JUDGMENT OF THE GENERAL COURT (Tenth Chamber)

18 October 2023 (*)

(State aid – Latvian air transport market – Aid granted by Latvia to airBaltic in the context of the COVID-19 pandemic – Recapitalisation – Decision not to raise any objections – Action for annulment – Locus standi – Admissibility – Temporary Framework for State aid measures – Measure intended to remedy a serious disturbance in the economy of a Member State – Failure to weigh the beneficial effects of the aid against its adverse effects on trading conditions and the maintenance of undistorted competition – Identification of the relevant market – Significant market power – Equal treatment – Freedom of establishment – Freedom to provide services – Obligation to state reasons)

In Case T‑737/20,

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

applicant,

v

European Commission, represented by L. Flynn, C. Georgieva and S. Noë, acting as Agents,

defendant,

supported by

Republic of Latvia, represented by K. Pommere and J. Davidoviča, acting as Agents,

and by

Air Baltic Corporation AS, established in Riga (Latvia), represented by J. Ysewyn, lawyer,

interveners,

THE GENERAL COURT (Tenth Chamber),

composed, at the time of the deliberations, of A. Kornezov, President, E. Buttigieg (Rapporteur) and G. Hesse, Judges,

Registrar: V. Di Bucci,

having regard to the written part of the procedure,

having regard to the fact that no request for a hearing was submitted by the parties within three weeks after service of notification of the close of the written part of the procedure, and having decided to rule on the action without an oral part of the procedure, pursuant to Article 106(3) of the Rules of Procedure of the General Court,

gives the following

Judgment

1        By its action based on Article 263 TFEU, the applicant, Ryanair DAC, seeks annulment of Commission Decision C (2020) 4665 final of 3 July 2020 on State aid SA.56943 (2020/N) – Latvia – COVID-19: Recapitalisation of airBaltic (‘the contested decision’).

I.      Background to the dispute

2        On 17 June 2020, the Republic of Latvia notified the European Commission of an individual aid measure, in the form of a recapitalisation (‘the aid at issue’), in favour of Air Baltic Corporation AS (‘airBaltic’), an unlisted airline, 80.05% owned by the Latvian State, with 19.95% being held by a private minority shareholder.

3        The aid at issue was notified as aid compatible with the internal market under Article 107(3)(b) TFEU, as interpreted in 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), amended on 3 April 2020 (OJ 2020 C 112 I, p. 1), on 8 May 2020 (OJ 2020 C 164, p. 3) and on 29 June 2020 (OJ 2020 C 218, p. 3) (‘the Temporary Framework’).

4        The recapitalisation referred to in paragraph 2 above took the form of a capital increase of EUR 250 million and was intended to help airBaltic restore its equity and liquidity levels in the context of the COVID-19 outbreak.

5        On 3 July 2020, the Commission adopted the contested decision, by which it found that the aid at issue, first, constituted State aid within the meaning of Article 107(1) TFEU and, second, was compatible with the internal market on the basis of Article 107(3)(b) TFEU.

II.    Forms of order sought

6        The applicant claims that the Court should:

–        annul the contested decision;

–        order the Commission to pay the costs.

7        The Commission contends that the Court should:

–        dismiss the application as unfounded;

–        order the applicant to pay the costs.

8        The Republic of Latvia contends that the Court should dismiss the action as unfounded.

9        AirBaltic contends that the Court should:

–        dismiss the application as unfounded;

–        order the applicant to pay the costs relating to its intervention in support of the Commission.

III. Law

A.      Admissibility of the action

10      First, the applicant submits that, as a competitor of airBaltic, it is an interested party within the meaning 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 of the Treaty on the Functioning of the European Union (OJ 2015 L 248, p. 9) and that it therefore has standing to bring the present action in order to protect its procedural rights under the abovementioned provision of the FEU Treaty. The protection of those rights also confers on it a legal interest in bringing proceedings.

11      Second, the applicant states that, by its action, it also seeks to challenge the merits of the contested decision. In that regard, it submits that its market position is substantially affected in so far as it is airBaltic’s most direct competitor and the only real candidate liable to take its place on the market in question.

12      The Commission does not dispute that the applicant competes with airBaltic. It does not, therefore, dispute that the applicant has standing to bring the present action seeking to safeguard its procedural rights as an interested party within the meaning of Article 108(2) TFEU and Article 1(h) of Regulation 2015/1589.

13      The Commission does not put forward any arguments concerning the alleged substantial effect on the applicant’s market position and, more generally, whether it has locus standi to challenge the merits of the contested decision.

14      The Republic of Latvia and airBaltic did not submit any arguments on the admissibility of the action.

15      In the present case, it is not disputed that the applicant is a competitor of airBaltic and that it is, therefore, an interested party within the meaning of Article 108(2) TFEU and Article 1(h) of Regulation 2015/1589. Thus, in accordance with settled case-law, it has standing to bring proceedings in order to safeguard the procedural rights available to it under the abovementioned provision of the FEU Treaty (see judgment of 15 July 2021, Deutsche Lufthansa v Commission, C‑453/19 P, EU:C:2021:608, paragraphs 35 and 36 and the case-law cited). In that regard, it should be noted at the outset that the third plea raised by the applicant alleges that the Commission failed to initiate the formal investigation procedure.

16      As regards the applicant’s standing to challenge the merits of the contested decision, it must be borne in mind that the admissibility of an action brought by a natural or legal person against an act which is not addressed to that person, in accordance with the fourth paragraph of Article 263 TFEU, is subject to the condition that that person be accorded standing to bring proceedings, which arises in two situations. First, such proceedings may be instituted if the act is of direct and individual concern to them. Second, such persons may bring proceedings against a regulatory act not entailing implementing measures if that act is of direct concern to them (judgments of 17 September 2015, Mory and Others v Commission, C‑33/14 P, EU:C:2015:609, paragraphs 59 and 91, and of 13 March 2018, Industrias Químicas del Vallés v Commission, C‑244/16 P, EU:C:2018:177, paragraph 39).

17      The contested decision, which was addressed to the Republic of Latvia, does not constitute a regulatory act within the meaning of the fourth paragraph of Article 263 TFEU, since it is not an act of general application (see, to that effect, judgment of 3 October 2013, Inuit Tapiriit Kanatami and Others v Parliament and Council, C‑583/11 P, EU:C:2013:625, paragraph 56). Consequently, the Court must ascertain whether that decision is of direct and individual concern to the applicant within the meaning of that provision.

18      In that regard, it is settled case-law that persons other than those to whom a decision is addressed may claim to be individually concerned only if that decision affects them by reason of certain attributes which are peculiar to them or by reason of circumstances in which they are differentiated from all other persons and by virtue of these factors distinguishes them individually just as in the case of the person addressed (judgments of 15 July 1963, Plaumann v Commission, 25/62, EU:C:1963:17, p. 107; of 28 January 1986, Cofaz and Others v Commission, 169/84, EU:C:1986:42, paragraph 22; and of 22 November 2007, Sniace v Commission, C‑260/05 P, EU:C:2007:700, paragraph 53).

19      Thus, where an applicant calls into question the merits of a decision appraising aid taken on the basis of Article 108(3) TFEU or at the end of the formal investigation procedure, the mere fact that it may be regarded as a ‘party concerned’ within the meaning of paragraph 2 of that article cannot suffice to render the action admissible. It must then demonstrate that it has a particular status within the meaning of the case-law referred to in paragraph 18 above. That is the case, in particular, where the applicant’s position on the market concerned is substantially affected by the aid to which the decision at issue relates (see judgment of 15 July 2021, Deutsche Lufthansa v Commission, C‑453/19 P, EU:C:2021:608, paragraph 37 and the case-law cited).

20      In that regard, the Court of Justice has held that demonstration by the applicant of a substantial adverse effect on its market position does not entail a definitive ruling on the competitive relationship between the applicant and the undertakings in receipt of aid, but requires only that the applicant adduce pertinent reasons to show that the Commission’s decision may harm its legitimate interests by substantially affecting its position on the market in question (see judgment of 15 July 2021, Deutsche Lufthansa v Commission, C‑453/19 P, EU:C:2021:608, paragraph 57 and the case-law cited).

21      It is thus apparent from the Court’s case-law that the substantial adverse effect on the applicant’s competitive position on the market in question results not from a detailed analysis of the various competitive relationships on that market, allowing the extent of the adverse effect on its competitive position to be established specifically, but, in principle, from a prima facie finding that the grant of the measure covered by the Commission’s decision leads to a substantial adverse effect on that position (see judgment of 15 July 2021, Deutsche Lufthansa v Commission, C‑453/19 P, EU:C:2021:608, paragraph 58 and the case-law cited).

22       It follows that that condition may be satisfied where the applicant adduces evidence to show that the measure at issue is liable to have a substantial adverse effect on its position on the market concerned (see judgment of 15 July 2021, Deutsche Lufthansa v Commission, C‑453/19 P, EU:C:2021:608, paragraph 59 and the case-law cited).

23      As regards the factors accepted by the case-law for the purpose of establishing a substantial adverse effect of that kind, it should be borne in mind that the mere fact that an act may exercise an influence on the competitive relationships existing on the relevant market and that the undertaking concerned is in a competitive relationship with the beneficiary of that act cannot suffice for that undertaking to be regarded as being individually concerned by that act. Therefore, an undertaking cannot rely solely on its status as a competitor of the undertaking in receipt of aid (see judgment of 15 July 2021, Deutsche Lufthansa v Commission, C‑453/19 P, EU:C:2021:608, paragraph 60 and the case-law cited).

24      Demonstrating a substantial adverse effect on a competitor’s position on the market cannot simply be a matter of the existence of certain factors indicating a decline in the applicant’s commercial or financial performance, such as a significant decline in turnover, appreciable financial losses or a significant reduction in market share following the grant of the aid in question. The grant of State aid can also have an adverse effect on the competitive situation of an operator in other ways, in particular by causing the loss of an opportunity to make a profit or a less favourable development than would have been the case without such aid (judgment of 15 July 2021, Deutsche Lufthansa v Commission, C‑453/19 P, EU:C:2021:608, paragraph 61).

25      Moreover, the case-law does not require the applicant to adduce evidence as to the size or geographic scope of the markets in question, or as to its market shares and those of the beneficiary of the measure in question or any competitors on those markets (see, to that effect, judgment of 15 July 2021, Deutsche Lufthansa v Commission, C‑453/19 P, EU:C:2021:608, paragraph 65).

26      It is in the light of those principles that it is necessary to examine whether the applicant has adduced evidence establishing that the aid at issue is liable to have a significant adverse effect on its position on the market concerned.

27      In that regard, as regards the preliminary question of the determination of the ‘relevant market’ for the purposes of assessing the substantial effect on the applicant’s competitive position, it should be noted that the Commission defined the relevant markets in the present case as the airports from which airBaltic provides passenger air transport services (recital 143 of the contested decision). Three of those airports were identified, namely Riga (Latvia), Vilnius (Lithuania) and Tallinn (Estonia) airports (recital 144 of the contested decision).

28      Yet the appellant disputes the method of defining the relevant markets used by the Commission and submits before the Court that the Commission had to define those markets on the basis of city pairs between a point of origin and a point of destination (‘the O&D approach’).

29      In that regard, it should be borne in mind that it is not necessary, at the stage of examining the admissibility of the action, to rule definitively on the definition of the market for the goods or services in question or on the competitive relationship between the applicant and the beneficiary. It is sufficient, in principle, for the applicant to show that, prima facie, the grant of the measure at issue leads to a significant adverse effect on its competitive position on the market (see the case-law cited in paragraphs 20 and 21 above).

30      Therefore, at the stage of examining the admissibility of the action, where the applicant challenges the substance of the relevant market, as in the present case, it is sufficient to examine whether the definition of that market put forward by the applicant is plausible, without prejudice to the examination of the substance of that question.

31      In the present case, the Court considers that the definition of the markets for passenger air transport services in accordance with the O&D approach advocated by Ryanair is prima facie plausible. Suffice it to bear in mind that, in the aviation sector, the Court has accepted that the Commission may have recourse to that approach in order to define the relevant markets, in particular in the field of the control of concentrations (see, to that effect, judgment of 13 May 2015, Niki Luftfahrt v Commission, T‑162/10, EU:T:2015:283, paragraphs 139 and 140 and the case-law cited).

32      Since those preliminary points concerning the ‘relevant market’ have been provided, it is necessary to examine the evidence submitted by the applicant, which has not been disputed by the other parties to the dispute.

33      The applicant stated, in the first place, relying on data from 2019, that it was in direct competition with airBaltic on 15 routes served from Riga, Tallinn and Vilnius airports, thereby contributing to the connectivity of the Baltic countries with economically and politically important European cities. The applicant stated that it was the airline in direct competition with airBaltic on a larger number of routes than any other airline operating out of Riga Airport. It also stated that, more generally, at that time it was operating 17 routes out of Riga Airport, that is to say, four less than airBaltic.

34      In the second place, the applicant relied on a study according to which, in 2019, it had a market share of 14% in Latvia in terms of originating seats (0.6 million seats) and placed second behind airBaltic, which had a market share of 63% (2.6 million seats).

35      In the third place, the applicant referred to steady growth in the relevant markets over the past 16 years, which was significantly higher than that of airBaltic, which was also significant, in particular for the past four years, as is apparent from recital 28 of the contested decision. In that context, the applicant also stated that Riga was particularly targeted by its expansion plans, with eight new routes launched in 2019. Furthermore, it claimed that it had recently ordered 210 Boeing 737 Max aircraft, scheduled to join its fleet at the beginning of 2021, which would enable it to deliver more connectivity and create new jobs in Latvia whilst significantly reducing its environmental footprint.

