Ryanair DAC v European Commission.

• Jurisdiction: European Union
• Court: General Court (European Union)
• Date: 10 May 2023

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

10 May 2023 ( *1 )

(State aid – German air transport market – Aid granted by Germany to an airline in the context of the COVID-19 pandemic – Recapitalisation of Deutsche Lufthansa – Decision not to raise any objections – Temporary Framework for State aid measures – Actions for annulment – Locus standi – Substantial effect on competitive position – Admissibility – Significant market power – Additional measures to preserve effective competition on the market – Obligation to state reasons)

In Joined Cases T‑34/21 and T‑87/21,

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

applicant in Case T‑34/21,

Condor Flugdienst GmbH, established in Neu-Isenburg (Germany), represented by A. Israel, J. Lang and E. Wright, lawyers,

applicant in Case T‑87/21,

v

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

defendant,

supported by

Federal Republic of Germany, represented by J. Möller and P.-L. Krüger, acting as Agents,

intervener in Case T‑34/21,

by

French Republic, represented by T. Stéhelin, J.-L. Carré and P. Dodeller, acting as Agents,

intervener in Case T‑34/21,

and by

Deutsche Lufthansa AG, established in Cologne (Germany), represented by H.‑J. Niemeyer and J. Burger, lawyers,

intervener in Cases T‑34/21 and T‑87/21,

THE GENERAL COURT (Tenth Chamber, Extended Composition),

composed, at the time of the deliberations, of A. Kornezov (Rapporteur), President, E. Buttigieg, K. Kowalik-Bańczyk, G. Hesse and D. Petrlík, Judges,

Registrar: P. Cullen, Administrator,

having regard to the written part of the procedure, in particular the decision of 9 June 2022 joining Cases T‑34/21 and T‑87/21 for the purposes of the oral part of the procedure and the decision closing the proceedings,

further to the hearing on 11 July 2022,

gives the following

Judgment

1 By their actions on the basis of Article 263 TFEU, the applicants, Ryanair DAC and Condor Flugdienst GmbH (‘Condor’) seek annulment of Commission Decision C(2020) 4372 final of 25 June 2020 concerning State Aid SA.57153 (2020/N) – Germany – COVID-19 – Aid to Lufthansa (‘the contested decision’).

I. Background to the dispute and events subsequent to the actions being brought

2 On 12 June 2020, the Federal Republic of Germany notified the European Commission of individual aid, under Article 107(3)(b) TFEU and the Communication from the Commission 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 2020 (OJ 2020 C 112 I, p. 1) and 8 May 2020 (OJ 2020 C 164, p. 3) (‘the Temporary Framework’), in the form of a recapitalisation of EUR 6 billion (‘the measure at issue’) granted to Deutsche Lufthansa AG (‘DLH’).

3 DLH is the parent company of the Lufthansa Group, which, inter alia, comprises Lufthansa Passenger Airlines, Brussels Airlines SA/NV, Austrian Airlines AG, Swiss International Air Lines Ltd and Edelweiss Air AG.

4 The measure at issue is intended to restore the balance sheet position and liquidity of the undertakings in the Lufthansa Group in the exceptional situation caused by the COVID-19 pandemic. The aid is financed and managed for the German Government by the Wirtschaftsstabilisierungsfonds (Economic Stabilisation Fund, Germany) (‘the ESF’), a public entity that provides financial support at short notice to German companies affected by the COVID-19 pandemic.

5 The measure at issue consists of the following three elements: – an equity participation of EUR 306044 326.40; – a ‘silent participation’ of EUR 4693955 673.60, which is a hybrid capital instrument treated as equity under international accounting standards (‘Silent Participation I’); and – a ‘silent participation’ of EUR 1 billion with the features of a convertible debt instrument (‘Silent Participation II’).

6 The measure at issue is part of a wider series of support measures for the Lufthansa Group, which may be summarised, at the time the contested decision was adopted, as follows: – a State guarantee of 80% on a loan of EUR 3 billion which the Federal Republic of Germany intended to grant to DLH under an aid scheme already approved by the Commission (Commission Decision C(2020) 1886 final of 22 March 2020 on State Aid SA.56714 (2020/N) – Germany – COVID-19 measures); – a State guarantee of 90% on a loan of EUR 300 million which the Republic of Austria intended to grant to Austrian Airlines under an aid scheme already approved by the Commission (Commission Decision C(2020) 2354 final of 8 April 2020 on State aid SA.56840 (2020/N) – Austria – COVID-19: Austrian liquidity assistance scheme); – a loan of EUR 150 million, which the Republic of Austria planned to grant to Austrian Airlines to compensate it for the damage resulting from the cancellation or rescheduling of its flights in the context of the COVID-19 pandemic; – EUR 250 million in liquidity support and a loan of EUR 40 million which the Kingdom of Belgium planned to grant to Brussels Airlines; – a State guarantee of 85% on a loan of EUR 1.4 billion granted by the Swiss Confederation to Swiss International Air Lines and Edelweiss Air.

7 On 25 June 2020, the Commission adopted the contested decision, by which it found that the measure at issue constituted State aid that was compatible with the internal market under Article 107(3)(b) TFEU and the Temporary Framework. On 20 November 2020, the Commission published information about that decision in the Official Journal of the European Union (OJ 2020 C 397, p. 2).

8 On 14 December 2021, after the present actions had been brought, the Commission adopted Decision C(2021) 9606 final, correcting the contested decision (‘the correcting decision’).

II. Forms of order sought

9 In the application lodged in Case T‑34/21, Ryanair claims that the Court should: – annul the contested decision; – order the Commission to pay the costs.

10 In a response to the measure of organisation of procedure of 11 May 2022, lodged on 26 May 2022, Ryanair claims, in essence, that the contested decision, as rectified by the correcting decision, should be annulled and that the Commission should be ordered to pay the costs.

11 In Case T‑87/21, Condor claims that the Court should: – annul the contested decision; – order the Commission to pay the costs.

12 By a statement of modification lodged on 22 March 2022, Condor claims in addition that the Court should annul the contested decision, as rectified by the correcting decision, and order the Commission to pay the costs.

13 The Commission contends that the Court should: – dismiss the actions; – order the applicants to pay the costs.

14 DLH contends that the actions should be dismissed and that the applicants should be ordered to pay the costs. The Federal Republic of Germany and the French Republic, which intervened only in Case T‑34/21, contend that the action in that case should be dismissed. The Federal Republic of Germany also contends that Ryanair should be ordered to pay the costs.

III. Law

A. Admissibility of the actions

1. Ryanair’s standing to bring proceedings

15 First, Ryanair argues that it is an interested party for the purposes of Article 108(2) TFEU and Article 1(h) 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) and that it therefore has standing to bring proceedings in order to protect its procedural rights. Second, Ryanair submits that its competitive position on the market has been substantially affected by the measure at issue and that it is also entitled to contest the contested decision on the merits.

16 The Commission does not dispute the admissibility of the action.

17 However, the French Republic maintains that Ryanair has not shown that its competitive position has been substantially affected by the measure at issue.

18 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 Regulation 2015/1589, as in the present case, it declares not only that the measures concerned 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 Article 6(1) of that regulation (see 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 (judgment of 24 May 2011, Commission v Kronoply and Kronotex, C‑83/09 P, EU:C:2011...