Case T‑146/22
Ryanair DAC
v
European Commission
Judgment of the General Court (Eighth Chamber) of 7 February 2024
(State aid – Aid granted by the Netherlands to KLM in the context of the COVID‑19 pandemic – State guarantee for a bank loan and a subordinated loan by the State – Decision declaring the aid compatible with the internal market – Action for annulment – Locus standi – Substantial adverse effect on the applicant’s position on the market – Admissibility – Determination of the beneficiary of the aid in the context of a group of companies)
1. Action for annulment – Natural or legal persons – Measures of direct and individual concern to them – Individual concern – Criteria – Commission decision finding aid compatible with the internal market – Action of a rival undertaking claiming that its market position is significantly affected – Admissibility – Obligation for the rival undertaking to provide a precise definition of the market at issue and to compare the situation of all the competitors present on that market in order to differentiate itself in relation to them – None
(Art. 263, fourth para., TFEU)
(see paragraphs 19-45)
2. Aid granted by a Member State – Prohibition – Exceptions – Aid capable of being regarded as compatible with the internal market – Discretion of the Commission – Identification of the beneficiary of the aid – Group of undertakings constituting a single economic unit – Criteria for assessment – Capital, organic, functional and economic links between the undertakings belonging to that group – Contractual framework and context of the aid measures at issue
(Art. 107(3)(b) TFEU)
(see paragraphs 52-62, 76, 77, 97, 107, 132, 139-146)
3. Aid granted by a Member State – Prohibition – Exceptions – Aid capable of being regarded as compatible with the internal market – Discretion of the Commission – Identification of the beneficiary of the aid – Undertaking benefiting from a direct or indirect advantage – Indirect advantage – Concept – Distinction between indirect advantage and secondary economic effects inherent in an aid measure
(Art. 107(3)(b) TFEU; Commission Notice 2016/C 262/01, paras 115 and 116)
(see paragraphs 149-158)
4. Aid granted by a Member State – Prohibition – Exceptions – Aid capable of being regarded as compatible with the internal market – Aid to remedy serious disturbance in the economy of a Member State – Aid intended to finance the immediate liquidity needs of an airline group in the context of the COVID‑19 pandemic – Commission decision finding the aid compatible with the internal market – Manifest error of assessment committed by the Commission in identifying the beneficiaries – Error likely to have an impact on the analysis of the compatibility of the aid measures with the internal market
(Art. 107(3)(b) TFEU)
(see paragraphs 159-163)
Résumé
In an action brought by the airline Ryanair, the General Court annuls the Commission’s decision of 16 July 2021 (1) by which the Commission classified financial support notified by the Kingdom of the Netherlands in favour of the airline KLM as State aid compatible with the internal market under Article 107(3)(b) TFEU. Within that framework, the General Court provides clarifications as to the determination of the beneficiary of an aid measure in the context of a group of companies.
On 26 June 2020, the Kingdom of the Netherlands notified the Commission of State aid in favour of KLM consisting of (i) a State guarantee for a loan granted to it by a consortium of banks, and (ii) a State loan (‘the measure at issue’). The total budget of that aid was EUR 3.4 billion.
The measure at issue forms part of a series of other State aid measures aimed at supporting the companies owned by the Air France-KLM holding company, the two main subsidiaries of which are the airlines KLM and Air France.
In particular, by decision of 4 May 2020 (‘the Air France decision’), (2) the Commission authorised individual aid granted by the French Republic to Air France in the form of (i) a State loan guarantee covering 90% of a loan of EUR 4 billion granted by a consortium of banks and (ii) a shareholder loan of up to EUR 3 billion. Moreover, on 5 April 2021, the Commission concluded that individual aid granted by the French Republic in the form of a recapitalisation of Air France and the Air France-KLM holding totalling EUR 4 billion was compatible with the internal market (‘the Air France-KLM and Air France decision’). (3)
The objective of the measure at issue was to provide temporary liquidity to KLM which it needed to deal with the adverse effects of the COVID‑19 pandemic.
By decision of 13 July 2020, (4) the Commission found that the measure at issue constituted State aid compatible with the internal market on the basis of Article 107(3)(b) TFEU. According to that decision, KLM was the sole beneficiary of the aid, to the exclusion of the other companies in the Air France-KLM group.
By judgment of 19 May 2021, the Court nevertheless annulled the decision of 13 July 2020 (5) on the ground that it was vitiated by a failure to state reasons as regards the determination of the beneficiary of the measure at issue. In addition, it ordered that the effects of the annulment of that decision be suspended pending the adoption of a new decision by the Commission under Article 108 TFEU.
Consequently, on 16 July 2021, the Commission adopted a second decision, by which it found that the aid at issue constituted State aid within the meaning of Article 107(1) TFEU; however, it considered that aid to be compatible with the internal market on the basis of Article 107(3)(b) TFEU. On this occasion, the Commission identified KLM and its subsidiaries as the sole beneficiaries of the aid, to the exclusion of the other companies in the Air France-KLM group.