36      In the fourth place, account must also be taken of the Commission’s conclusion, in recital 83 of the contested decision, that, without the aid at issue, airBaltic would have faced serious difficulties in maintaining its operations as referred to in point 49(a) of the Temporary Framework. According to the Latvian authorities, the recapitalisation of airBaltic was the only way to avoid its exit from the market due to the COVID-19 pandemic (recital 11 of the contested decision). According to the applicant, airBaltic will be able to use the fresh capital obtained from the aid to increase its fleet and expand its network, thereby improving its competitive position.

37      In the light of the evidence set out in paragraphs 33 to 36 above, it must be held that the applicant has demonstrated to the requisite legal standard that the aid at issue was prima facie liable to have a significant adverse effect on its position on the market concerned, by causing, inter alia, a loss of an opportunity to make a profit or a less favourable development than would have been the case without it (see the case-law cited in paragraph 24 above). It must therefore be concluded that the applicant is individually concerned by the contested decision.

38      As regards the question whether Ryanair is directly concerned by the contested decision, it must be borne in mind that, according to settled case-law, a competitor of the beneficiary of aid is directly concerned by a Commission decision authorising a Member State to pay that aid where there is no doubt as to the intention of that State to do so (see, to that effect, judgments of 5 May 1998, Dreyfus v Commission, C‑386/96 P, EU:C:1998:193, paragraphs 43 and 44, and of 15 September 2016, Ferracci v Commission, T‑219/13, EU:T:2016:485, paragraph 44 and the case-law cited), as is the case here.

39      It must therefore be concluded that the applicant has standing to challenge the merits of the contested decision.

40      Furthermore, it is common ground that the applicant has an interest in bringing proceedings in the present case.

41      In the light of all the foregoing considerations, it must be concluded that the present action is admissible in its entirety.

B.      Substance

42      The applicant puts forward four pleas in law in support of its action, alleging (i) misapplication of Article 107(3)(b) TFEU and of the Temporary Framework; (ii) infringement of certain specific provisions of the FEU Treaty and of the general principles of non-discrimination, freedom to provide services and freedom of establishment; (iii) failure to initiate the formal investigation procedure provided for in Article 108(2) TFEU; and (iv) infringement of the obligation to state reasons.

1.      First plea in law: misapplication of Article 107(3)(b) TFEU and of the Temporary Framework

43      The first plea in law consists of seven parts, which it is appropriate to address in turn.

(a)    First part: the aid at issue is inappropriate for remedying a serious disturbance in the Latvian economy within the meaning of Article 107(3)(b) TFEU

44      The applicant, while not disputing that the COVID-19 pandemic caused a serious disturbance in the Latvian economy and affected the air transport sector as a whole, submits that the aid at issue, granted as it was to a single airline, is not an appropriate measure for remedying that disturbance but that, on the contrary, it exacerbates it. According to the applicant, in order to deal with the COVID-19 pandemic, non-discriminatory aid schemes which are accessible to all operators should be put in place.

45      The applicant states that the exclusion from the benefit of the aid at issue of other airlines which, like the applicant, play an important role in Latvia’s connectivity, weakens its efficiency and makes it inappropriate for remedying the disturbance in the Latvian economy.

46      In support of its argument, the applicant relies on the Commission’s decision-making practice in relation to the banking sector and the rail transport sector, from which it is apparent that individual aid may exceptionally be authorised under Article 107(3)(b) TFEU, provided that its beneficiary is an undertaking which plays a systemic role in the economy of the Member State concerned, as is the case with a bank, or representing the entire transport sector concerned, in particular as an infrastructure manager, which is not the case with airBaltic.

47      The Commission, supported by the Republic of Latvia and airBaltic, disputes the applicant’s arguments.

48      Article 107(3)(b) TFEU provides, inter alia, that aid to remedy a serious disturbance in the economy of a Member State may be considered compatible with the internal market.

49      In that regard, it must be borne in mind that Article 107(3)(b) TFEU is a derogation from the general principle laid down in Article 107(1) TFEU that State aid is incompatible with the internal market. It is therefore to be interpreted strictly (see judgment of 9 April 2014, Greece v Commission, T‑150/12, not published, EU:T:2014:191, paragraph 146 and the case-law cited). Article 107(1) TFEU states that any aid granted by a Member State or through State resources ‘in any form whatsoever’ is incompatible with the internal market. Therefore, it should be noted that Article 107(3)(b) TFEU applies both to aid schemes and to individual aid (judgment of 14 April 2021, Ryanair v Commission (Finnair I; Covid-19), T‑388/20, under appeal, EU:T:2021:196, paragraph 32).

50       According to the case-law, the Commission may declare aid compatible with Article 107(3) TFEU only if it can establish that the aid contributes to the attainment of one of the objectives specified, something which, under normal market conditions, the recipient undertaking would not achieve by using its own resources. In other words, an aid measure cannot be declared compatible with the internal market if it brings about an improvement in the financial situation of the recipient undertaking without being necessary to achieve the objectives laid down in Article 107(3)(b) TFEU, namely to remedy the serious disturbance in the national economy (see, to that effect, judgment of 14 January 2009, Kronopoly v Commission, T‑162/06, EU:T:2009:2, paragraph 65 and the case-law cited, and of 14 April 2021, Ryanair v Commission (Finnair I; Covid-19), T‑388/20, under appeal, EU:T:2021:196, paragraph 33).

51      In those circumstances, individual aid such as the one in the present case may be declared compatible with the internal market where it is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of the Member State concerned (judgment of 14 April 2021, Ryanair v Commission (Finnair I; Covid-19), T‑388/20, under appeal, EU:T:2021:196, paragraph 34).

52      Furthermore, it has already been stated that Article 107(3)(b) TFEU does not require that the aid in question is capable, in itself, of remedying the serious disturbance in the economy of the Member State concerned. Once the Commission has established the reality of a serious disturbance in the economy of a Member State, that State may be authorised, if the other conditions laid down in that article are also satisfied, to grant State aid, in the form of aid schemes or individual aid, which help to remedy that disturbance. It could therefore involve a number of aid measures, each contributing to that end. Therefore, in order for an aid measure to be validly based on Article 107(3)(b) TFEU, it cannot be required to remedy, in itself, a serious disturbance in the economy of a Member State (judgment of 14 April 2021, Ryanair v Commission (Finnair I; Covid-19), T‑388/20, under appeal, EU:T:2021:196, paragraph 41).

53      It follows from the foregoing considerations that the applicant’s line of argument, in so far as it may be interpreted as suggesting that only aid schemes may be declared compatible under Article 107(3)(b) TFEU or that the aid measure in question must be capable, in itself, of remedying the serious disturbance in the economy of the Member State concerned, must be rejected.

54      The Court finds as follows in relation to the applicant’s argument, based on the Commission’s alleged decision-making practice under which, first, airBaltic was not sufficiently important in comparison with the other airlines operating in Latvia to justify, in the light of Article 107(3)(b) TFEU, the grant of the aid at issue in itself and, second, the exclusion of the other airlines from the benefit of the aid would affect its effectiveness.

55      In the first place, inasmuch as the applicant relies on the Commission’s previous decision-making practice, it should be borne in mind that the lawfulness of the contested decision must be assessed solely in the context of Article 107(3)(b) TFEU and not in the light of an alleged earlier practice (see, to that effect, judgment of 27 February 2013, Nitrogénművek Vegyipari v Commission, T‑387/11, not published, EU:T:2013:98, paragraph 126 and the case-law cited).

56      In the second place, the fact that the beneficiaries of the aid in the cases falling within the Commission’s earlier practice cited by the applicant were ‘systemic’ undertakings, on account of their role in the banking system or in rail transport in the Member State concerned, does not in any way mean that Article 107(3)(b) TFEU lays down the condition that the beneficiaries of individual aid must have an equivalent status. Under that provision, the Commission must assess whether the aid in question is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of the Member State concerned (see paragraph 51 above). In the present case, the Commission concluded that that was the case in recital 160 of the contested decision.

57      In the third place, as regards the appropriateness of the aid at issue to remedy the serious disturbance in the Latvian economy, called into question, in essence, by the applicant’s arguments, first, it should be noted that the applicant does not dispute that the COVID-19 pandemic led to a serious disturbance in the Latvian economy, or that air transport as a whole was particularly affected by that pandemic.

58      Second, it is apparent from the contested decision that the objective of the aid at issue is to improve airBaltic’s equity and liquidity levels in order to enable it to cope with the losses suffered as a result of the crisis caused by the COVID-19 pandemic and continue its operations. In recitals 85 to 92 of the contested decision, moreover, the Commission explained the important role played by airBaltic’s in the Latvian economy by reason of, inter alia, its being the largest airline operating in Latvia and the only airline ensuring, with high frequency, the connectivity of that country with Europe’s major business centres. In that context, referring to a consultancy study provided by the Latvian authorities and a report prepared by the International Air Transport Association (IATA), the Commission explained the major role played by air transport services, such as those provided by airBaltic, for the Latvian economy. It is thus apparent that the aid at issue, in so far as it helped airBaltic’s activities to continue, contributed to remedying the serious disturbance in the Latvian economy, in accordance with Article 107(3)(b) TFEU.

59      In the light of the foregoing, the first part of the first plea must be dismissed.

(b)    Second part: misapplication of the eligibility conditions laid down in point 49 of the Temporary Framework

60      In the context of the second part of the first plea, the applicant submits that the Commission erred in finding that the aid at issue fulfilled the eligibility conditions set out in point 49 of the Temporary Framework. That part comprises three complaints alleging infringement of the three conditions laid down in point 49(a), (b) and (c) of the Temporary Framework.

(1)    First complaint: infringement of point 49(a) of the Temporary Framework

61      The applicant submits that the Commission does not demonstrate that airBaltic would go out of business and exit the market without the grant of the aid at issue.

62      The applicant observes that, in the contested decision, the Commission refers to the risk of airBaltic’s default on certain existing bonds issued in 2019 and the losses incurred by that airline in 2020. Those factors do not give the impression of a potential exit from the market, however. According to the applicant, the debts can be restructured with the consent of the creditors and the losses can be absorbed by existing capital.

63      The Commission, supported by the Republic of Latvia and airBaltic, disputes the applicant’s arguments.

64      According to point 49(a) of the Temporary Framework, a recapitalisation measure in the context of the COVID-19 pandemic must satisfy the following condition:

‘Without the State intervention the beneficiary would go out of business or would face serious difficulties to maintain its operations. Such difficulties may be shown by the deterioration of, in particular, the beneficiary’s debt to equity ratio or similar indicators; …’

65      In the present case, in recital 83 of the contested decision, the Commission found that, without the aid at issue, airBaltic would face serious difficulties in maintaining its operations as referred to in point 49(a) of the Temporary Framework.

66      The reasons for that assessment were set out in recitals 81 and 82 of the contested decision.

67      In recital 81 of the contested decision, the Commission found that airBaltic was bound by the covenant on the bonds it had issued in 2019 in the amount of EUR 200 million (‘the 2019 bonds’) to maintain a cash and cash equivalents balance of at least EUR 25 million at all times, default on which would trigger the obligation for it to repay more than EUR 200 million of those bonds, which would aggravate its already fragile financial position and put it at serious risk of default in the very short term.

68      In recital 82 of the contested decision, the Commission found that airBaltic had suffered significant losses due to the outbreak of the COVID-19 pandemic, with its fleet being almost fully grounded for about three months. Due to that situation, the airline was going to register losses of at least EUR 200 million to EUR 300 million in 2020 (a situation necessarily linked to the fact that airBaltic had an equity position of EUR 20 million to EUR 70 million in December 2019), despite cost reductions and payment deferrals.

69      Furthermore, in recital 104 of the contested decision, the Commission found that airBaltic’s capital would decrease to a negative amount of several tens of millions of euros by December 2020.

70      Those findings by the Commission were based on information provided by the Latvian authorities and set out in recitals 5 to 10 of the contested decision.

71      It is apparent from those findings, which are not disputed by the applicant, that airBaltic was experiencing a serious liquidity shortfall due to the impact of the COVID-19 pandemic on its operations and the resulting risk of the immediate activation of the contractual obligation to repay the 2019 bonds. Those findings supported, to the requisite legal standard, the Commission’s finding, in recital 83 of the contested decision, that airBaltic was experiencing serious difficulties in maintaining its operations as referred to in point 49(a) of the Temporary Framework.

72      The applicant’s claims (see paragraphs 61 and 62 above) are speculative and unsupported by any specific and probative evidence. They also seem to be based on the erroneous premiss that the Commission found that airBaltic would go out of business without the aid at issue. Yet the Commission made no such finding in recital 83 of the contested decision.

73      In the light of the foregoing considerations, it must be concluded that the applicant’s complaint concerning the Commission’s application of point 49(a) of the Temporary Framework is unfounded.

(2)    Second complaint: non-observance of point 49(b) of the Temporary Framework

74      The applicant contends that the Commission has failed to demonstrate that it is in the common interest to intervene as referred to in point 49(b) of the Temporary Framework. In the applicant’s submission, the contested decision does not establish that airBaltic’s bankruptcy could jeopardise the Latvian economy and connectivity.

75      The Commission, supported by the Republic of Latvia and airBaltic, disputes the applicant’s arguments.

76      Point 49(b) of the Temporary Framework provides that the planned recapitalisation measure must be in the common interest. The existence of such an interest may be demonstrated if the measure at issue is aimed at avoiding social hardship and market failure due to significant loss of employment, the exit of an innovative company, the exit of a systemically important company, the risk of disruption to an important service, or similar situations duly substantiated by the Member State concerned.

