JUDGMENT OF THE GENERAL COURT (Tenth Chamber)

18 October 2023 (*)

(State aid – Estonian air transport market – Aid granted by Estonia to an airline in the context of the COVID-19 pandemic – Recapitalisation and grant of a subsidised loan to Nordica – Decision not to raise any objections – Temporary Framework for State Aid – Measure intended to remedy a serious disturbance in the economy of a Member State – Equal treatment – Freedom of establishment – Freedom to provide services – Obligation to state reasons)

In Case T‑769/20,

Ryanair DAC, established in Swords (Ireland), represented by F.‑C. Laprévote, E. Vahida, 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 Estonia, represented by N. Grünberg, acting as Agent,

intervener,

THE GENERAL COURT (Tenth Chamber),

composed, at the time of the deliberations, of A. Kornezov, President, K. Kowalik-Bańczyk (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 on the basis of Article 263 TFEU, the applicant, Ryanair DAC, seeks annulment of Commission Decision C(2020) 5616 final of 11 August 2020 on State aid SA.57586 (2020/N) – Estonia – COVID-19: Recapitalisation and subsidised interest loan for Nordica (‘the contested decision’).

 Background to the dispute

2        On 25 July 2020, the Republic of Estonia notified the European Commission, under Article 107(3)(b) TFEU and the Communication from the Commission of 19 March 2020 entitled ‘Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak’ (OJ 2020 C 91I, p. 1), as last amended on 29 June 2020 (OJ 2020 C 218, p. 3) (‘the Temporary Framework’), of individual aid to the airline Nordica Aviation Group SA (‘Nordica’). That aid measure consisted of a capital increase (‘the recapitalisation at issue’) and a subsidised interest loan, the total budget of which was EUR 30 million (together, ‘the measure at issue’).

3        On 11 August 2020, the Commission adopted the contested decision, by which it found that the measure at issue, on the one hand, constituted State aid within the meaning of Article 107(1) TFEU and, on the other, was compatible with the internal market on the basis of Article 107(3)(b) TFEU and the Temporary Framework.

 Forms of order sought

4        The applicant respectfully requests the Court to:

–        annul the contested decision;

–        order the Commission to pay the costs.

5        The Commission contends that the Court should:

–        dismiss the action;

–        order the applicant to pay the costs.

6        The Republic of Estonia contends that the action should be dismissed.

 Law

7        Without formally raising an objection of inadmissibility, the Commission expresses doubts as to the admissibility of the action. Supported by the Republic of Estonia, it submits that the applicant has not demonstrated its status as an ‘interested party’ within the meaning of Article 1(h) of Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 TFEU (OJ 2015 L 248, p. 9), since it has not provided evidence that it was in competition with Nordica. Operating on markets distinct from those of Nordica, which is mainly a provider of aircraft, crew, maintenance and insurance services (‘ACMI services’) for other airlines, the applicant has neither standing to protect its procedural rights nor, consequently, an interest in challenging the merits of the contested decision.

8        The applicant disputes the arguments of the Commission and the Republic of Estonia on the admissibility of the action.

9        In that regard, it should be recalled that the Courts of the European Union are entitled to assess, according to the circumstances of each case, whether the proper administration of justice justifies the dismissal of the action on its merits without first ruling on its admissibility (see, to that effect, judgments of 26 February 2002, Council v Boehringer, C‑23/00 P, EU:C:2002:118, paragraphs 51 and 52, and of 14 September 2016, Trajektna luka Split v Commission, T‑57/15, not published, EU:T:2016:470, paragraph 84). In the present case, since the examination of the admissibility of the action involves a complex analysis, it is appropriate to begin by examining the merits of the action, without first ruling on its admissibility.

10      In support of the action, the applicant relies on four pleas in law. The first plea alleges misapplication of Article 107(3)(b) TFEU and the provisions in the Temporary Framework. The second plea alleges infringement of certain specific provisions of the FEU Treaty and certain general principles of EU law, namely non-discrimination, freedom to provide services and freedom of establishment. The third plea alleges that the Commission failed to initiate the formal investigation procedure provided for in Article 108(2) TFEU and infringed the applicant’s procedural rights. The fourth and final plea alleges infringement of the obligation to state reasons within the meaning of the second paragraph of Article 296 TFEU.

 The first plea, alleging misapplication of Article 107(3)(b) TFEU and of the Temporary Framework

11      The applicant’s first plea consists of six parts. The first part alleges that the Commission misapplied Article 107(3)(b) TFEU in finding that the measure at issue was intended to address a serious disturbance in the Estonian economy. The second part alleges that the Commission failed to demonstrate that Nordica was eligible for the recapitalisation at issue, contrary to point 49 of the Temporary Framework. The third alleges that the Commission failed to assess whether, apart from the recapitalisation at issue, there were any alternative measures that might be less distortive of competition, contrary to point 53 of the Temporary Framework. The fourth alleges that the Commission failed to apply to the recapitalisation at issue the conditions regarding the exit of the State laid down in points 56 to 61 of the Temporary Framework. The fifth part alleges that the Commission failed to require the notification of a restructuring plan in due time in order to ensure that the recapitalisation at issue was appropriate and proportionate and did not endanger competition. The sixth and final plea alleges that the Commission did not weigh the beneficial effects of the aid against its adverse effects on trading conditions and the maintenance of undistorted competition.

