Ryanair DAC v European Commission.

• Jurisdiction: European Union
• ECLI: ECLI:EU:T:2022:390
• Docket Number: T-657/20
• Date: 22 June 2022
• Celex Number: 62020TJ0657
• Court: General Court (European Union)
• Procedure Type: Action for annulment

JUDGMENT OF THE GENERAL COURT (Tenth Chamber, Extended Composition)

22 June 2022 (*)

(State aid – Finnish air-transport market – Aid granted by Finland to Finnair in the context of the COVID-19 pandemic – Recapitalisation of an airline by its public and private shareholders on a pro rata basis in proportion to the previously existing ownership structure – Decision not to raise any objections – Temporary Framework for State aid measures – Measure intended to remedy a serious disturbance in the economy of a Member State – Derogation from certain requirements of the temporary framework – No weighing of the beneficial effects of the aid against its adverse effects on trading conditions and the maintenance of undistorted competition – Equal treatment – Freedom of establishment – Freedom to provide services – Obligation to state reasons)

In Case T‑657/20,

Ryanair DAC, established in Swords (Ireland), represented by F.‑C. Laprévote, V. Blanc, E. Vahida, S. Rating and I.‑G. Metaxas-Maranghidis, lawyers,

applicant,

v

European Commission, represented by L. Flynn, S. Noë and F. Tomat, acting as Agents,

defendant,

supported by

French Republic, represented by T. Stéhelin and P. Dodeller, acting as Agents,

and by

Republic of Finland, represented by H. Leppo and A. Laine, acting as Agents,

interveners,

THE GENERAL COURT (Tenth Chamber, Extended Composition),

composed of A. Kornezov, President, E. Buttigieg, K. Kowalik‑Bańczyk, G. Hesse (Rapporteur) and D. Petrlík, Judges,

Registrar: I. Pollalis, Administrator,

having regard to the written part of the procedure,

further to the hearing on 8 December 2021,

gives the following

Judgment

1 By its action on the basis of Article 263 TFEU, the applicant, Ryanair DAC, seeks annulment of European Commission Decision C(2020) 3970 final of 9 June 2020 on State aid SA.57410 (2020/N) – Finland COVID-19: Recapitalisation of Finnair (‘the contested decision’).

Background to the dispute

2 On 3 June 2020, the Republic of Finland notified the Commission, in accordance with Article 108(3) TFEU, of an aid measure in the form of a recapitalisation (a rights issue) of an amount which, depending on the final terms of the rights issue, could range from EUR 499 million to EUR 512 million (‘the measure at issue’). The new shares were offered to all the shareholders of the beneficiary, Finnair, Plc (‘the beneficiary’ or ‘Finnair’), on a pro rata basis in proportion to their existing shares in its capital.

3 The measure at issue is based on Article 107(3)(b) TFEU. It follows the grant of a State guarantee for Finnair which the Commission, in Decision C(2020) 3387 final of 18 May 2020 on State aid SA.56809 (2020/N) – Finland COVID-19: State guarantee for Finnair (‘the State guarantee decision’), declared to be compatible with the internal market in the light of sections 3.2 and 3.4 of the Commission Communication of 19 March 2020 entitled ‘Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak’ (OJ 2020 C 91 I, p. 1), as amended on 3 April and 8 May 2020 (‘the temporary framework’). That State guarantee covered 90% of a loan of EUR 600 million obtained by Finnair from a pension fund.

4 On 9 June 2020, the Commission adopted the contested decision, by which it decided not to raise objections to the measure at issue on the ground that it was compatible with the internal market pursuant to Article 107(3)(b) TFEU. The Commission assessed the compatibility of each measure forming part of the overall transaction, namely the State guarantee and the recapitalisation. In particular, it examined whether any effects arose from the cumulative presence of the two measures and determined whether those possible cumulative effects were compatible with the internal market.

Forms of order sought

5 The applicant claims that the Court should:

– annul the contested decision;

– order the Commission to pay the costs.

6 The Commission contends that the Court should:

– dismiss the action as inadmissible or unfounded;

– order the applicant to pay the costs.

7 The French Republic and the Republic of Finland contend that the Court should dismiss the action.

Law

8 In support of the action, the applicant puts forward four pleas in law, alleging, first, infringement of Article 107(3)(b) TFEU, second, infringement of the principles of non-discrimination, the freedom to provide services and the freedom of establishment, third, infringement of its procedural rights and, fourth, failure to state reasons.