77      In recitals 84 to 92 of the contested decision, the Commission examined whether the condition laid down in point 49(b) of the Temporary Framework was satisfied. It took into account, first, the role of airBaltic for Latvia’s connectivity and, second, its importance for the Latvian economy.

78      As regards the role of airBaltic for Latvia’s connectivity, the Commission found, in recital 85 of the contested decision, that the company was the biggest airline in Latvia and the largest passenger carrier in that country. From its hub at Riga Airport, it provided transport to the largest number of destinations and connected Latvia with major business and political centres across Scandinavia and Europe in general. The data set out in Table 1 of the contested decision, entitled ‘Flight frequency of major air carriers at Riga Airport in 2019’, show that airBaltic offered by far the largest choice of destinations from Riga Airport, which is Latvia’s main international airport, and with the highest frequency. Thus, according to that table, airBaltic served between 70 and 80 destinations in 2019, whilst its two main competitors served 10 to 20 destinations. In addition, during that year, airBaltic served between 20 and 30 destinations at least 10 times a week and 30 to 40 destinations at least 5 times a week, whilst its two main competitors served, with the same frequencies (10 and 5 times a week), only 0 to 10 destinations.

79      On the basis of those factors, the Commission concluded, in recital 89 of the contested decision, that airBaltic ensured substantial and regular connections from Latvia to essential European business centres and that it was unlikely that its services would be replicated to the same extent by competitors. The Commission also found that that airline was well placed to help the Latvian economy recover after the crisis, since it was the only airline connecting Latvia to major business centres with such high frequency.

80      As regards the importance of airBaltic for the Latvian economy, the Commission found, on the basis of the study referred to in paragraph 58 above, that that airline had contributed 2.5% of Latvia’s gross domestic product (GDP) in 2018 (approximately EUR 730 million). AirBaltic directly employs 1 800 employees and supports close to 30 000 jobs in Latvia. It is one of the largest companies in that country. The Commission also noted, on the basis of the abovementioned study and the IATA report (see paragraph 58 above), the important role played by air transport services for the Latvian economy, having regard in particular to the relatively remote geographical position of Latvia within the European Union (recitals 90 and 91 of the contested decision). In essence, according to the Commission, the essential role played by airBaltic for Latvia’s connectivity, together with GDP and employment data, demonstrated the important role of that airline for the Latvian economy.

81      In recital 92 of the contested decision, the Commission found that airBaltic’s contribution to the Latvian economy was significant and that its bankruptcy could severely affect the Latvian economy and its connectivity in the context of the COVID-19 crisis. The Commission concluded that it was in the common interest for the Latvian State to intervene.

82      The applicant does not dispute the data presented by the Commission in the contested decision. In essence, it criticises the Commission for having failed to examine the possibility that other airlines, more efficient than airBaltic, might replicate its activities, thereby ensuring Latvia’s connectivity.

83      In that regard, the applicant submits, in the first place, that airlines are easily replaceable and that their assets and activities are by nature mobile, particularly in the context of overcapacity caused by the COVID-19 pandemic, which left hundreds of aircraft grounded throughout Europe. In support of its argument, the applicant relies on examples of airline bankruptcies that occurred in 2013, which allegedly led to an immediate increase in air traffic and an improvement in connectivity of the Member States concerned.

84      In the second place, the applicant refers to the finding, in the contested decision, that airBaltic does not have significant market power at Riga Airport given its low congestion levels, which suggests that the barriers to entry to the infrastructures of that airport are not high.

85      In the third place, the applicant submits that airBaltic’s contribution to Latvia’s international connectivity is not as important as it appears, since a significant proportion of airBaltic passengers use Riga Airport only as a transit point.

86      That line of argument put forward by the applicant does not call into question the Commission’s finding that the condition laid down in point 49(b) of the Temporary Framework was satisfied.

87      First of all, it should be noted that, as is apparent from recital 89 of the contested decision, the Commission did examine the possibility that airBaltic’s competitors could offer the same level of connectivity from Riga Airport as that airline and concluded that that was unlikely. The Commission took into account the data presented in Table 1 of the contested decision, which showed that airBaltic’s contribution to Latvia’s connectivity was much more substantial in terms of the number of destinations served and the frequency of flights, than the contribution of any other competing airline, which made it unlikely that one or more airlines could provide the same level of connectivity as airBaltic, once account was also taken of the crisis caused by the COVID-19 pandemic affecting all airlines.

88      The applicant does not put forward any evidence to support its argument. The examples put forward by it, of bankruptcies of certain airlines in 2013, which led, in essence, to growth in competition and an expansion of air transport services provided in the Member States concerned, are irrelevant. As rightly observed by the Commission, those bankruptcies occurred in a context characterised by an air transport market which was functioning and expanding and not in a context like the one featuring in the present case, characterised by an unprecedented health crisis affecting almost all countries of the world and the entire air transport sector.

89      The applicant’s argument set out in paragraph 84 above must also be rejected. The fact that airlines other than airBaltic may start providing air transport services from Riga Airport (in so far as Riga Airport has available capacity enabling those airlines to enter) does not establish that those new arrivals will be able to offer air transport services on the same scale as those provided by airBaltic and make the same contribution to Latvia’s connectivity.

90      Similarly, nor is the applicant’s argument set out in paragraph 85 above convincing. Even if, as the applicant submits, a significant proportion of the passengers carried by airBaltic use Riga Airport only as a transit point, that fact does not call into question the role of that airline in Latvia’s connectivity.

91      Lastly, it must be noted that, by its arguments, the applicant does not in any way dispute the important role of airBaltic in the Latvian economy owing to its contribution to GDP and its support for employment in Latvia.

92      In the light of the foregoing considerations, it must be concluded that the applicant’s complaint concerning the Commission’s application of point 49(b) of the Temporary Framework is unfounded.

(3)    Third complaint: infringement of point 49(c) of the Temporary Framework

93      The applicant submits that airBaltic had market-based financing options at its disposal that could have been utilised instead of the aid at issue. In that context, it criticises the Commission for having confused the refusal of airBaltic’s minority shareholder to participate in the financing of that airline with its inability to do so. In the applicant’s submission, the criterion of ‘inability’ is the relevant criterion for the purposes of applying point 49(c) of the Temporary Framework, in order to prevent the owners of an undertaking from using their refusal to participate in the financing to transfer the burden of rescue to the State.

94      The applicant also complains that the Commission failed to consider whether other financing solutions involving, inter alia, existing creditors, potential buyers of assets or the acquisition of airBaltic shares by investors other than the Latvian State might be available.

95      The applicant submits that other airlines whose ratings are comparable to or lower than those of airBaltic, such as IAG, easyJet or Virgin Atlantic, have managed to obtain financing solutions on the markets and have adopted large-scale restructuring measures. The applicant states that it had drawn those solutions to the Commission’s attention and that there was no reason why airBaltic could not benefit from those solutions, which are not even mentioned in the contested decision.

96      The applicant concludes that the Commission, assuming that the only alternative to the grant of the aid at issue was the bankruptcy of airBaltic, made a manifest error of assessment.

97      The Commission, supported by the Republic of Latvia and airBaltic, disputes the applicant’s arguments.

98      Under point 49(c) of the Temporary Framework, a recapitalisation measure in the context of the COVID-19 pandemic must satisfy the following condition:

‘The beneficiary is not able to find financing on the markets at affordable terms and the horizontal measures existing in the Member State concerned to cover liquidity needs are insufficient to ensure its viability.’

99      The Commission examined that condition in recitals 93 to 97 of the contested decision.

100    In the first place, the Commission found, in recital 93 of the contested decision, that the 2019 bond issue agreement contained a clause which prevented airBaltic from obtaining a loan from the market or the State in order to cover its liquidity needs. If airBaltic decided to repay the 2019 bond amount, it would need to raise EUR 200 million on the markets, in addition to what it needed to cover losses resulting from the COVID-19 outbreak. The Commission found that, in view of airBaltic’s substantial losses and negative equity position, it would have great difficulty raising funds on the markets.

101    In the second place, in recital 95 of the contested decision, the Commission noted that airBaltic had attempted to obtain financing from its minority shareholder, but that the latter had ultimately refused to participate in that financing.

102    In the third place, in recital 96 of the contested decision, the Commission found that, by way of horizontal measures, there was an aid scheme in Latvia with a total budget of EUR 250 million, consisting of the grant of State guarantees or loans at subsidised rates. Yet, according to the Commission, airBaltic could not receive aid under that scheme, not only because of the contract referred to in paragraph 100 above, which prevented it from obtaining State loans, but also because of the budget of that scheme, which was insufficient to cover its liquidity needs.

103    The Commission concluded, in recital 97 of the contested decision, that the condition laid down in point 49(c) of the Temporary Framework was satisfied.

104    As a preliminary point, it should be noted that, as is apparent from the contested decision, an important source of potential financing for airBaltic, namely obtaining a loan from the market or the Latvian State, was not available because of a provision in the contract governing the 2019 bond issue. The applicant does not dispute that fact.

105    Next, the applicant’s argument to the effect that, in essence, the Commission should not have confined itself to finding that airBaltic’s minority shareholder had refused to participate in its financing, but had to examine whether that shareholder was genuinely unable to participate in that financing, cannot be accepted.

106    It is clear that point 49(c) of the Temporary Framework refers to the aid beneficiary’s inability to finance itself on the markets at affordable terms, that beneficiary being, in the present case, airBaltic. Since it is not disputed that airBaltic’s minority shareholder is an entity distinct from that airline and cannot be assimilated to it, it was sufficient for the Commission to take into account its refusal to participate in the financing of airBaltic for the purposes of finding that that airline was ‘not able to find financing on the markets at affordable terms’ as referred to in point 49(c) of the Temporary Framework.

107    The applicant’s argument relating to the cases of financing on the markets of certain other airlines must also be rejected.

108    First of all, it should be noted that the documents submitted by the applicant before the Court do not show that, prior to the adoption of the contested decision, it had drawn the Commission’s attention to the specific cases of financing on the markets of the three airlines referred to in its arguments (see paragraph 95 above).

109    Next, it should be noted that the Commission stated in the defence that the financial situation of the airlines referred to by the applicant was different from that of airBaltic. In support of its argument, the Commission produced before the Court documents showing that the market-based financing of those airlines had been preceded, depending on the situation, by the obtaining of loans on favourable terms and deferrals of payments from creditors. The Commission’s arguments and supporting facts have not been disputed by the applicant.

110    Hence, it has not been demonstrated that the Commission was under an obligation to verify further whether there were other market-based financing solutions for airBaltic.

111    In the light of the foregoing considerations, it must be concluded that the applicant’s complaint relating to the Commission’s application of point 49(c) of the Temporary Framework is unfounded.

(c)    Third part: failure by the Commission to examine the existence of measures less distortive of competition than the aid at issue

112    The applicant complains that the Commission failed to examine whether the aid at issue was, from among all the instruments available, the one least distortive of competition. In the applicant’s submission, the contested decision does not contain any analysis of distortions of competition or of whether there were other, less distortive recapitalisation instruments. The applicant concludes that that decision infringes point 53 of the Temporary Framework.

113    The Commission, supported by the Republic of Latvia and airBaltic, disputes the applicant’s arguments.

114    Section 3.11.3 of the Temporary Framework, entitled ‘Types of recapitalisation measures’, contains points 52 and 53. Point 52 lists the COVID-19 recapitalisation instruments that Member States may provide being, on the one hand, equity instruments, in particular, the issuance of new common or preferred shares, and, on the other hand, instruments with an equity component (referred to as ‘hybrid capital instruments’), in particular profit participation rights, silent participations and convertible secured or unsecured bonds.

115    Point 53 of the Temporary Framework states as follows:

‘The State intervention can take the form of any variation of the above instruments, or a combination of equity and hybrid capital instruments. … The Member State must ensure that the selected recapitalisation instruments and the conditions attached thereto are appropriate to address the beneficiary’s recapitalisation needs, while at the same time being the least distortive of competition.’

116    In the present case, as found by the Commission, it must be emphasised that a recapitalisation instrument and the conditions attached thereto may be considered appropriate to meet the beneficiary’s recapitalisation needs while being the least distortive of competition as referred to in point 53 of the Temporary Framework, provided that they meet the various requirements laid down for that purpose in that framework and relating to the amount of the recapitalisation (Section 3.11.4 of the Temporary Framework), remuneration and exit of the State (section 3.11.5 of the Temporary Framework), governance and prevention of undue distortions of competition (Section 3.11.6 of the Temporary Framework) and the exit strategy of the State from the participation resulting from the recapitalisation (Section 3.11.7 of the Temporary Framework). The reference, in point 53 of the Temporary Framework, to the ‘conditions attached [to the measure at issue]’ refers to requirements, such as those referred to in the preceding sentence, which are intended precisely to ensure that the measure at issue and the conditions attached thereto do not go beyond what is appropriate to address the beneficiary’s recapitalisation needs, while at the same time being the least distortive of competition. Hence, if the abovementioned requirements are met, the selected recapitalisation instrument must be considered compliant with point 53 of the Temporary Framework.

117    In recitals 101 to 158 of the contested decision, the Commission examined whether the aid at issue complied with the conditions laid down in Sections 3.11.4 to 3.11.7 of the Temporary Framework. The applicant disputes the merits of that examination in the fourth to seventh parts of the present plea.

118    It follows from the foregoing considerations that the applicant’s present complaint has no content independent of the arguments which it puts forward as part of the fourth to seventh parts of its first plea. The fate of the merits of the present complaint therefore turns on the analysis of those other parts examined below.

