view that the unlawful nature of a measure is irrelevant as regards its classification as State aid (first part of the single ground of Aer Lingus’ cross-appeal)

(a) The Aer Lingus judgment

14. The first complaint raised by Aer Lingus in its sole ground of appeal is directed against paragraph 43 of the Aer Lingus judgment, in which the General Court notes, as a preliminary point, that the concept of State aid is an objective one and that the question of whether there is an advantage within the meaning of Article 107(1) TFEU ‘must be examined in the light of the anticompetitive effects caused by the aid measure in question, and not in the light of other factors such as the lawfulness of the measure by which the aid is granted’.

(b) Succinct presentation of the arguments of the parties

15. Aer Lingus claims that if paragraph 43 of the Aer Lingus judgment is to be construed as meaning that, when analysing whether a selective advantage exists, the fact that the domestic measure at issue is in part unlawful, or forms an integral part of a measure that is unlawful, should be disregarded, then that paragraph is vitiated by an error of law. According to Aer Lingus, failure to take into consideration the unlawful nature of the domestic measure that gives rise to the selective advantage is incompatible with the case-law of the Court of Justice and of the General Court according to which, in assessing the existence of aid in a State intervention, it is necessary to consider the measure as a whole and its context. Aer Lingus notes that it argued, before the General Court, that the higher rate of the ATT was unlawful, since it was contrary to Article 56 TFEU and to Regulation No 1008/2008, and...