 The first part of the first plea, alleging that the measure at issue is inappropriate to remedy a serious disturbance in the Estonian economy under Article 107(3)(b) TFEU

12      The applicant claims that aid to one single company is not appropriate to remedy a serious disturbance in the Estonian economy under Article 107(3)(b) TFEU and may even worsen the disturbance in that economy. It points out, in that regard, that Nordica is not sufficiently important for Estonia’s connectivity, since it is neither an infrastructure manager nor an operator that is uniquely positioned in relation to other airlines operating in Estonia.

13      The Commission, supported by the Republic of Estonia, disputes the applicant’s arguments.

14      It should be recalled that 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 to be compatible with the internal market.

15      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 is incompatible with the internal market ‘in any form whatsoever’. Therefore, it should be noted that Article 107(3)(b) TFEU applies both to aid schemes and 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).

16      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, the measure at issue cannot be declared compatible with the internal market if it brings about an improvement in the financial situation of the undertaking receiving that aid without being necessary to achieve the objective laid down in Article 107(3)(b) TFEU, namely to remedy a serious disturbance in the national economy concerned (see, to that effect, judgments of 14 January 2009, Kronoply 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).

17      It should be noted that the applicant’s arguments in the first part of the present plea are based on a misreading of Article 107(3)(b) TFEU.

18      In the first place, it must be observed that, contrary to what the applicant claims, Article 107(3)(b) TFEU does not require that the aid in question should be capable, in itself, of remedying a 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 the aforementioned article are also satisfied, to grant State aid, in the form of aid schemes or individual aid, which help to remedy that serious disturbance. It could therefore involve a number of aid measures, each contributing to that end. Therefore, for an aid measure to be validly based on Article 107(3)(b) TFEU, it cannot be required, in itself, to remedy 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).

19      In those circumstances, the applicant cannot criticise the Commission for having declared that the measure at issue satisfied the conditions laid down in Article 107(3)(b) TFEU, solely on the ground that that measure could not, in itself, remedy the serious disturbance in the Estonian economy caused by the COVID-19 outbreak.

20      In the second place, as regards the applicant’s arguments that Nordica is not sufficiently important for Estonia’s economy and connectivity to justify the grant of individual aid compatible with Article 107(3)(b) TFEU, since it is neither an infrastructure manager nor an operator uniquely positioned vis-à-vis other airlines operating in Estonia, it should be noted that the scope of Article 107(3)(b) TFEU is not limited to infrastructure managers or undertakings uniquely positioned vis-à-vis other undertakings operating in the Member State concerned.

21      In that regard, first, the applicant cannot draw the opposite conclusion from the judgment of 14 April 2021, Ryanair v Commission (Finnair I; Covid-19) (T‑388/20, under appeal, EU:T:2021:196, paragraph 57). In that judgment, the General Court did not find that Article 107(3)(b) TFEU imposed a condition that an individual aid measure should have been granted only to a beneficiary that is uniquely positioned vis-à-vis its competitors. The General Court merely noted, on the basis of factual findings, that the beneficiary of the aid at issue, Finnair plc, played an important role for Finland’s economy.

22      Secondly, as regards the applicant’s argument based on Commission decision C(2017) 3987 final of 16 June 2017 on State aid SA.32543 (2011/N) – Greece – Measures in favour of OSE S.A. it must be borne in mind that the legality of the contested decision must be assessed solely in the context of Article 107(3)(b) TFEU, and not by reference to any alleged earlier decision-making 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). Moreover, the measure at issue was adopted on the basis of Article 107(3)(b) TFEU and the Temporary Framework in the specific context of the COVID-19 pandemic, unlike the aid forming the subject matter of the abovementioned decision, which was neither based on the Temporary Framework nor granted in the context of that pandemic. Moreover, the fact that the recipient of the aid in the abovementioned case may have had systemic importance in the railway infrastructure of the Member State concerned does not mean that the scope of Article 107(3)(b) TFEU is limited to undertakings with an equivalent status.

23      Lastly, as regards the applicant’s argument that the aid measure at issue is not appropriate to remedy a serious disturbance in the Estonian economy and could even worsen that disturbance by benefiting only Nordica, to the exclusion of other airlines, it must be held that the Commission rightly concluded that that measure contributed to the attainment of the objective referred to in Article 107(3)(b) TFEU, in accordance with the case-law set out in paragraph 16 above.