119    Even if the applicant’s line of argument were to be understood as also criticising the Commission for having failed to examine whether another type of aid measure than the recapitalisation at issue would have been more appropriate and less distortive of competition, it is clear that that potential part of its line of argument is not substantiated in any way whatsoever.

120    It must be borne in mind in that regard that, according to the case-law, the Commission is not required to take a decision on every other conceivable aid measure. It is not required to show, positively, that no other conceivable aid measure, which is by definition hypothetical, would not be more appropriate and less liable to give rise to distortions of competition (see, to that effect and by analogy, judgment of 6 May 2019, Scor v Commission, T‑135/17, not published, EU:T:2019:287, paragraph 94 and the case-law cited).

121    Furthermore, whilst the Court has also held that when there is a choice between several appropriate measures recourse must be had to the least onerous, and the disadvantages caused must not be disproportionate to the aims pursued (see judgment of 22 January 2013, Sky Österreich, C‑283/11, EU:C:2013:28, paragraph 50 and the case-law cited), in the present case, there is nothing to suggest that the Commission had to choose between several appropriate measures.

122    Therefore, that part of the line of argument put forward by the applicant and summarised in paragraph 119 above must be rejected.

(d)    Fourth part: failure by the Commission to apply appropriate conditions for the exit of the State to the recapitalisation at issue

123    The applicant criticises the Commission for having approved the aid at issue notwithstanding the absence of a mechanism to ensure the redemption of that aid in accordance with point 56 of the Temporary Framework. In the applicant’s submission, the mere fact that it is planned that airBaltic will be launched via an initial public offering (‘IPO’) on the Stock Exchange and that the Latvian State will sell its shares in connection with that launch is not sufficient to prove that redemption.

124    The applicant further submits that the information provided by the Latvian authorities, set out in recital 54 of the contested decision, suggests that the Latvian State will not sell all the shares acquired through the recapitalisation, which means that the requirement of full redemption of the aid, laid down in point 56 of the Temporary Framework, will not be observed. The applicant submits that, in any event, the Latvian State has no right to maintain its initial level of shareholding in airBaltic once the shares acquired by it have been redeemed.

125    The applicant concludes that the Commission misapplied the provisions of the Temporary Framework aimed at ensuring the Latvian State’s exit from airBaltic’s capital and the establishment of a step-up mechanism. It thus erred in the application of Article 107(3)(b) TFEU and the Temporary Framework, which are grounds for annulment of the contested decision.

126    The Commission, supported by the Republic of Latvia and airBaltic, disputes the applicant’s arguments.

127    The applicant’s arguments relate to two distinct issues. The first issue concerns the existence of incentives for the redemption of the recapitalisation at issue and is addressed in Section 3.11.5 of the Temporary Framework, entitled ‘Remuneration and exit of the State’. The second issue concerns the existence of a strategy for the Latvian State to phase out its equity stake in airBaltic resulting from the recapitalisation at issue and is addressed in Section 3.11.7 of the Temporary Framework, entitled ‘Exit strategy of the State from the participation resulting from the recapitalisation and reporting obligations’.

128    As regards the first issue identified in paragraph 127 above, it should be noted that point 56 of the Temporary Framework lays down the principle that the recapitalisation in the context of the COVID-19 pandemic must be redeemed when the economy stabilises. That point also provides that the Member State concerned must put a mechanism in place to gradually incentivise redemption.

129    By way of measure to incentivise redemption of equity instruments such as recapitalisation, point 61 of the Temporary Framework provides for the introduction of a step-up mechanism gradually increasing the remuneration of the State, in order to incentivise the beneficiary to redeem the State’s paid-up equity stake. That remuneration step-up may, inter alia, take the form of supplementary actions in accordance with the detailed rules provided for in point 61 of the Temporary Framework.

130    In addition, point 64 of the Temporary Framework provides that the Member State concerned may at any time sell its equity stake at market prices to purchasers other than the beneficiary and that such a sale may, inter alia, be carried out on a stock exchange.

131    In the present case, it is apparent from recitals 43 to 48 of the contested decision that the Republic of Latvia put in place a remuneration step-up mechanism entailing, as provided for in the second paragraph of point 61 of the Temporary Framework, the grant to it, on two occasions (five and seven years respectively after the recapitalisation), of additional shares resulting in an increase in its equity stake in airBaltic and dilution of the minority shareholder’s shareholding. The Commission assessed that step-up mechanism in recitals 126 to 131 of the contested decision and concluded that it complied with point 61 of the Temporary Framework.

132    The Court finds that that the Commission’s assessment relating to the remuneration step-up mechanism put in place by the Republic of Latvia and its compliance with the Temporary Framework is not disputed by the applicant.

133    As regards the second issue identified in paragraph 127 above, it should be noted that, according to point 79 of the Temporary Framework, beneficiaries other than small and medium-sized enterprises (SMEs) in receipt of COVID-19 recapitalisation equalling more than 25% of their equity must show proof of a credible exit strategy for the participation of the State, unless the State’s intervention is reduced below the level of 25% of equity within 12 months from the date of the granting of the aid.

134    In accordance with point 80 of the Temporary Framework, the exit strategy must specify, on the one hand, the beneficiary’s plan for the continuation of its activity and the use of the funds invested by the State, including a payment schedule of the remuneration and of the redemption of the State investment and, on the other hand, the measures that the beneficiary and the State will take to abide by the repayment schedule.

135    Point 81 of the Temporary Framework states that the exit strategy should be prepared and submitted to the Member State within 12 months after aid is granted and must be endorsed by the Member State.

136    The Latvian State’s strategy for phasing out its stake in airBaltic’s capital is described in recitals 53 to 58 and assessed in recitals 153 to 158 of the contested decision.

137    In its assessment, the Commission observes, first of all, in recital 154 of the contested decision, that airBaltic drew up a business plan showing the continuation of its activities and the use of the funds invested by the Latvian State. The airline’s objective is to launch an IPO in which the State is to sell the shares acquired through the recapitalisation. In recital 155 of the contested decision, the Commission takes the view that, although the Republic of Latvia has presented indications of a strategy for phasing out its shareholding acquired in the context of the COVID-19 pandemic, that exit strategy will have to contain more details, in particular as regards the repayment schedule and the organisation of the IPO. Thus, in recital 156 of the contested decision, the Commission took note of the commitment made by the Republic of Latvia to receive and endorse a credible exit strategy within 12 months after the aid is granted, unless the State’s intervention is reduced below the level of 25% of equity within the fixed time limit granted, in accordance with points 79 to 81 of the Temporary Framework.

138    In recital 158 of the contested decision, the Commission concluded that the aid at issue complied with Section 3.11.7 of the Temporary Framework.

139    The applicant’s only complaint about the above assessment by the Commission, as evidenced by paragraph 65 of the application, is that the Commission carried out an inadequate assessment by confining itself to endorsing a future IPO by airBaltic and a sale of the Latvian State’s additional shares through that IPO.

140    That complaint is unfounded, however. The Commission made it clear in recital 155 of the contested decision that the Latvian State’s exit strategy will need to be more detailed, in particular as regards the organisation of airBaltic’s IPO. That approach by the Commission was in line with point 81 of the Temporary Framework, according to which the exit strategy need not necessarily be set at the date of adoption of the contested decision, but must be submitted to the Member State concerned within 12 months after the aid is granted.

141    The applicant’s argument, set out in paragraph 124 above, must also be rejected in view of the Latvian State’s commitment to sell, in the context of the IPO of airBaltic, the shares it acquired in that company through the recapitalisation (see recital 54 of the contested decision). That commitment, which was taken into account by the Commission in recital 154 of the contested decision, is compliant with point 56 of the Temporary Framework, which provides for the obligation to redeem the recapitalisation.

142    Furthermore, as regards the applicant’s claim that the Republic of Latvia has no right to retain its initial level of shareholding in airBaltic following the redemption of the shares acquired through the recapitalisation, it is clear, as observed by the Commission, that the Temporary Framework does not require the Member State concerned (in this case, the Republic of Latvia) to dispose of its initial equity stake in the aid beneficiary or even to reduce it. As is apparent from point 56 thereof, it requires only the redemption of the recapitalisation.

143    In the light of the foregoing considerations, the fourth part of the first plea must be rejected.

(e)    Fifth part: failure by the Commission to require notification of a restructuring plan ‘in due time’

144    The applicant submits that the notification of a restructuring plan only after the seven-year period, as provided for in point 85 of the Temporary Framework, does not make it possible, due to the length of that period, to ensure that the recapitalisation remains appropriate and proportionate and does not adversely affect competition. In that sense, such a time limit is incompatible with point 45 of the Temporary Framework, which requires recapitalisation measures to be subject to stringent conditions in order to limit distortions of competition, and is inconsistent with the equivalent requirement laid down in the Communication from the Commission on the application, from 1 August 2013, of State aid rules to support measures in favour of banks in the context of the financial crisis (OJ 2013 C 216, p. 1).

145    The applicant also raises a plea of illegality pursuant to Article 277 TFEU against the Temporary Framework inasmuch as it does not require a restructuring plan to be submitted in due time so as to comply with the principles of adequacy, proportionality and maintenance of effective competition.

146    The Commission, supported by the Republic of Latvia and airBaltic, disputes the applicant’s arguments.

147    Point 85 of the Temporary Framework, under Section 3.11.7, entitled ‘Exit strategy of the State from the participation resulting from the recapitalisation and reporting obligations’, provides as follows:

‘If six years after the COVID-19 recapitalisation the State’s intervention has not been reduced below 15% of beneficiary’s equity, a restructuring plan in accordance with the Rescue and Restructuring Guidelines must be notified to the Commission for approval. … If the beneficiary is not a publicly listed company, or is an SME, the Member State may decide to notify a restructuring plan only if the State’s intervention has not been reduced below the level of 15% of equity seven years after the COVID-19 recapitalisation.’

148    In recital 57 of the contested decision (under point 2.7.6, entitled ‘Exit strategy of the State’), the Commission stated that if seven years after the COVID-19 recapitalisation the Latvian State’s intervention had not been reduced below 15% of airBaltic’s equity, the Republic of Latvia would have to notify a restructuring plan to it for approval, in accordance with the Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty (OJ 2014 C 249, p. 1).

149    It should be noted in that regard that aid measures are granted under the Temporary Framework only to undertakings that were not in difficulty on 31 December 2019, in accordance with point 49(d) of that framework. Hence, the beneficiaries of such aid are undertakings whose liquidity problems were caused by the occurrence of the COVID-19 pandemic, over which the beneficiaries have no control. It must thus be pointed out that the beneficiaries have neither created nor contributed to the occurrence of that crisis.

150    It would, therefore, be contrary to the very objective of State support granted to counter the harmful economic effects caused by the COVID-19 pandemic to require from the outset or immediately a restructuring plan for undertakings which have not contributed in any way to the occurrence of those difficulties.

151    It is therefore in no way contrary to the principle of proportionality to provide in point 85 of the Temporary Framework that such a restructuring plan is to be notified only if, after seven years, the State’s intervention has not been reduced to below 15% of the equity of the beneficiary concerned. It is only after that seven-year period that it will become clear that the various incentive mechanisms have not produced the expected result and that a restructuring plan will accordingly have to be notified. Such a duration is also entirely consistent with the various mechanisms put in place by the Temporary Framework to encourage and accelerate the exit of the State from the equity of the beneficiary concerned, some of which are spread over a similar period. Thus, by way of example, the step-up mechanism increasing remuneration for capital instruments, described in point 61 of the Temporary Framework, provides for the increase, under certain conditions, of the remuneration of the State four years and then six years after the equity injection, whereas the remuneration of hybrid instruments, described in point 66 of the Temporary Framework, increases over time until the eighth year following the recapitalisation.

152    Furthermore, the analogy with the communication referred to in paragraph 144 above is inappropriate because, as observed by the Commission, the corresponding crisis was caused, at least in part, by the excessive risks taken by certain financial institutions, unlike the COVID-19 pandemic, which is a health crisis. Accordingly, it cannot be required that the measures put in place by the Commission in order to remedy the consequences of the COVID-19 crisis be of the same nature as those responding to that financial crisis.

153    In the light of those considerations, the period of seven years for submitting a restructuring plan provided for in point 85 of the Temporary Framework does not appear excessive. Thus, the Commission did not infringe Article 107(3)(b) TFEU by applying in the contested decision the time limit referred to in point 85 of the Temporary Framework.

154    Furthermore, the applicant’s argument based on point 45 of the Temporary Framework must be rejected. While that point requires the recapitalisation measures to be subject to stringent conditions in order to limit distortions of competition, it is explained that those conditions relate to the State’s entry into, remuneration and exit from the equity of the undertakings concerned, governance provisions and appropriate measures to limit distortions of competition. This is clearly a reference to the conditions set out in Sections 3.11.2 to 3.11.7 of the Temporary Framework. The applicant has therefore failed to explain how the time limit for submitting a restructuring plan provided for in point 85 of the Temporary Framework, which was complied with by the Commission in the contested decision, is contrary to that point.

155    The Court further finds that the applicant’s line of argument, put forward in paragraph 71 of the application in support of the plea of illegality raised against point 85 of the Temporary Framework, is not sufficiently substantiated and remains too general to be able to satisfy the requirements of Article 76(d) of the Rules of Procedure of the General Court. Accordingly, those arguments must be rejected as inadmissible.

156    In the light of the foregoing considerations, the applicant’s arguments in the context of the fifth part of the present plea must be rejected.