Admissibility

9 The Commission, supported by the French Republic, disputes the admissibility of the first three pleas. The Commission argues that the applicant is not entitled to challenge the merits of the contested decision since it has not established that its competitive position on the Finnish air-transport market has been substantially affected. The applicant, it submits, has merely mentioned that it provided services on the Helsinki (Finland)-Vienna (Austria) route during the summer of 2020, but has stated that it had ended that route. The Commission therefore also doubts that the applicant has established that it was an interested party since it has not provided any evidence to demonstrate that it was in competition with the beneficiary of the aid.

10 The applicant disputes those pleas of inadmissibility.

11 It should be borne in mind that, where the Commission adopts a decision not to raise objections on the basis of Article 4(3) of Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 [TFEU] (OJ 2015 L 248, p. 9), as in the present case, it not only declares that the measures at issue are compatible with the internal market, but also, by implication, that it refuses to initiate the formal investigation procedure laid down in Article 108(2) TFEU and in Article 6(1) of that regulation (see, by analogy, judgment of 27 October 2011, Austria v Scheucher-Fleisch and Others, C‑47/10 P, EU:C:2011:698, paragraph 42 and the case-law cited). If, following the preliminary examination, it finds that the measure notified raises doubts as to its compatibility with the internal market, the Commission is required to adopt, on the basis of Article 4(4) of Regulation 2015/1589, a decision initiating the formal investigation procedure under Article 108(2) TFEU and Article 6(1) of that regulation. Under the latter provision, such a decision is to call upon the Member State concerned and upon other interested parties to submit comments within a prescribed period which must not as a rule exceed one month (see, by analogy, judgment of 24 May 2011, Commission v Kronoply and Kronotex, C‑83/09 P, EU:C:2011:341, paragraph 46).

12 In the present case, the Commission decided as a result of a preliminary examination not to raise objections to the measure at issue on the ground that it was compatible with the internal market, pursuant to Article 107(3)(b) TFEU. Since the formal investigation procedure was not initiated, the interested parties who could have submitted comments during that stage were deprived of that possibility. In order to remedy this, they are entitled to challenge the Commission’s decision not to initiate the formal investigation procedure before the EU Courts. Accordingly, an action brought by a party concerned for the purposes of Article 108(2) TFEU for annulment of the contested decision would be admissible in so far as that party would be seeking to safeguard the procedural rights available to it under that latter provision (see, to that effect, judgment of 18 November 2010, NDSHT v Commission, C‑322/09 P, EU:C:2010:701, paragraph 56 and the case-law cited).

13 In the light of Article 1(h) of Regulation 2015/1589, an undertaking competing with the beneficiary of an aid measure is without doubt an ‘interested party’ within the meaning of Article 108(2) TFEU (judgment of 3 September 2020, Vereniging tot Behoud van Natuurmonumenten in Nederland and Others v Commission, C‑817/18 P, EU:C:2020:637, paragraph 50; see also, to that effect, judgment of 18 November 2010, NDSHT v Commission, C‑322/09 P, EU:C:2010:701, paragraph 59).

14 Contrary to the submissions of the Commission and the French Republic, the applicant has demonstrated to the requisite legal standard that it was a competitor of Finnair. It has explained that it provided passenger transport services by air to and from Finland for more than 17 years. It is also common ground that the applicant, before the start of the COVID-19 pandemic, had a share of the market for those services, even if that share was small. The applicant has also stated that in 2019 it had carried more than 100 000 passengers to and from Finland and that its initial schedule, before the start of the COVID-19 pandemic, for the 2020 summer season included six routes from three Finnish airports. The applicant also explained, without being contradicted on that point, that its operations in Finland had been more affected by the pandemic than those of the beneficiary.

15 Contrary to what is claimed by the Commission, that finding is not called into question by the fact that the applicant stopped providing its services in Finland owing to the COVID-19 pandemic. Taking account of the facts set out in paragraph 14 above and the circumstances that caused those services to be brought to an end, it must be held that that cessation of services was most likely temporary and that the competitive relationship between the applicant and the beneficiary had not ended at the time when the application was lodged (see, to that effect, judgment of 2 September 2021, NeXovation v Commission, C‑665/19 P, EU:C:2021:667, paragraph 63). In addition, the applicant stated at the hearing that it was again operating flights to and from Finland.

16 It follows that the applicant, a competitor of the beneficiary, has demonstrated that it was an interested party within the meaning of Article 1(h) of Regulation...