24      On the one hand, the applicant does not dispute the fact that the COVID-19 pandemic led to a serious disturbance in the Estonian economy or that the air transport sector as a whole was particularly affected by the crisis caused by that pandemic.

25      On the other hand, it is apparent from the contested decision that the purpose of the measure at issue is, in essence, to provide Nordica with sufficient liquidity to maintain its viability and air transport services during the period when the COVID-19 pandemic is causing a serious disturbance in the entire Estonian economy and to prevent the possible bankruptcy of Nordica from further disrupting that economy. In paragraphs 19, 20 and 79 to 83 of the contested decision, the Commission provided a body of evidence demonstrating Nordica’s importance for Estonia’s economy and connectivity. In those circumstances, the Commission established to the requisite legal standard that the measure at issue could contribute to remedying a serious disturbance in the Estonian economy, in accordance with Article 107(3)(c) TFEU.

26      It follows from the foregoing that the applicant’s arguments in the context of the first part of the present plea must be rejected as unfounded.

 The second part of the first plea, alleging misapplication of the eligibility conditions relating to recapitalisation measures

27      In the context of the second part of the first plea, the applicant submits that the Commission wrongly concluded that the recapitalisation at issue fulfilled the eligibility conditions set out in point 49 of the Temporary Framework. This part contains three complaints alleging infringement of the three conditions laid down in point 49(a), (b) and (c) of the Temporary Framework.

28      First of all, compliance with the provisions of point 49(a) and (c) must be examined in turn, before assessing compliance with the provisions of point 49(b) of the Temporary Framework.

–       The first complaint in the second part of the first plea, alleging infringement of point 49(a) of the Temporary Framework

29      The applicant submits that the Commission has not shown that Nordica would have gone out of business in the absence of the recapitalisation at issue, as required by the condition laid down in point 49(a) of the Temporary Framework. The Commission, it alleges, merely assumed that that was the case.

30      The Commission, supported by the Republic of Estonia, disputes the applicant’s arguments.

31      In that regard, point 49 of the Temporary Framework, set out in section 3.11.2, entitled ‘Eligibility and entry conditions’, lists the conditions that a recapitalisation measure granted in the context of the COVID-19 pandemic must meet in order for its potential beneficiary to be considered eligible for that measure. In particular, it must be demonstrated, in accordance with point 49(a) of the Temporary Framework, that ‘without the State intervention, the beneficiary would go out of business or would face serious difficulties to maintain its operations’.

32      In the present case, the Commission found in paragraph 76 of the contested decision that, without the intervention of the Estonian State, Nordica would have gone out of business or would have faced serious difficulties to maintain its operations. That finding was based on the fact that Nordica estimated the amount of losses for the financial year 2020 to be approximately EUR 20 to 30 million, while its equity on 31 December 2019 was calculated at EUR 10 to 20 million. Noting that Nordica had negative equity and was suffering continuous losses, the Commission concluded that Nordica’s financial viability was in danger.

33      In that regard, it should be noted that the applicant does not dispute that, following the travel restrictions and the suspension of the collaboration with the airlines to which it provided ACMI services amid the COVID-19 pandemic, Nordica suffered significant losses and that its equity would have been negative without the intervention of the Estonian State, with the result that that undertaking risked going out of business or facing serious difficulties to maintain its operations. The applicant’s argument relates in reality to the possibilities for Nordica to obtain financing on the markets in order to resolve its financial difficulties instead of requiring intervention by the Estonian State and therefore relates rather to the condition laid down in point 49(c) of the Temporary Framework.

34      It follows that the applicant’s arguments in the context of the first complaint of the second part of the present plea must be rejected.

–       The third complaint in the second part of the first plea, alleging infringement of point 49(c) of the Temporary Framework

35      The applicant claims that the Commission did not properly demonstrate that the possibility of financing on the markets in order to avoid bankruptcy, either from banks or private investors, was excluded, as required by the condition laid down in point 49(c) of the Temporary Framework. The Commission, it is alleged, simply assumed that that condition was satisfied.

36      The Commission, supported by the Republic of Estonia, disputes the applicant’s arguments.

37      Point 49(c) of the Temporary Framework provides that a recapitalisation measure may be granted by a Member State only if ‘the beneficiary [of that measure] is not able to find financing on the markets [on] affordable terms’.

38      In the present case, the Commission concluded in paragraph 84 of the contested decision that the Estonian authorities had demonstrated that Nordica was unable to finance itself on the markets, as evidenced by Nordica’s failure to acquire financing from a bank. According to the Commission, Nordica’s access to financing on the markets on affordable terms was impossible in view of the very difficult situation in the aviation sector and the fact that Nordica did not own aircraft which it could sell and lease back in the context of such financing.