(f)    Sixth part: failure by the Commission to weigh the expected beneficial effects of the aid against its adverse effects on trading conditions and the maintenance of undistorted competition

157    The applicant complains that, in the present case, the Commission failed to weigh the expected positive effects of the aid at issue in terms of the achievement of the objectives set out in Article 107(3)(b) TFEU against its negative effects in terms of distortion of competition and effect on trade between Member States (‘the balancing test’).

158    The applicant submits that the obligation to conduct the balancing test results from the exceptional nature of aid declared compatible with the internal market, particularly aid declared compatible under Article 107(3)(b) TFEU, the requirement of proportionality and the need to monitor aid in an EU context.

159    The applicant adds that the Temporary Framework also provides for the balancing test, as is apparent from Section 1.2 and point 53 of that framework, and is therefore a second legal basis for the Commission’s obligation to carry out that test.

160    In the applicant’s submission, if the Temporary Framework were to be interpreted as authorising the Commission not to carry out the balancing test, that would amount to its depriving itself of its discretionary power to assess the compatibility of the aid, thereby negating the validity of the Temporary Framework. Thus, the applicant also raises a plea of illegality in respect of the Temporary Framework pursuant to Article 277 TFEU inasmuch as, in the abovementioned situation, that framework infringes the obligation to conduct the balancing test in the context of the application of Article 107(3)(b) TFEU.

161    The Commission, supported by the Republic of Latvia and airBaltic, disputes the applicant’s arguments.

162    It should be borne in mind that, under Article 107(3)(b) TFEU, ‘the following may be considered to be compatible with the internal market: … aid to … remedy a serious disturbance in the economy of a Member State’. It follows from the wording of that provision that its authors considered that it was in the interests of the European Union as a whole that one or other of its Member States be able to overcome a major or possibly even an existential crisis which could only have serious consequences for the economy of all or some of the other Member States and therefore for the European Union as a whole. That textual interpretation of the wording of Article 107(3)(b) TFEU is confirmed by a comparison of it with Article 107(3)(c) TFEU concerning ‘aid to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest’, in so far as the wording of the latter provision contains a condition relating to proof that there is no effect on trading conditions to an extent that is contrary to the common interest, which is not found in Article 107(3)(b) TFEU (see, to that effect, judgment of 22 September 2020, Austria v Commission, C‑594/18 P, EU:C:2020:742, paragraphs 20 and 39).

163    Thus, in so far as the conditions laid down in Article 107(3)(b) TFEU are fulfilled, that is to say, in the present case, that the Member State concerned is indeed confronted with a serious disturbance in its economy and that the aid measure adopted to remedy that disturbance are, first, necessary for that purpose and, second, appropriate and proportionate, that measure is presumed to be adopted in the interests of the European Union, so that that provision does not require the Commission to weigh the beneficial effects of the aid against its adverse effects on trading conditions and the maintenance of undistorted competition, contrary to what is laid down in Article 107(3)(c) TFEU. In other words, such a balancing exercise would have no raison d’être in the context of Article 107(3)(b) TFEU, as its result is presumed to be positive. Indeed, the fact that a Member State manages to remedy a serious disturbance in its economy can only benefit the European Union in general and the internal market in particular (judgment of 17 February 2021, Ryanair v Commission, T‑238/20, under appeal, EU:T:2021:91, paragraph 68).

164    Accordingly, the Court rejects the applicant’s argument that the obligation to conduct the balancing test results from the exceptional nature of compatible aid, including aid declared compatible under Article 107(3)(b) TFEU. For the same reasons, it is not justified in relying on the judgments of 6 July 1995, AITEC and Others v Commission (T‑447/93 to T‑449/93, EU:T:1995:130), and of 19 September 2018, HH Ferries and Others v Commission (T‑68/15, EU:T:2018:563, paragraphs 210 to 214) (see, to that effect, judgment of 17 February 2021, Ryanair v Commission, T‑238/20, under appeal, EU:T:2021:91, paragraph 69, and of 14 April 2021, Ryanair v Commission (Finnair I; Covid-19), T‑388/20, under appeal, EU:T:2021:196, paragraphs 70 and 71).

165    Nor may the applicant succeed in its argument that the mandatory nature of the weighing-up derives from the Temporary Framework, when that framework provides for no such obligation. In particular, Section 1.2 of that framework, referred to by the applicant, concerning the ‘need for close European coordination of national aid measures’, comprises a single point, point 10, which prescribes nothing whatsoever in that regard. Nor may the applicant rely on point 53 of the Temporary Framework in that regard. Indeed, as explained in paragraph 116 above, the latter point must be understood as requiring that a recapitalisation measure be subject to conditions that meet the various requirements expressly provided for in Section 3.11 of the Temporary Framework, relating to the amount of recapitalisation, remuneration and exit of the State, governance and prevention of undue distortions of competition and the exit strategy of the State from the participation resulting from the recapitalisation.

166    It follows that the Commission was under no obligation in the contested decision to carry out the balancing test demanded by the applicant. Although the applicant raises a plea of illegality of the Temporary Framework, as is apparent from paragraph 163 above, Article 107(3)(b) TFEU does not require the Commission to weigh the beneficial effects of the aid against its adverse effects on trading conditions and the maintenance of undistorted competition. As a result, the Temporary Framework, which does not provide for such a balancing test, cannot infringe that provision.

167    Consequently, the applicant’s arguments put forward in the sixth part of the present plea must be rejected.

(g)    Seventh part: misapplication of points 71 and 72 of the Temporary Framework

(1)    Application of point 71 of the Temporary Framework

168    The applicant complains that the Commission did not consider that airBaltic’s business plan, which referred to a ‘progressive return to … pre-COVID-19 projects’, in the context of the time when all airlines that had not received State aid had to engage in substantial downsizing, amounted to an aggressive commercial expansion prohibited under point 71 of the Temporary Framework. In support of its argument, the applicant refers to airBaltic’s launch of new routes and acquisition of new aircraft, as is apparent from the press releases provided in Annex A.2.4 to the application.

169    The Commission, supported by the Republic of Latvia and airBaltic, disputes the applicant’s arguments.

170    Point 71 of the Temporary Framework is placed under Section 3.11.6, entitled ‘Governance and prevention of undue distortions of competition’. In that point it is stated that, in order to prevent undue distortions of competition, beneficiaries must not engage in aggressive commercial expansion financed by State aid or made possible by excessive risk-taking. In general, the lower the participation of the Member State and the higher remuneration, the lesser need there is to provide safeguards.

171    In recital 134 of the contested decision, the Commission stated that airBaltic’s business plan showed that that airline was preparing a progressive return to its pre-COVID-19 projects. In the same recital, the Commission also referred to airBaltic’s commitment to comply with the conditions set out in Section 3.11.6 of the Temporary Framework.

172    The applicant’s argument cannot be upheld.

173    The Court finds that the Commission did examine airBaltic’s business plan. The fact that that plan revealed that airline’s objective of making a progressive return to its pre-COVID-19 projects, namely, before the recapitalisation at issue, does not establish that it engaged in aggressive commercial expansion financed by the aid at issue or made possible by excessive risk-taking as referred to in point 71 of the Temporary Framework.

174    That finding is not called into question by the press releases relied on by the applicant.

175    Those press releases date from December 2020 and are therefore subsequent to the adoption of the contested decision. Moreover, the facts set out in those press releases postdate that decision. In that regard, it should be borne in mind that the legality of the contested decision cannot be called into question on the basis of circumstances arising after its adoption (see judgment of 9 February 2022, Sped-Pro v Commission, T‑791/19, EU:T:2022:67, paragraph 82 and the case-law cited).

176    In the light of the foregoing considerations, the Court finds that the applicant has not succeeded in demonstrating that the Commission misapplied point 71 of the Temporary Framework.

(2)    Application of point 72 of the Temporary Framework

177    Under point 72 of the Temporary Framework, if the beneficiary of a COVID-19 recapitalisation measure above EUR 250 million is an undertaking with significant market power (‘SMP’) on at least one of the relevant markets in which it operates, Member States must propose additional measures to preserve effective competition in those markets. In proposing such measures, Member States may in particular offer structural or behavioural commitments such as those provided for in the Commission Notice on remedies acceptable under the Council Regulation (EC) No 139/2004 and under Commission Regulation (EC) No 802/2004 (OJ 2008 C 267, p. 1; ‘the Remedies Notice’).

178    The applicant submits, first of all, that the definition of the relevant market in the contested decision is incorrect and derogates from the ‘normal’ market definition method used by the Commission in merger cases in the air transport sector.

179    Next, the applicant disputes the Commission’s finding that airBaltic has no SMP in the relevant markets defined in the contested decision.

180    The Commission contends, as a preliminary point, that the applicant’s argument is ineffective since, as noted in recital 135 of the contested decision, the recapitalisation amount in the present case did not exceed EUR 250 million and, therefore, the Republic of Latvia was not obliged to propose additional measures as referred to in point 72 of the Temporary Framework.

181    In that regard, it should be noted that point 72 of the Temporary Framework applies where the recapitalisation amount in question exceeds EUR 250 million.

182    In recital 135 of the contested decision, the Commission noted that, since the recapitalisation amount in the present case did not exceed EUR 250 million, the Republic of Latvia was not obliged to propose additional measures as referred to in point 72 of the Temporary Framework. Nevertheless, in recital 136, the Commission considered that, since the recapitalisation amount was exactly EUR 250 million and the initial amount notified exceeded that amount, it was appropriate for it to examine whether airBaltic had SMP on at least one of the relevant markets in which it operates as referred to in point 72 of the Temporary Framework.

183    Since the Commission ultimately considered it appropriate to examine, in the contested decision, whether airBaltic had SMP on at least one of the markets at issue, the Commission’s argument that the applicant’s complaints are ineffective must be rejected and those complaints must be examined on their merits.

(i)    Definition of the relevant markets for the purposes of point 72 of the Temporary Framework

184    In recitals 137 to 143 of the contested decision, the Commission examined the issue of the definition of the relevant markets in the present case for the purposes of point 72 of the Temporary Framework.

185    For the purposes of that definition, it drew a distinction between the O&D approach (see paragraph 28 above), according to which each pair of cities or airports constitutes a distinct market, and the approach under which each airport in which the operator concerned provides air transport services constitutes a distinct market (‘the airport-by-airport approach’).

186    In the present case, the Commission adopted the airport-by-airport approach and concluded, in recital 143 of the contested decision, that, for the purposes of assessing the compatibility of the aid at issue, the relevant markets were the airports at which airBaltic provided passenger air transport services, namely Riga, Vilnius and Tallinn airports.

187    The Commission justified the application of this approach in the present case by the fact that the aid at issue was intended to preserve the overall capacity of the beneficiary (i.e. airBaltic) to provide air transport services, including by ensuring the preservation of its assets and its medium and long-term operating rights. Those assets and rights are not, in principle, assigned to any particular route (recital 142 of the contested decision).

188    Consequently, according to the Commission, if the measure at issue affects competition, it affects competition on all routes departing from and arriving at an airport where the beneficiary holds slots, irrespective of the competitive position of that beneficiary on each of those routes. Accordingly, in the Commission’s view, it would not be appropriate to analyse the impact of the measure at issue on each of those routes separately. Instead of doing so, the relevant markets should be defined as the airports where the beneficiary provided passenger air transport services (recital 143 of the contested decision).

189    The applicant disputes the application in the present case of the airport-by-airport approach, referring to the Commission’s merger-related decision-making practice in the aviation sector, according to which the relevant market is defined using the O&D approach. It submits that a merger is also aimed at strengthening the ‘overall ability of the beneficiary to operate’ as referred to in recital 142 of the contested decision, but that that does not justify making an exception to the rules governing the definition of relevant market, which must be the same as those applied in the sphere of merger control. The applicant adds that the reference in point 72 of the Temporary Framework to the Remedies Notice confirms that the definition of the relevant market in the present case must be consistent with the rules governing the definition of the relevant market in merger-related matters.

190    The choice of the method of identifying the relevant markets in this case involves complex economic assessments, so that review by the EU judicature is confined to establishing that the rules of procedure and the rules relating to the duty to give reasons have been complied with, and to verifying the accuracy of the facts relied on and that there has been no error of law, manifest error in the assessment of the facts or misuse of powers (see judgment of 11 September 2008, Germany and Others v Kronofrance, C‑75/05 P and C‑80/05 P, EU:C:2008:482, paragraph 59 and the case-law cited).

191    In that regard, first, it should be noted that point 72 of the Temporary Framework does not specify the method to be used for defining the relevant markets.

192    Second, as footnote 1 to the Commission Notice on the definition of relevant market for the purposes of Community competition law (OJ 1997 C 372, p. 5) indicates, the focus of assessment in State aid cases is the recipient of the aid in question and the industry/sector concerned rather than the identification of competitive constraints faced by that recipient.

193    Third, it should be remembered that, when examining aid measures that may be authorised pursuant to Article 107(3)(b) TFEU, the Commission must ensure that they are intended principally to remedy a serious disturbance in the economy of a Member State. In particular, the Temporary Framework is part of the overall effort by Member States to counter the effects of the COVID-19 outbreak on their economy and aims to clarify the possibilities offered to Member States by EU rules to ensure liquidity and access to corporate funding (paragraph 11 of the Temporary Framework). Regarding, more specifically, the recapitalisation measures, the Temporary Framework is aimed at ensuring that the disturbance in the economy caused by the pandemic does not cause an avoidable exit from the market of undertakings that were viable before the COVID-19 outbreak. At the same time, the Commission must ensure that the recapitalisations do not exceed the minimum necessary to ensure the beneficiary’s viability and are limited to re-establishing the beneficiary’s equity structure as it was prior to the COVID-19 outbreak.