Disputing in particular the exclusion of the Air France-KLM holding and its subsidiary Air France from the scope of the beneficiaries of the measure at issue, Ryanair brought an action for annulment of that second decision before the General Court.
Findings of the Court
As regards the determination of the beneficiaries of a notified aid measure in the context of a group of companies, the Court recalls that, while the Commission has a broad discretion in that regard, the fact remains that the EU judicature must establish not only whether the evidence relied on is factually accurate, reliable and consistent but also whether that evidence contains all the relevant information which must be taken into account and whether it is capable of substantiating the conclusions drawn from it.
Moreover, it is apparent from the case-law and the Commission Notice on the notion of State aid (6) that several separate legal entities may be considered to form one economic unit for the purposes of the application of State aid rules. The factors taken into account in order to determine whether such an economic unit exists include, inter alia, the capital, organic, functional and economic links between the entities concerned, the contracts providing for the grant of the notified aid and the type of aid measure granted and its context.
In the light of those clarifications, the Court notes, first of all, that the capital and organic links within the Air France-KLM group indicate that the separate legal entities within that group form a single economic unit for the purposes of the application of the rules on State aid. In that regard, the Court notes that the findings of the Commission in the contested decision and the evidence adduced by Ryanair show that the Air France-KLM holding actually exercises control over the sister companies Air France and KLM by involving itself directly or indirectly in their management and thus takes part in the economic activity carried on by them. It also follows that there is, at the level of the Air France-KLM group, a centralised decision-making procedure and a certain degree of coordination, carried out through joint bodies bringing together high-level representatives of the Air France-KLM holding, Air France and KLM, at least as regards the way in which certain important decisions are taken.
The Commission’s conclusion that the Air France-KLM holding, Air France and KLM do not constitute an economic unit for the purpose of identifying the beneficiaries of the measure at issue is, moreover, undermined by the functional and economic links between those entities. The description of those links in the contested decision and the examples relied on in that regard by Ryanair demonstrate a degree of integration and functional, commercial and financial cooperation between those entities.
Next, the Court states that, contrary to what the Commission argues, the contractual framework on the basis of which the measure at issue is granted does not support the conclusion that the sole beneficiaries of the measure at issue are KLM and its subsidiaries, to the exclusion of the Air France-KLM holding and Air France, and of the subsidiaries controlled by them. On that point, the Court notes that several conditions for the grant of the measure at issue were explicitly subject to the approval of the Air France-KLM holding or were the subject of a commitment on its part. That shows that the contracts on the basis of which the measure at issue was granted impose on that holding company significant contractual rights and obligations in the context of the grant and implementation of that measure. Moreover, by ensuring KLM’s viability, the measure at issue also enhances the viability of the Air France-KLM holding. In the absence of that measure, the risk of failure by KLM could have spread to the Air France-KLM holding and, consequently, the Air France-KLM group as a whole. Thus, in view of the level of integration within the Air France-KLM group, the measure at issue is capable of strengthening, at least indirectly, the financial position of that group as a whole.
Emphasising the existence of a chronological, structural and economic link between the measure at issue and the aid measures which are the subject of the Air France decision and the Air France-KLM and Air France decision, the Court notes, moreover, that the contested decision makes no mention of the aid measure which is the subject of the Air France-KLM and Air France decision. In that decision, which was adopted more than three months before the contested decision, the Commission had considered both the Air France-KLM holding and its subsidiaries, and Air France and its subsidiaries, to the exclusion of KLM and its subsidiaries, to be beneficiaries of the aid measure which was the subject of that decision. In the specific circumstances of the present case, it was incumbent on the Commission to take account also of the Air France-KLM and Air France decision, which it failed to do.
Lastly, the Court rejects the Commission’s argument that the measure at issue has, at most, merely secondary economic effects vis-à-vis the Air France-KLM holding and Air France. On that point, the Court recalls that the foreseeable effects of the measure at issue from an ex ante perspective suggest that the financing solution provided for was likely to benefit the Air France-KLM group as a whole, by improving its overall financial position. In accordance with the Commission Notice on the notion of State aid, such a financing solution indicates the existence, at the very least, of an indirect advantage in favour of the Air France-KLM group.
In the light of all of the foregoing, the Court holds that the Commission committed a manifest error of assessment by considering that the beneficiaries of the measure at issue were KLM and its subsidiaries, to the exclusion of the Air France-KLM holding and its other subsidiaries, including Air France and its subsidiaries. Since that incorrect identification of the beneficiaries is likely to have an impact on the entire analysis of the compatibility of the measure at issue with the internal market under Article 107(3)(b) TFEU, the Court annuls the contested decision.