39      In that regard, with respect, first of all, to the applicant’s argument that the Commission could not conclude that Nordica did not have access to finance on the markets on affordable terms on the basis of a single refusal of financing from a single bank, it must be stated that it is indeed apparent from paragraphs 7 and 84 of the contested decision that Nordica attempted to obtain financing on the markets from a bank in Estonia in April 2020. That evidence is relevant to the examination of the condition laid down in point 49(c) of the Temporary Framework, since it specifically shows that Nordica unsuccessfully attempted to gain access to financing on the markets, which is not disputed by the applicant.

40      Next, it should be observed that the Commission did not rely solely on that evidence to support its conclusion in that regard in the contested decision. It is apparent from paragraph 84 of that decision that it also referred to the specific circumstances concerning Nordica, which made it impossible for financing to be granted on the markets on affordable terms. First, Nordica did not own any aircraft which it might have been able to sell and lease back in order to facilitate financing on the capital markets, as other undertakings in the sector could have done, nor, according to paragraph 7 of the contested decision, did it have other assets which it could have pledged in the context of financing. On the other hand, it faced increased financial problems as a result of travel restrictions imposed by various Member States. It is therefore apparent from those factors that, contrary to what the applicant claims, the Commission did not simply assume that access for Nordica to financing on the markets on affordable terms was excluded, but rather it relied on several relevant, specific and consistent factors relating to Nordica’s particular situation.

41      Moreover, the applicant’s arguments that the Commission should have taken other financing possibilities into account in its analysis are not convincing.

42      As regards, first, the examples cited by the applicant of financing obtained by other airlines allegedly in financial difficulty, such as International Consolidated Airlines Group (IAG), easyJet Airline Co. Ltd or Virgin Atlantic Airways Ltd, the applicant is unable to demonstrate that those examples are comparable to Nordica’s particular situation at the time of the adoption of the contested decision. As explained in paragraphs 7 and 84 of the contested decision, Nordica did not own any assets which it could have pledged or aircraft which it might have been able to sell and lease back as part of a financing package, the benefit of which was crucial for its viability. Furthermore, it was refused a bank loan on affordable terms, as explained in paragraph 39 above. In those circumstances, the applicant’s argument must be rejected.

43      On the other hand, as regards the applicant’s argument that the Commission should have examined the possibility of financing from OÜ Transpordi Varahaldus, a third-party undertaking which leased aircraft to Nordica, it must be noted that the applicant does not submit any evidence relating to the commercial interest of the latter undertaking in offering such financing to Nordica or the practical possibilities which it would have had for doing so. The fact that, according to press articles annexed to the reply, a possible merger between Transpordi Varahaldus and Nordica was the subject of discussions, before the adoption of the contested decision, is not such as to demonstrate that financing from Transpordi Varahaldus or, as also raised by the applicant, from the banks financing that undertaking was a plausible option for Nordica.

44      In the light of the foregoing, it must be concluded that the Commission established to the requisite legal standard in the contested decision that Nordica was unable to finance itself on the markets on affordable terms, in accordance with point 49(c) of the Temporary Framework.

45      Consequently, the applicant’s arguments in the third complaint of the second part of the present plea must be rejected.

–       The second complaint in the second part of the first plea, alleging infringement of point 49(b) of the Temporary Framework relating to the common interest to intervene

46      The applicant claims that the Commission has not demonstrated that it is in the common interest to intervene, within the meaning of point 49(b) of the Temporary Framework. According to the applicant, service providers at Tallinn Airport (Estonia) were not dependent on Nordica and the Commission did not establish in the contested decision why Nordica’s bankruptcy would necessarily have endangered Estonia’s economy and connectivity. Contrary to the analysis set out in the contested decision, other operators could easily have replaced Nordica’s services to and from Estonia.

47      The Commission, supported by the Republic of Estonia, disputes the applicant’s arguments.

48      Point 49(b) of the Temporary Framework provides that the planned recapitalisation measure must be in the common interest. The existence of such a common interest may be shown 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’.

49      The Commission found, in paragraphs 79 to 83 of the contested decision, that that condition was satisfied on the basis of various factors. First, it noted that Nordica was, prior to the COVID-19 pandemic, the most important employer in the air transport sector in Estonia and that, according to the Estonian authorities, the activities of many Estonian undertakings or institutions in that sector were dependent on Nordica. Secondly, it highlighted Nordica’s contribution to Estonia’s connectivity, referring to the repatriation flights of Estonian citizens and transport of medical equipment carried out by Nordica during the outbreak of the COVID-19 pandemic and to routes between Tallinn Airport and significant international destinations it operated through its ACMI services. As a result of these latter services provided to other airlines, the Commission considered that Nordica was also of crucial importance for Tallinn Airport, the main airport in Estonia, where its fleet was based. The Commission inferred from this that there was no company which, in the short term, would have been able to replace Nordica in the event of its exit from the market and that such an exit from the market would have had a negative impact on the connectivity and economy of Estonia, a Member State which suffered from a low level of connectivity.