194    That type of aid measure is thus aimed at remedying a serious disturbance in the economy of a Member State by supporting, in particular, the viability of undertakings affected by the crisis caused by the COVID-19 pandemic, in order to re-establish their pre-COVID-19 equity structure. Those aid measures are thus focused on the beneficiary’s overall financial situation and, more generally, that of the economic sector concerned.

195    Fourth, as regards the measure at issue specifically, it should be noted that it is intended to ensure, in essence, that airBaltic has sufficient liquidity and that the disruption caused by the COVID-19 pandemic does not compromise its viability (recitals 4, 11 and 81 to 83 of the contested decision). The effects of that aid therefore extend to the overall financial situation of that airline. The measure at issue is aimed at restoring the equity structure of the beneficiary as it was before the COVID-19 outbreak and not at supporting the presence of the beneficiary on a particular route.

196    Accordingly, the Commission was right to find in the contested decision that the measure at issue was aimed at preserving the beneficiary’s assets and its medium and long-term operating rights and, therefore, its overall ability to provide air transport services and that, consequently, it was not appropriate to examine the impact of the measure at issue on each O&D market separately.

197    Fifth, the applicant’s arguments seeking to call into question the airport-by-airport approach taken by the Commission in the contested decision are based, in essence, on an analogy with the market definition method used in the sphere of merger control, according to which the relevant markets are defined using the O&D approach.

198    However, that analogy does not take sufficient account of the specific features of the Temporary Framework and the measure at issue.

199    Indeed, the measure at issue in the present case does not have the effect of strengthening the position of the beneficiary concerned in certain O&D markets and not others. More specifically, a recapitalisation measure produces effects across the overall situation of the beneficiary concerned, inasmuch as the capital injection provided to that beneficiary is not allocated to particular routes and therefore has no direct link with certain O&D markets rather than others.

200    Accordingly, there is no contradiction arising from the fact that the Commission used different approaches for defining markets, on the one hand, in the contested decision and, on the other, in its decision-making practice in the sphere of merger control (see, to that effect and by analogy, judgment of 13 May 2015, Niki Luftfahrt v Commission, T‑162/10, EU:T:2015:283, paragraph 148).

201    It should also be noted that, in the field of concentrations, the Commission has had occasion to define the relevant markets solely on the basis of the airport-by-airport approach where the concentration consisted in an acquisition of assets, including notably slots, from an airline that had ceased all operations and thus withdrawn from all O&D markets. That approach was allowed by the Court, notably on the ground that the slots at issue in the concentration could be redeployed on all the O&D routes to or from the airports concerned (see, to that effect, judgments of 20 October 2021, Polskie Linie Lotnicze ‘LOT’ v Commission, T‑240/18, EU:T:2021:723, paragraph 57, and of 20 October 2021, Polskie Linie Lotnicze ‘LOT’ v Commission, T‑296/18, EU:T:2021:724, paragraph 80). A recapitalisation measure such as the measure at issue has an effect comparable to a concentration involving essentially slots in that, like those slots, the capital supplied to airBaltic is not allocated to particular routes and may be used for the purpose of operating any O&D route from an airport.

202    Lastly, while it is true that point 72 of the Temporary Framework refers to the Remedies Notice in order to guide Member States when choosing to offer structural or behavioural commitments in order to preserve effective competition on the relevant markets, that reference does not seek to impose on the Commission a particular method for defining markets.

203    Accordingly, the Court finds that the Commission could, without making a manifest error of assessment, define the relevant markets for the purposes of applying point 72 of the Temporary Framework using the airport-by-airport approach.

(ii) AirBaltic’s SMP on the relevant markets

204    The Commission, applying the airport-by-airport approach, identified, in recital 144 of the contested decision, three relevant markets for the purposes of point 72 of the Temporary Framework, namely Riga, Vilnius and Tallinn airports, where airBaltic had a base. In recital 149 of the contested decision, it concluded that airBaltic had no SMP at any of those three airports.

205    The applicant submits, in the first place, that, according to the Commission’s practice, a market share exceeding 50% in itself constitutes evidence of a dominant position and SMP, in particular if that market share has remained stable over time. In the applicant’s submission, that is the case with airBaltic in the present case since, according to the contested decision, that airline held a market share of between 50% and 70% of Riga Airport’s passenger traffic.

206    In the second place, the applicant criticises the Commission for having ignored the findings of the Konkurences padome (Competition Council, Latvia) and the Vilniaus miesto apylinkes teismas (District Court, Vilnius, Lithuania) relating to airBaltic’s abuse of a dominant position. The applicant observes that those abusive practices and the enforcement of compensation claims against airBaltic resulted in proceedings that gave rise to the judgment of 5 July 2018, flyLAL-Lithuanian Airlines (C‑27/17, EU:C:2018:533). The applicant notes that the Commission could easily find that information.

207    In the third place, the applicant criticises the Commission for having examined the existence of SMP in the present case solely on the basis of airBaltic’s share of airport infrastructure capacity at Riga, Vilnius and Tallinn airports, without taking into account all the other factors which contribute to the existence of SMP and without explaining why it limited its examination to the two abovementioned factors.

208    The applicant submits that barriers to entry, other than airport congestion, may contribute to the existence of SMP. As regards airBaltic, those barriers to entry include vertical integration between that airline and Riga Airport, resulting from the fact that the Latvian State controls both entities. In the applicant’s submission, that vertical integration results in the structure of airport charges at Riga Airport benefiting airBaltic, through reductions and exemptions on transfer and transit traffic, to the detriment of airlines competing with airBaltic and wishing to provide point-to-point passenger transport services.

209    In the fourth place, the applicant claims that the assessment of the existence of SMP is by nature a prospective exercise, since the Commission’s objective is to determine whether the aid may have negative effects in the future. According to the applicant, the Commission should have taken into account airBaltic’s ability to sell at a loss by reason of the aid at issue or to pursue an artificial expansion of its capacity. The applicant submits that the Commission’s statement, in recital 146 of the contested decision, that ‘airBaltic does not hold slots or any historic rights to slots in [Riga Airport] that would prevent other airlines to schedule flights’ ignores the context of the COVID-19 pandemic, which makes any new entry or expansion by an operator not benefiting from aid highly unlikely.

210    The Commission, supported by the Republic of Latvia and airBaltic, disputes the applicant’s arguments.

211    The assessment of the applicant’s arguments requires an initial clarification of the concept of ‘SMP’.

–       The concept of ‘SMP’

212    The concept of ‘SMP’ is not defined in the Temporary Framework or more generally in the field of State aid.

213    That concept derives from Article 63(2) of Directive (EU) 2018/1972 of the European Parliament and of the Council of 11 December 2018 establishing the European Electronic Communications Code (OJ 2018 L 321, p. 36). Under that provision, an undertaking is to be deemed to have SMP if, either individually or jointly with others, it enjoys a position equivalent to dominance, namely a position of economic strength affording it the power to behave to an appreciable extent independently of competitors, customers and ultimately consumers.

214    According to recital 161 of Directive 2018/1972, the definition of SMP used in that directive is ‘equivalent to the concept of dominance as defined in the case-law of the Court of Justice’.

215    The Court considers that there is no objective reason for interpreting the concept of ‘SMP’ for the purposes of point 72 of the Temporary Framework differently from that resulting from Directive 2018/1972.

216    Accordingly, the concept of ‘SMP’ for the purposes of point 72 of the Temporary Framework must be regarded as being, in essence, equivalent to that of a dominant position under competition law.

217    In that regard, it should be recalled that, according to settled case-law, a dominant position is defined in EU law as a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition from being maintained on the relevant market by giving it the power to behave to an appreciable extent independently of its competitors, its customers and, ultimately, consumers (judgments of 14 February 1978, United Brands and United Brands Continental v Commission, 27/76, EU:C:1978:22, paragraph 65, and of 13 February 1979, Hoffmann-La Roche v Commission, 85/76, EU:C:1979:36, paragraph 38).

218    It is also apparent from settled case-law that the existence of a dominant position generally results from a combination of several factors which, taken separately, would not necessarily be decisive (judgments of 14 February 1978, United Brands and United Brands Continental v Commission, 27/76, EU:C:1978:22, paragraph 66, and of 13 February 1979, Hoffmann-La Roche v Commission, 85/76, EU:C:1979:36, paragraph 39).

219    Moreover, even if it has been held that a market share of 50% or more constitutes a presumption of the existence of a dominant position (see, to that effect, judgment of 3 July 1991, AKZO v Commission, C‑62/86, EU:C:1991:286, paragraph 60), it is apparent from the case-law that a substantial market share is not an immutable factor and that its significance varies from one market to another depending on their structure, especially as far as production, supply and demand are concerned (judgment of 13 February 1979, Hoffmann-La Roche v Commission, 85/76, EU:C:1979:36, paragraph 40).

220    Lastly, it should be noted that, contrary to the applicant’s assertions, the examination of the existence of SMP is not, by its nature, prospective. That assessment must be carried out on the basis of the situation prevailing at the time of notification of the measure at issue. If the beneficiary does not enjoy SMP at the time of that notification, point 72 of the Temporary Framework does not apply. Consequently, the Commission does not have to consider whether the beneficiary could attain SMP following the grant of the aid. Moreover, as the Commission rightly notes, the prospective aspects relating to airBaltic’s conduct, relied on by the applicant (see paragraph 209 above), are covered by points of the Temporary Framework other than point 72, in particular point 71, which prohibits the beneficiary of a recapitalisation measure from engaging in aggressive commercial expansion, and point 74 which, in essence, prohibits that beneficiary from making acquisitions as long as most of the aid has not been redeemed.

–       Assessment of airBaltic’s SMP at the three relevant airports in the present case

221    In the contested decision, the Commission concluded that airBaltic had no SMP at the airports of Riga, Vilnius and Tallinn, taking into account the following factors.

222    As regards, first of all, Riga Airport, the Commission noted, in recital 145 of the contested decision, that, on the date of adoption of that decision, that airport was not a coordinated airport and that its infrastructure capacity was generally adequate to meet the demands of users. It is observed in that regard that, according to Article 2(g) of Council Regulation (EEC) No 95/93 of 18 January 1993 on common rules for the allocation of slots at Community airports (OJ 1993 L 14, p. 1), in the version applicable in the present case, a ‘coordinated’ airport is any airport where, in order to land or take off, an air carrier or any other aircraft operator must have been allocated a slot by a coordinator, with the exception of State flights, emergency landings and humanitarian flights. Thus, at those airports, demand for airport infrastructure, in particular as regards slots, significantly exceeds the airport’s capacity and the extension of that infrastructure to meet demand is not possible in the short term. That is not the situation at non-coordinated airports such as Riga Airport, however, where there are sufficient slots available.

223    In recital 146 of the contested decision, the Commission noted, on the basis of data from 2019, that passenger traffic carried by airBaltic accounted for between 50% and 70% of total passenger traffic at Riga Airport. It also found that, due to that airport’s available capacity, airBaltic did not hold slots or historical rights over such slots which could prevent other airlines from scheduling flights.

224    Furthermore, in recital 147 of the contested decision, the Commission noted that, on the date of adoption of that decision, runway capacity in mixed mode (arrivals and departures) at Riga Airport was 29 movements per hour. It also noted that, during the summer of 2019, airBaltic’s share of movements at that airport represented on average less than 30% to 40% and reached a maximum of 50% to 60% during only one peak hour. Furthermore, the average congestion rate of that airport during the summer of 2019 was less than 43%, which, according to the Commission, showed that there was significant available capacity at that airport.

225    As regards Vilnius and Tallinn airports, the Commission noted, in recital 148 of the contested decision, that passenger traffic carried by airBaltic accounted for 5% to 15% and 30% to 40%, respectively, of the total passenger traffic at those airports and that those airports were not congested or coordinated.

226    The applicant does not dispute the abovementioned data relied on by the Commission. Those data indeed demonstrate that, on the date of adoption of the contested decision, the three airports in question had plenty of free capacity, allowing airBaltic’s competitors to schedule flights on days and times that suited them.

227    The Court is not convinced by the applicant’s argument that airBaltic held SMP at Riga Airport on the sole ground that it accounted for between 50% and 70% of passenger traffic at that airport.

228    In that regard, given that that airport was neither a coordinated airport nor an airport with a high congestion rate and that it allowed any airline to enter or expand, the abovementioned information does not demonstrate that the Commission committed a manifest error of assessment in finding that airBaltic did not have SMP at Riga Airport.

229    Even though airBaltic’s share of passenger traffic is indeed high, the fact remains that its share of the movements at Riga Airport represents, on average, less than 30% to 40% and that that airport is not coordinated. Those data demonstrate the existence of sufficient slots available at that airport for entry and expansion of airBaltic’s competitors, which is moreover corroborated by the fact that the average congestion rate at that airport during the summer of 2019 was less than 43%.

230    In that regard, in accordance with the case-law referred to in paragraph 219 above, a substantial market share is not an immutable fact and its significance varies from one market to another depending on their structure, especially as far as production, supply and demand are concerned.

231    Thus, in the present case, the Commission was fully entitled to conclude that, in view of the structure of the market in question, in particular the absence of significant barriers to entry and expansion, as is apparent from paragraph 229 above, airBaltic did not have SMP at Riga Airport.

232    As regards the applicant’s reference to the decisions of the Latvian Competition Council and the Vilniaus miesto apylinkes teismas (District Court, Vilnius) (see paragraph 206 above), suffice it to note that the Republic of Latvia maintained before the Court, without being challenged by the applicant, that those decisions related to market conditions dating back more than ten years and that they were therefore not relevant in the present case.