50      In that regard, it should be noted, in the first place, that the applicant’s arguments that the Commission infringed point 49(b) of the Temporary Framework by wrongly concluding that undertakings in the air sector in Estonia were dependent on Nordica and that Nordica’s exit from the market would have jeopardised Estonia’s economy and connectivity are based on a misinterpretation of the condition relating to the common interest to intervene laid down in that provision.

51      There is nothing in the wording of point 49(b) of the Temporary Framework that states, as the arguments of the applicant suggest, that only undertakings whose exit from the market would lead to the collapse of an entire sector are eligible for aid. Thus, a reading of that provision as a whole and of the non-exhaustive examples cited therein of common interest to intervene, such as the risk of social hardship or significant job losses, or even a disruption of an important service, shows that the interpretation put forward by the applicant is too restrictive.

52      In the second place, it must be concluded that the Commission sufficiently demonstrated that Nordica satisfied the eligibility condition in point 49(b) of the Temporary Framework. As described in paragraph 49 above, the Commission relied in paragraphs 79 to 83 of the contested decision on a body of relevant and consistent evidence that it was in the common interest to intervene.

53      Even though the applicant criticises the Commission, in that regard, for not having carried out an in-depth analysis of the competitors’ ability to replace Nordica’s air transport services, it must be held, first, that the Commission based its analysis of this issue on evidence, such as the information provided by the Estonian State on the ACMI services offered by Nordica, Estonia’s low connectivity and the very difficult market conditions at the time when the contested decision was adopted, which was capable of indicating that Nordica’s bankruptcy would have led to a reduction, at least temporarily, in the number of flights to and from Estonia. That could have resulted, according to paragraph 83 of the contested decision, in a long-lasting pause in air passenger routes to Estonia and a connectivity gap which would have had negative consequences for the population, transport, trade and tourism in Estonia. In that regard, the applicant does not provide any information or arguments showing that other operators would have been interested in increasing their routes to Estonia in the event of Nordica’s exit from the market. That conclusion cannot be called into question by the applicant’s reference to the previous bankruptcies of Sabena, Malev and Spanair which, according to the applicant, had a positive impact in the long term on the connectivity of certain Member States and the activities of certain airports. Those examples do not provide any indication of the interest of other airlines in replacing Nordica’s ACMI services in Estonia in the very specific circumstances existing at the time of the adoption of the contested decision.

54      Second, it must be pointed out that the Commission based its assessment of the common interest to intervene on a number of factors in the context of an overall assessment and not only on the difficulties in replacing Nordica, in the short term, in the event of Nordica’s exit from the market. Accordingly, the criticism made by the applicant, even if it were well founded, could not, in itself, vitiate the legality of the Commission’s assessment in that regard.

55      It follows that the Commission was fully entitled to conclude that it was in the common interest to intervene in support of Nordica and that the condition laid down in that regard in point 49(b) of the Temporary Framework was therefore satisfied.

56      Consequently, the applicant’s arguments in the context of the second complaint in the second part of the present plea must be rejected.

 The third part of the first plea, alleging that the Commission failed to assess whether there were other measures less distortive to competition available besides the recapitalisation at issue

57      The applicant argues that the Commission infringed point 53 of the Temporary Framework in that it failed to assess whether the recapitalisation measure at issue was the most appropriate and the least likely to distort competition. Thus, the Commission did not compare the available recapitalisation instruments and the distortions of competition generated by those instruments.

58      The Commission, supported by the Republic of Estonia, disputes the applicant’s arguments.

59      In that regard, section 3.11.3 of the Temporary Framework, entitled ‘Types of recapitalisation measures’, contains points 52 and 53. Point 52 sets out the recapitalisation measures that the Member States can provide during the COVID‑19 pandemic, namely, in point 52(a) of that framework, ‘equity instruments, in particular, the issuance of new common or preferred shares’ and, in point 52(b) of the framework, ‘instruments with an equity component (referred to as “hybrid capital instruments”) …, in particular profit participation rights, silent participations and convertible secured or unsecured bonds’.

60      Point 53 of the Temporary Framework states:

‘The State intervention can take the form of any variation of [those] 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 to competition.’

61      In paragraphs 9 and 36 of the contested decision, the Commission explained that the recapitalisation in question involved an increase in Nordica’s capital of EUR 22 million, with the issue of 3 million new ordinary shares. The recapitalisation measure at issue was therefore a capital instrument, as referred to in point 52(a) of the Temporary Framework.

62      In the present case, it must be stated, as the Commission has done, that a recapitalisation measure and the conditions attached thereto may be regarded as being appropriate to address the recapitalisation needs of the beneficiary concerned, while being the least distortive to competition, within the meaning of point 53 of the Temporary Framework, as long as they meet the various requirements laid down for that purpose in that framework, which relate to the amount of the recapitalisation, the remuneration and exit of the State, governance and the prevention of undue distortions to competition, and to the exit strategy of the State from the participation resulting from the recapitalisation. The reference in point 53 of the Temporary Framework to the ‘conditions attached [to the measure at issue]’ refers to requirements, such as those mentioned in the previous sentence, whose very purpose is to ensure that the measure at issue and the conditions attached thereto do not exceed what is appropriate to address the recapitalisation needs of the beneficiary concerned, while being the least distortive to competition. Consequently, if the abovementioned requirements are satisfied, the recapitalisation instrument chosen must be regarded as complying with point 53 of the Temporary Framework.

63      Accordingly, the present complaint has no independent content in relation to the arguments which the applicant raises in the context of the other parts of the present plea, which concern some of the other requirements mentioned in paragraph 62 above and examined in the contested decision, namely the remuneration and exit of the State (in the fourth part) and the exit strategy of the State (in the fifth part). The merits of the present complaint are therefore dependent on the analysis of those other parts of the plea, examined below.

64      Finally, even if the applicant seeks by its line of argument to criticise the Commission for having failed to assess whether another type of aid measure other than the recapitalisation would have been more appropriate and less distortive to competition, which is not clear from its pleadings, it must be held, without prejudice to the admissibility of that argument, that it is too general and abstract. In its written pleadings, the applicant simply referred to ‘other possible aid instruments’, without, however, explaining exactly what those other instruments were and why they would be more appropriate and less distortive to competition than the notified measure.

65      However, according to the case-law, it is not for the Commission to make a decision on every other possible alternative aid measure. It is not required to prove, positively, that no other conceivable aid measure, which by definition would be hypothetical, would be more appropriate and less distortive to competition than the measure at issue (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).

66      It is true, as the applicant states, that the Court of Justice 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). However, there is nothing in the present case to indicate that the Commission had to make a choice between several appropriate measures, as set out in that case-law.

 The fourth part of the first plea, alleging that the Commission failed to apply to the recapitalisation at issue the conditions relating to the exit of the State

67      The applicant submits that the Commission disregarded points 56 to 61 of the Temporary Framework, set out in section 3.11.5 thereof, and the conditions laid down therein relating to the remuneration and exit of the State. The Commission, it is alleged, wrongly failed to impose a mechanism for increasing remuneration.

68      In that regard, the applicant recalls that a recapitalisation measure must provide for a step-up mechanism to increase the remuneration under point 61 of the Temporary Framework. It also states that the Estonian State’s commitment to sell the additional shares in Nordica acquired following the recapitalisation at issue through a prospective consultation of potential purchasers and not to sell its shareholding below a certain price is not sufficient to ensure that the recapitalisation in question is repaid in full.

69      According to the applicant, there was no valid reason to derogate from the Temporary Framework in that respect and, contrary to what the Commission contends in the defence, the governance provisions in section 3.11.6 of the Temporary Framework, such as the dividend ban, are in no way equivalent to a step-up mechanism.

70      Finally, by failing to impose such a mechanism on a State-owned undertaking such as Nordica, the Commission also breached the principle of neutrality with regard to the regime of property ownership enshrined in Article 345 TFEU and Article 107(3)(b) TFEU.

71      The Commission, supported by the Republic of Estonia, disputes the applicant’s arguments.

72      In that regard, section 3.11.5 of the Temporary Framework on remuneration and exit of the State states the following in point 56:

‘The COVID-19 recapitalisation should be redeemed when the economy stabilises. The Commission considers it appropriate to give the beneficiary sufficient time to redeem the recapitalisation. The Member State must put a mechanism in place to gradually incentivise redemption.’

73      As regards the remuneration for equity instruments, point 61 of the Temporary Framework provides that ‘any recapitalisation measure shall include a step-up mechanism increasing the remuneration of the State, to incentivise the beneficiary to buy back the State capital injections’. Under the same point, that increase in remuneration may take the form of additional shares granted to the State or other mechanisms, and should correspond to a minimum 10% increase in the remuneration of the State four years after the equity injection, if the State has not sold at least 40% of its equity participation resulting from that injection. If, six years after the equity injection, the State has not sold in full its equity participation resulting from that injection, the step-up mechanism is to be activated again.

74      According to point 62 of the Temporary Framework, the Commission may accept alternative mechanisms, provided they lead overall to a similar outcome with regard to the incentive effects on the exit of the State from the capital and have a similar overall impact on the State’s remuneration.

75      In that regard, it should be noted that the Temporary Framework, in the version applicable ratione temporis, does not provide for a derogation from the obligation, as regards remuneration for equity instruments, to impose either a step-up mechanism under point 61 or another mechanism that meets the same objective under point 62 thereof.

76      In the present case, in paragraph 99 of the contested decision, the Commission considered that a step-up mechanism, as provided for in point 61 of the Temporary Framework, would have had no incentive effect on the exit of the Estonian State. It justified that conclusion by explaining that Nordica was 100% owned by the Estonian State and that, following the recapitalisation, all the shares in Nordica, which belonged exclusively to the Estonian State as the sole shareholder, were regarded as ‘COVID shares’ due to the dilution of the existing shares. According to the Commission, a step-up mechanism could even have increased the aid required by Nordica, which would have gone against the principles underlying the State aid rules. The Commission also concluded that the incentive effect on the remuneration of the State was safeguarded by the conditions set out in section 3.6.6 of the contested decision concerning the Estonian State’s exit strategy and Nordica’s reporting obligations, which implemented section 3.11.7 of the Temporary Framework.