233    Nor does the judgment of 5 July 2018, flyLAL-Lithuanian Airlines (C‑27/17, EU:C:2018:533), also relied on by the applicant (see paragraph 206 above), demonstrate that airBaltic had SMP at the airports of Riga, Vilnius and Tallinn. In that judgment, the Court did not rule on airBaltic’s market power at those airports.

234    The applicant’s arguments set out in paragraph 208 above must also be rejected. That line of argument does not demonstrate the existence of barriers to entry for the infrastructures of Riga Airport that should lead the Commission to conclude that airBaltic held SMP at that airport despite the fact that it was not coordinated and had capacity allowing for the entry or expansion of a competitor of airBaltic. In any event, the applicant’s line of argument does not demonstrate that the Commission committed a manifest error of assessment of airBaltic’s market power at Riga Airport.

235    Lastly, the applicant’s complaint that the Commission examined the existence of SMP solely on the basis of airBaltic’s share of airport infrastructure capacity at Riga, Vilnius and Tallinn airports, without taking into account other relevant factors (see paragraph 207 above), must be rejected, as it is based on an incomplete reading of the contested decision. As is apparent from recitals 145 to 148 of the contested decision, the Commission also took account of the fact that the abovementioned airports were neither coordinated nor congested and of airBaltic’s passenger traffic market share. Thus, in the contested decision, the Commission took into consideration not only the beneficiary’s share of airport capacity, but also the characteristics of the three airports in terms of available capacity and market shares of the beneficiary in the market for the provision of passenger air transport services.

236    In conclusion, it must be held that the applicant has failed to demonstrate that the Commission made a manifest error of assessment in finding that airBaltic did not have SMP at the three relevant airports in the present case, namely those of Riga, Vilnius and Tallinn. Furthermore, and in response to the applicant’s complaint set out in paragraph 207 above, relating to a failure to provide a statement of reasons for the contested decision, it follows from the foregoing that the Commission did provide reasons, to the requisite legal standard, for the abovementioned conclusion.

237    In the light of the foregoing considerations, the seventh part of the first plea must be rejected. Consequently, the plea must be rejected in its entirety.

2.      Second plea: infringement of the principles of non-discrimination, freedom to provide services and freedom of establishment

238    The applicant claims that the aid at issue infringes the principles of non-discrimination, freedom to provide services and freedom of establishment.

239    The Commission, supported by the Republic of Latvia and airBaltic, disputes the applicant’s arguments.

240    As a preliminary point, it should be remembered that State aid which infringes provisions of the Treaty or general principles of EU law cannot be declared compatible with the internal market (judgments of 15 April 2008, Nuova Agricast, C‑390/06, EU:C:2008:224, paragraphs 50 and 51, and of 22 September 2020, Austria v Commission, C‑594/18 P, EU:C:2020:742, paragraph 44).

(a)    Infringement of the principle of non-discrimination

241    The applicant submits, in essence, that the Commission treated the comparable situation of airlines operating routes to and from Latvia differently by favouring airBaltic without any objective justification. In the applicant’s submission, all airlines operating in Latvia were impacted by the COVID-19 pandemic. The Commission merely highlights certain facts relating to airBaltic’s size and range of flights offered, which does not demonstrate that it was more suitable than other airlines for remedying the serious disturbances caused to the Latvian economy. That is particularly true as regards the applicant, which is in direct competition with airBaltic at Riga Airport.

242    The applicant also submits that the Commission failed to establish that the difference in treatment described above was necessary and proportionate to the objective pursued of remedying a serious disturbance in the Latvian economy.

243    The Commission, supported by the Republic of Latvia and airBaltic, disputes the applicant’s arguments.

244    It should be remembered that the principle of non-discrimination requires that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment is objectively justified (judgment of 15 April 2008, Nuova Agricast, C‑390/06, EU:C:2008:224, paragraph 66; see also, to that effect, judgment of 5 June 2018, Montero Mateos, C‑677/16, EU:C:2018:393, paragraph 49).

245    The elements which characterise different situations, and hence their comparability, must in particular be determined and assessed in the light of the subject matter and purpose of the EU act which makes the distinction in question. The principles and objectives of the field to which the act relates must also be taken into account (judgment of 16 December 2008, Arcelor Atlantique et Lorraine and Others, C‑127/07, EU:C:2008:728, paragraph 26).

246    Furthermore, it should be borne in mind that the principle of proportionality, which is one of the general principles of EU law, requires that acts adopted by EU institutions do not exceed the limits of what is appropriate and necessary in order to attain the legitimate objectives pursued by the legislation in question (judgment of 17 May 1984, Denkavit Nederland, 15/83, EU:C:1984:183, paragraph 25); where there is a choice between several appropriate measures, recourse must be had to the least onerous measure and the disadvantages caused must not be disproportionate to the aims pursued (judgment of 30 April 2019, Italy v Council (Fishing quota for Mediterranean swordfish), C‑611/17, EU:C:2019:332, paragraph 55).

247    In the present case, it should be recalled that, according to the contested decision, the aid at issue is intended solely to meet airBaltic’s liquidity and equity needs following the loss of revenue suffered by it as a result of the spread of the COVID-19 pandemic, in order to remedy a serious disturbance in the economy of a Member State for the purposes of the Temporary Framework.

248    In the first place, it is true that other airlines indisputably contribute to a certain extent to Latvia’s connectivity and are affected by the COVID-19 pandemic and the resulting travel restrictions just as much as airBaltic. However, the fact remains that, as observed by the Commission, Member States are under no obligation to grant aid to remedy the serious disturbance in an economy within the meaning of Article 107(3)(b) TFEU (see, to that effect, Ryanair and Laudamotion v Commission (Austrian Airlines; Covid-19), T‑677/20, under appeal, EU:T:2021:465, paragraph 54). Although Article 108(3) TFEU requires Member States to notify their plans to grant State aid to the Commission before they are put into effect, it does not, however, require them to grant aid (order of 30 May 2018, Yanchev, C‑481/17, not published, EU:C:2018:352, paragraph 22).

249    In addition, aid may be intended to remedy a serious disturbance in the economy of a Member State, in accordance with Article 107(3)(b) TFEU, irrespective of the fact that it does not, in itself, remedy such a disturbance. Therefore, contrary to what the applicant claims, the Republic of Latvia cannot be required to grant aid to all undertakings which contribute, to one degree or another, to the connectivity of its territory.

250    In the second place, it should be noted that individual aid, such as the measure at issue, by definition benefits only one undertaking, to the exclusion of all other undertakings, including those in a situation comparable to that of the beneficiary of that aid. Thus, by its very nature, such aid introduces a difference in treatment, or even discrimination, which is inherent in the individual nature of that measure. To maintain, as the applicant does, that the individual aid at issue is contrary to the principle of non-discrimination amounts, in essence, to calling into question systematically the compatibility with the internal market of any individual aid solely on account of its inherently exclusive and thereby discriminatory nature, even though EU law allows Member States to grant individual aid, provided that all the conditions laid down in Article 107 TFEU are satisfied (judgment of 14 April 2021, Ryanair v Commission (Finnair I; Covid-19), T‑388/20, under appeal, EU:T:2021:196, paragraph 81).

251    In the third place, assuming that, as the applicant claims, the difference in treatment introduced by the measure at issue, in so far as it benefits only airBaltic, may amount to discrimination, it must be ascertained whether it is justified by a legitimate objective and whether it is necessary, appropriate and proportionate to achieve it. Similarly, since the applicant refers to the first paragraph of Article 18 TFEU, it should be made clear that, under that provision, any discrimination on grounds of nationality is prohibited within the scope of application of the Treaties ‘without prejudice to any special provisions contained therein’. Therefore, it is important to ascertain whether that difference in treatment is permitted under Article 107(3)(b) TFEU, which is the legal basis for the contested decision. That examination implies, first, that the objective of the measure at issue satisfies the requirements laid down by that provision and, second, that the detailed rules for granting the measure at issue, namely, in the present case, the fact that it benefits only airBaltic, are such as to enable that objective to be achieved and do not go beyond what is necessary to achieve it (judgment of 14 April 2021, Ryanair v Commission (Finnair I; Covid-19), T‑388/20, under appeal, EU:T:2021:196, paragraph 82).

252    As regards the objective of the measure at issue, it is common ground that the COVID-19 pandemic seriously disrupted the Latvian economy and that it had significant negative effects on the Latvian air transport market. In that context, having regard to airBaltic’s important role in Latvia’s connectivity and its significant contribution to the Latvian economy (see paragraphs 57, 58 and 77 to 91 above), the objective of the measure at issue, namely maintaining airBaltic’s viability and air transport services, was capable of remedying the serious disturbance in the Latvian economy.

253    As regards the arrangements for granting the measure at issue, once again, that measure was intended to restore that airline’s liquidity situation. Since it took the form of a recapitalisation, there is no doubt that it was such as to enable the abovementioned objective to be achieved.

254    As regards the question whether the aid at issue goes beyond what is necessary to achieve the objective pursued, the Commission concluded, in recital 114 of the contested decision, that that measure did not exceed the minimum necessary to ensure the viability of airBaltic and did not go beyond the restoration of that company’s capital structure, as it existed on 31 December 2019. The applicant does not dispute that conclusion.

255    The appellant disputes the necessity of the alleged difference in treatment between airBaltic and other airlines operating in Latvia, relying on arguments which have already been examined and rejected by the Court in the context of the first plea.

256    Thus, the applicant’s argument that there were market-based solutions available to airBaltic other than the grant of the aid at issue was examined and rejected in paragraphs 61 to 73 above.

257    As regards the applicant’s argument that it had not been established that the bankruptcy of airBaltic would necessarily endanger the Latvian economy and Latvia’s connectivity, that argument was examined and rejected in paragraphs 74 to 92 above.

258    Furthermore, as regards the applicant’s argument that the Commission did not examine the need to grant the aid at issue only to airBaltic, it must be remembered that the Commission is under no obligation to examine whether, in addition to maintaining airBaltic, the Republic of Latvia should broaden the circle of beneficiaries of the aid, since the contested decision establishes, to the requisite legal standard, the need to preserve airBaltic’s contribution to the connectivity of Latvia and the Latvian economy.

259    The applicant disputes the proportionality of the alleged difference in treatment between airBaltic and other airlines operating in Latvia, in view of the fact that airBaltic receives all the aid granted by the Latvian State despite the fact that its participation in Latvia’s international connectivity ranged from 50% to 70%. The applicant submits that if the aid at issue were granted to all airlines operating in Latvia on the basis of their market share, the objective of the measure would be achieved without discrimination.

260    That argument cannot be upheld. Given its major role in international connectivity and its economic importance in Latvia, as already established in the context of the examination of the second complaint in the second part of the first plea in law (see paragraphs 74 to 91 above), the Court finds that ensuring the continuity of airBaltic’s economic activities was more liable to contribute to remedying the serious disturbance in the Latvian economy than maintaining the activities of the other airlines which operated – to a lesser extent than airBaltic – in Latvia. In particular, it is not apparent from any document in the file before the Court that the applicant or any other airline, by virtue of their role in Latvia’s national and international connectivity and their economic and social importance for that country, was of an importance that was comparable to that of airBaltic for the Latvian economy and its resumption.

261    It follows that, in any event and in so far as the difference in treatment introduced by the aid at issue can be treated as discrimination, it was justified to grant the benefit of that aid solely to airBaltic.

262    In the light of the foregoing considerations, the applicant’s complaint alleging infringement of the principle of non-discrimination must be rejected.

(b)    Infringement of the principles of freedom to provide services and freedom of establishment

263    The applicant submits that the contested decision constitutes a restriction on the exercise of the freedom to provide services and the freedom of establishment of airlines operating to or from Latvia. That decision authorises the grant of the aid at issue, which strengthens airBaltic’s position on the Latvian passenger transport market and thus makes it more difficult for airlines which are in competition with airBaltic to operate on that market.

264    The applicant complains that the Commission failed to examine the compatibility of the aid at issue with the freedom of establishment and the freedom to provide services and with Regulation (EC) No 1008/2008 of the European Parliament and of the Council of 24 September 2008 on common rules for the operation of air services in the Community (OJ 2008 L 293, p. 3). It infers from this that the aid at issue restricts the rights granted to Community carriers by means of the European operating licence system provided for by that regulation.

265    The applicant also submits that the abovementioned restriction on the exercise of the freedom to provide services and freedom of establishment cannot be justified by an overriding reason in the public interest, inasmuch as it is discriminatory and disproportionate in relation to the objective pursued.

266    The Commission, supported by the Republic of Latvia and airBaltic, disputes the applicant’s arguments.

267    It should be remembered, first, that the provisions of the FEU Treaty on freedom of establishment are aimed in particular at ensuring that foreign nationals and companies are treated in the host Member State in the same way as nationals of that State (see judgment of 6 October 2015, Finanzamt Linz, C‑66/14, EU:C:2015:661, paragraph 26 and the case-law cited).

268    Second, freedom to provide services precludes the application of any national rules which have the effect of making the provision of services between Member States more difficult than the provision of services purely within one Member State, irrespective of whether there is discrimination on grounds of nationality or residence (judgment of 6 February 2003, Stylianakis, C‑92/01, EU:C:2003:72, paragraph 25). However, it must be noted that, under Article 58(1) TFEU, freedom to provide services in the field of transport is governed by the provisions of the title relating to transport, namely Title VI of the FEU Treaty. The freedom to provide services in the field of transport is thus subject, within primary law, to a specific legal regime (judgment of 18 March 2014, International Jet Management, C‑628/11, EU:C:2014:171, paragraph 36). Consequently, Article 56 TFEU, which enshrines the freedom to provide services, does not apply as such to the air transport sector (judgment of 25 January 2011, Neukirchinger, C‑382/08, EU:C:2011:27, paragraph 22).