77      It is common ground, therefore, that the remuneration for the participation of the Estonian State resulting from the recapitalisation at issue does not provide for a step-up mechanism within the meaning of point 61 of the Temporary Framework, or for any alternative mechanism within the meaning of point 62 of that framework.

78      In that regard, it should be recalled at the outset that, in the exercise of its discretion in relation to the complex economic and social assessments made in the context of the application of Article 107(3) TFEU, the Commission may adopt guidelines in order to establish the criteria on the basis of which it intends to assess the compatibility with the internal market of aid measures envisaged by the Member States. In adopting such guidelines and announcing by publishing them that they will apply to the cases to which they relate, the Commission imposes a limit on the exercise of that discretion and cannot, as a general rule, depart from those guidelines, at the risk of being found to be in breach of general principles of law, such as equal treatment or the protection of legitimate expectations (judgment of 19 July 2016, Kotnik and Others, C‑526/14, EU:C:2016:570, paragraphs 39 and 40).

79      Accordingly, in the specific area of State aid, the Commission is bound by the guidelines and notices that it issues, to the extent that they do not depart from the rules in the Treaty (see judgment of 2 December 2010, Holland Malt v Commission, C‑464/09 P, EU:C:2010:733, paragraph 47 and the case-law cited). It is therefore for the Courts of the European Union to determine whether the Commission has observed the rules which it adopted (see judgment of 8 April 2014, ABN Amro Group v Commission, T‑319/11, EU:T:2014:186, paragraph 29 and the case-law cited).

80      Nevertheless, the adoption of guidelines by which the Commission limits its discretion does not relieve it of its obligation to examine the specific exceptional circumstances relied on by a Member State, in a particular case, for the purpose of requesting the direct application of Article 107(3)(b) TFEU. Consequently, the Commission may authorise proposed aid that departs from those guidelines in exceptional circumstances (see, to that effect, judgment of 19 July 2016, Kotnik and Others, C‑526/14, EU:C:2016:570, paragraphs 41 and 43).

81      It follows that, although the Commission limited itself in the exercise of its discretion concerning the review of aid under Article 107(3) TFEU by adopting the Temporary Framework and cannot, in principle, depart from the rules of that framework, it is nevertheless required to examine the specific exceptional circumstances relied on by a Member State, in a particular case, for the purpose of requesting the direct application of Article 107(3)(b) TFEU and to provide reasons for its refusal to grant such a request (see, to that effect, judgment of 8 March 2016, Greece v Commission, C‑431/14 P, EU:C:2016:145, paragraphs 71 et 72).

82      Therefore, even if the wording of point 61 of the Temporary Framework requires the introduction of a step-up mechanism as part of a recapitalisation measure, it must be ascertained whether there were exceptional characteristics which, in accordance with the case-law referred to in paragraph 81 above, justified the direct application of Article 107(3)(b) TFEU to the facts of the present case and, therefore, the non-application of the abovementioned requirements (see, to that effect, judgment of 22 June 2022, Ryanair v Commission (Finnair II; Covid-19), T‑657/20, under appeal, EU:T:2022:390, paragraphs 64 to 68).

83      In that regard, it should be recalled, first, that the economic repercussions of the exceptional circumstances caused by the COVID-19 pandemic required immediate action both at Member State level and at EU level. To that end, the Commission adopted the Temporary Framework on 19 March 2020, that is to say, a few days after the Member States had adopted the first lockdown measures, in order to enable those States to act with the urgency that the situation demanded. From that point of view, the Commission set out in the Temporary Framework the conditions that temporary State aid measures had to fulfil in order to be regarded as compatible with the internal market on the basis of Article 107(3)(b) TFEU and authorised very rapidly after their notification by the Member State concerned. That framework, in the light of the extremely urgent circumstances that existed when it was adopted, could not foresee all the measures that the Member States might adopt for economic operators affected by the crisis caused by the COVID‑19 pandemic. In order to take account of developments in the situation and the different types of measures that the Member States planned to utilise in order to deal with the harmful consequences of that pandemic, the Commission has amended the Temporary Framework on several occasions.