269    It is therefore only on the basis of Article 100(2) TFEU that measures liberalising air transport services may be adopted (judgment of 18 March 2014, International Jet Management, C‑628/11, EU:C:2014:171, paragraph 38). As the applicant rightly points out, the EU legislature adopted Regulation No 1008/2008 on the basis of that provision, the specific purpose of which is to define the conditions for applying, in the air transport sector, the principle of freedom to provide services (see, by analogy, judgment of 6 February 2003, Stylianakis, C‑92/01, EU:C:2003:72, paragraphs 23 and 24).

270    In the present case, it should be noted that the applicant submits, in essence, that the aid measure at issue constitutes a restriction on the freedom of establishment and freedom to provide services on account of its discriminatory nature, in that it benefits only airBaltic.

271    Whilst it is true that the measure at issue relates to individual aid which benefits only airBaltic, the applicant does not establish how that exclusivity is capable of discouraging it from establishing itself in Latvia or providing services to and from that Member State. In particular, the applicant fails to identify the elements of fact or law which cause that measure to produce restrictive effects that go beyond those which trigger the prohibition laid down in Article 107(1) TFEU. On the contrary, as has been held in paragraphs 251 to 261 above, those effects are necessary and proportionate to remedy the serious disturbance in the Latvian economy caused by the COVID-19 pandemic, in accordance with the requirements laid down in Article 107(3)(b) TFEU.

272    Consequently, the contested measure cannot constitute an obstacle to the freedom of establishment or the freedom to provide services and the Commission cannot therefore be criticised for not having examined the compatibility of that measure with the freedom of establishment, the freedom to provide services and Regulation No 1008/2008.

273    In the light of all the foregoing considerations, the second plea must be rejected.

3.      Third plea: failure to initiate the formal investigation procedure

274    The applicant complains that the Commission failed to initiate the formal investigation procedure provided for in Article 108(2) TFEU despite the existence of serious difficulties encountered by it in the examination of the aid at issue. In order to demonstrate the existence of such difficulties, the applicant refers to its arguments developed in the context of the first and second pleas, which show that the Commission carried out an insufficient and incomplete assessment of that measure in the light of Article 107(3)(b) TFEU and the Temporary Framework, as well as in the light of the principles of non-discrimination, freedom to provide services and freedom of establishment.

275    The Commission, supported by the Republic of Latvia and airBaltic, disputes the applicant’s arguments.

276    As a preliminary point, it should be remembered that the lawfulness of a decision, such as the contested decision, not to raise objections, based on Article 4(3) of Regulation 2015/1589, depends on whether the assessment of the information and evidence which the Commission had at its disposal during the preliminary examination phase of the measure notified should objectively have raised doubts as to the compatibility of that measure with the internal market, given that such doubts must trigger the initiation of a formal investigation procedure in which the interested parties referred to in Article 1(h) of that regulation may participate (see, by analogy, judgments of 3 September 2020, Vereniging tot Behoud van Natuurmonumenten in Nederland and Others v Commission, C‑817/18 P, EU:C:2020:637, paragraph 80, and of 2 September 2021, Commission v Tempus Energy and Tempus Energy Technology, C‑57/19 P, EU:C:2021:663, paragraph 38).

277    According to the case-law, the concept of ‘doubts’ set out in Article 4(3) and (4) of Regulation 2015/1589, which takes the form of the existence of serious difficulties encountered by the Commission in its examination of whether the measure at issue constituted aid or whether it was compatible with the internal market, is objective in nature. Whether or not such doubts exist requires investigation of both the circumstances under which the contested measure was adopted and its content. That investigation must be conducted objectively, comparing the grounds of the decision with the information available to the Commission when it took a decision on the compatibility of the disputed aid with the internal market. It follows that judicial review by the Court of the existence of doubts will, by its very nature, go beyond consideration of whether or not there has been a manifest error of assessment (see, to that effect, judgments of 2 April 2009, Bouygues and Bouygues Télécom v Commission, C‑431/07 P, EU:C:2009:223, paragraph 63, and of 10 July 2012, Smurfit Kappa Group v Commission, T‑304/08, EU:T:2012:351, paragraph 80 and the case-law cited).

278    It is also apparent from the case-law that if the examination carried out by the Commission during the preliminary examination stage is insufficient or incomplete, this constitutes evidence of the existence of serious difficulties (see judgments of 9 September 2010, British Aggregates and Others v Commission, T‑359/04, EU:T:2010:366, paragraph 57 and the case-law cited, and of 19 September 2018, HH Ferries and Others v Commission, T‑68/15, EU:T:2018:563, paragraph 62 and the case-law cited).

279    In the present case, it must be observed that, in the context of the present plea, the applicant repeats in condensed form the arguments put forward in the context of the first and second pleas, without identifying new elements capable of demonstrating the existence of serious difficulties and, therefore, of doubts which the Commission should have had in that regard.

280    It is apparent from the examination of the first and second pleas in law that the arguments put forward by the applicant have not revealed any error on the part of the Commission. It is also apparent from the examination of those pleas that neither are the arguments put forward by the applicant capable of constituting conclusive evidence of an incomplete examination, as claimed by the applicant. Thus, the applicant’s arguments have not demonstrated the existence of doubts within the meaning of Article 4(3) and (4) of Regulation 2015/1589.

281    Consequently, the applicant’s third plea in law must be rejected.

4.      Fourth plea: infringement of the second paragraph of Article 296 TFEU

282    The applicant submits that the Commission failed to fulfil its obligation to state reasons, inasmuch as it failed to assess a number of elements relating to the application of Article 107(3)(b) TFEU and the Temporary Framework in the present case and to explain, in the contested decision, the reasons for those omissions.

283    The Commission, supported by the Republic of Latvia and airBaltic, disputes the applicant’s arguments.

284    It should be borne in mind that the statement of reasons required by Article 296 TFEU is an essential procedural requirement, as distinct from the question whether it is well founded, which goes to the substantive legality of the contested measure (see judgment of 10 July 2008, Bertelsmann and Sony Corporation of America v Impala, C‑413/06 P, EU:C:2008:392, paragraph 181 and the case-law cited). The statement of reasons must be appropriate to the measure at issue and must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the court having jurisdiction to exercise its power of review. The requirements to be satisfied by the statement of reasons depend on the circumstances of each case, in particular the content of the measure in question, the nature of the reasons given and the interest which the addressees of the measure, or other parties to whom it is of direct and individual concern, may have in obtaining explanations. It is not necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements laid down in Article 296 TFEU must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question (judgments of 2 April 1998, Commission v Sytraval and Brink’s France, C‑367/95 P, EU:C:1998:154, paragraph 63; of 22 June 2004, Portugal v Commission, C‑42/01, EU:C:2004:379, paragraph 66; and of 15 April 2008, Nuova Agricast, C‑390/06, EU:C:2008:224, paragraph 79).

285    Furthermore, a decision adopted at the end of the preliminary examination stage and declaring a State aid measure compatible with the internal market, which is taken within a short time, must merely set out the reasons for which the Commission considers that it is not faced with serious difficulties in assessing the compatibility of the aid in question with the internal market (judgments of 22 December 2008, Régie Networks, C‑333/07, EU:C:2008:764, paragraph 65, and of 27 October 2011, Austria v Scheucher-Fleisch and Others, C‑47/10 P, EU:C:2011:698, paragraph 111).

286    In the present case, in the first place, the applicant submits that the Commission failed to determine how aid targeting airBaltic could, in itself, remedy a serious disturbance in the Latvian economy. It should be borne in mind that Article 107(3)(b) TFEU does not require that the aid measure at issue be capable, in itself, of remedying the serious disturbance in the economy of the Member State concerned (see paragraph 52 above). Accordingly, it was not necessary for the Commission to provide reasons in that regard.

287    In the second place, the applicant submits that the Commission failed to explain why airBaltic had no sources of financing other than the aid at issue and to examine whether the recapitalisation instrument selected was the least distortive of competition. In that regard, it is appropriate to refer, first, to paragraphs 93 to 111 above, which demonstrate that, in recitals 93 to 97 of the contested decision, the Commission provided reasons, to the requisite legal standard, for its analysis relating to the application in the present case of point 49(c) of the Temporary Framework relating to the existence of other financing solutions. Second, it is apparent from paragraphs 114 to 118 above that the Temporary Framework does not require the Commission to examine whether, apart from the recapitalisation measure at issue, there were no other recapitalisation instruments liable to distort competition less. It was sufficient for the Commission to apply the requirements set out in Sections 3.11.4 to 3.11.7 of the Temporary Framework for the provisions of point 53 of the Temporary Framework referred to by the applicant. Accordingly, the Commission was not required to provide reasons in that regard.

288    In the third place, the applicant claims that the Commission failed to carry out, even briefly, the balancing test. It should be recalled in that regard that, as is apparent from paragraphs 162 to 167 above, neither Article 107(3)(b) TFEU nor the Temporary Framework requires such a balancing exercise to be carried out. Hence, the Commission did not have to provide reasons in that regard.

289    In the fourth place, the applicant complains that the Commission failed to explain why airBaltic’s market power should be assessed solely on the basis of congestion levels at Riga, Vilnius and Tallinn airports and why, in the light of all available data, airBaltic had no SMP. In the light of the considerations set out in paragraphs 235 and 236 above, the present complaint is unfounded.

290    In the fifth place, the applicant complains that the Commission failed to explain the contradiction between its assumption that airBaltic’s contribution to the economy could not be replaced and its argument that that airline had no SMP, given the low barriers to market entry. In that regard, suffice it to note that there is no contradiction between the Commission’s analysis in recital 89 of the contested decision, according to which it was unlikely that airBaltic’s services would be replicated on the same scale by its competitors, and its finding, in recital 149 of the contested decision, that airBaltic had no SMP. Recital 89 of the contested decision is based on the data provided in Table 1 of that decision, whereas the conclusion finding no SMP is based on the three factors examined in recitals 145 to 148 of the contested decision. The fact that the three relevant airports have available slot capacity does not contradict the Commission’s finding in recital 89 of the contested decision. The applicant’s complaint must be rejected.

291    In the sixth place, the applicant complains that the Commission failed to examine whether the aid at issue complied with the principles of non-discrimination, freedom to provide services and freedom of establishment. It must be noted in that regard that the contested decision contains information, in particular in recitals 19, 21 and 85 to 92, which makes it possible to understand the particular importance of airBaltic for Latvia’s economy and connectivity and therefore the reasons why the Republic of Latvia chose that company to be the sole beneficiary of the aid at issue. Since the applicant was able to challenge that analysis, as demonstrated by the arguments it put forward in the context of the second plea, the Commission provided an adequate statement of reasons in the light of the case-law cited in paragraphs 284 and 285 above.

292    It follows that the applicant’s arguments put forward under the fourth plea have not established that the Commission infringed its obligation to state reasons.

293    Consequently, the applicant’s fourth plea in law must be rejected and, consequently, the action must be dismissed in its entirety.

IV.    Costs

294    Under Article 134(1) of the Rules of Procedure of the General Court, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered to bear its own costs and to pay those incurred by the Commission and airBaltic, in accordance with the forms of order sought by those parties.

295    The Republic of Latvia is to bear its own costs, in accordance with Article 138(1) of the Rules of Procedure.

On those grounds,

THE GENERAL COURT (Tenth Chamber)

hereby:

1.      Dismisses the action.

2.      Orders Ryanair DAC to bear its own costs and to pay those incurred by the European Commission and Air Baltic Corporation AS.

3.      Orders the Republic of Latvia to bear its own costs.

Kornezov Buttigieg Hesse

Delivered in open court in Luxembourg on 18 October 2023.

V. Di Bucci M. van der Woude

Registrar President

Table of contents

I. Background to the dispute

II. Forms of order sought

III. Law

A. Admissibility of the action

B. Substance

1. First plea in law: misapplication of Article 107(3)(b) TFEU and of the Temporary Framework

(a) First part: the aid at issue is inappropriate for remedying a serious disturbance in the Latvian economy within the meaning of Article 107(3)(b) TFEU

(b) Second part: misapplication of the eligibility conditions laid down in point 49 of the Temporary Framework

(1) First complaint: infringement of point 49(a) of the Temporary Framework

(2) Second complaint: non-observance of point 49(b) of the Temporary Framework

(3) Third complaint: infringement of point 49(c) of the Temporary Framework

(c) Third part: failure by the Commission to examine the existence of measures less distortive of competition than the aid at issue

(d) Fourth part: failure by the Commission to apply appropriate conditions for the exit of the State to the recapitalisation at issue

(e) Fifth part: failure by the Commission to require notification of a restructuring plan ‘in due time’

(f) Sixth part: failure by the Commission to weigh the expected beneficial effects of the aid against its adverse effects on trading conditions and the maintenance of undistorted competition

(g) Seventh part: misapplication of points 71 and 72 of the Temporary Framework

(1) Application of point 71 of the Temporary Framework

(2) Application of point 72 of the Temporary Framework

(i) Definition of the relevant markets for the purposes of point 72 of the Temporary Framework

(ii) AirBaltic’s SMP on the relevant markets

– The concept of ‘SMP’

– Assessment of airBaltic’s SMP at the three relevant airports in the present case

2. Second plea: infringement of the principles of non-discrimination, freedom to provide services and freedom of establishment

(a) Infringement of the principle of non-discrimination

(b) Infringement of the principles of freedom to provide services and freedom of establishment

3. Third plea: failure to initiate the formal investigation procedure

4. Fourth plea: infringement of the second paragraph of Article 296 TFEU

IV. Costs

*      Language of the case: English.