84      Second, it is apparent from paragraphs 36, 90, 91 and 99 of the contested decision that the recapitalisation at issue had very particular characteristics which the Commission had not envisaged at the time of the adoption of the Temporary Framework. Nordica was wholly owned by the Estonian State before the recapitalisation at issue and remained so after that measure, which meant that a step-up mechanism had no incentive effect on the exit of the Estonian State and could even have increased the aid required by Nordica. In those specific circumstances, the Commission concluded that the incentive effect on the exit of the Estonian State and its remuneration was adequately safeguarded by the commitments made by that State and described in section 3.3.6 of the contested decision. In particular, those commitments provided, first, for the submission to the Commission of a credible strategy for the exit of the Estonian State, unless 75% of the shares owned by the State were redeemed within 12 months from the date on which the aid was granted, and for information every year on the repayment of the recapitalisation at issue, as well as a restructuring plan for Nordica to be submitted for approval within seven years after the recapitalisation at issue, unless Nordica had bought back all the shares from the State. Second, those commitments related to the conditions governing the buying back of shares by Nordica and the sale of shares to third parties by the Estonian State aimed at encouraging the latter’s exit from Nordica’s capital.

85      In that regard, the Court observes that the objective of the step-up mechanisms provided for in points 61 and 62 of the Temporary Framework is to encourage the restoration of the previous status quo. By making the State’s shareholding over time more onerous, by increasing its share in the equity of the beneficiary, without any additional capital injection by the State, that mechanism is intended to be an ex post incentive to the beneficiary concerned to buy back that shareholding as quickly as possible.

86      In the present case, the introduction of a step-up mechanism would not have had such an incentive effect, as the Commission found in paragraph 99 of the contested decision, on account of the very specific circumstances described in paragraph 84 above. The fact that the Estonian State was the sole shareholder in Nordica before and after the recapitalisation measure at issue meant that a step-up mechanism would only have had the effect of increasing the number of shares (or other instruments) held by the Estonian State, while maintaining the same capital structure of Nordica, since the Estonian State would have continued to be the sole shareholder. Nordica was not therefore encouraged to buy back shares from the Estonian State through such a mechanism. Furthermore, as the Commission also pointed out in paragraph 99 of the contested decision, a step-up mechanism could even have increased the aid required by Nordica, which would have been contrary to the principles underlying the State aid rules. In those specific circumstances, the commitments given by the Estonian State relating to its exit from Nordica’s capital (summarised in paragraph 84 above) were sufficient to ensure the incentive effect on the exit of the Estonian State.

87      It must therefore be concluded that the Commission justified to the requisite legal standard that the step-up mechanism provided for in point 61 of the Temporary Framework was inappropriate in the circumstances of the present case. Accordingly, it did not err in law by failing to impose such a mechanism.

88      In addition, the applicant’s argument that the Commission infringed Article 345 TFEU, which sets out the principle of the neutrality of the Treaties with regard to the rules in the Member States governing the system of property ownership, cannot succeed. The recapitalisation at issue does not as such concern the rules in Member States governing the system of property ownership.

89      Consequently, the applicant’s arguments in the fourth part of the present plea must be rejected.

 The fifth part of the first plea, alleging that the Commission failed to require the notification of a restructuring plan in ‘due time’ following the recapitalisation at issue

90      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 is too long to ensure that the recapitalisation remains appropriate and proportionate and does not endanger competition. In that sense, such a period 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; ‘the Banking Communication’).

91      The applicant also raises a plea of illegality of the Temporary Framework pursuant to Article 277 TFEU, in so far as it fails to require a restructuring plan to be notified in due time, in order to comply with the principles of appropriateness, proportionality and maintenance of effective competition.

92      The Commission, supported by the Republic of Estonia, disputes the applicant’s arguments.

93      In that regard, section 3.11.7 of the Temporary Framework provides as follows in point 85:

‘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 [Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty (OJ 2014 C 249, p. 1)] 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.’

94      In paragraph 114 of the contested decision, the Commission stated that, in accordance with point 85 of the Temporary Framework, the Estonian State would notify it of a Nordica restructuring plan for approval within seven years of the recapitalisation, unless Nordica bought back from the Estonian State all the shares issued under the conditions set out in paragraphs 111 to 113 of the contested decision.

95      In the present case, it should be noted that the 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. Therefore, 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. Thus, it must be pointed out that the beneficiaries have neither created nor contributed to the occurrence of that crisis.

96      Therefore, it would be contrary to the very objective of State support granted to combat the adverse 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.

97      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 below 15% of the equity of the beneficiary concerned. It is only after the said period of seven years that it will have become clear that the various incentive mechanisms have not produced the desired result and that, therefore, a restructuring plan will have to be notified. Such a period is also entirely consistent with the various mechanisms put in place by the Temporary Framework to incentivise and accelerate the exit of the State from the capital of the beneficiary concerned, some of which are spread over a similar period of time. Thus, by way of example, the step-up mechanism for equity instruments, described in point 61 of the Temporary Framework, provides for the increase, under certain conditions, in the remuneration of the State four years and then six years after the equity injection, while the remuneration of hybrid instruments, described in point 66 of the Temporary Framework, increases over time until the eighth year after the recapitalisation.

98      Furthermore, the analogy with the Banking Communication is inappropriate because, as recalled 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 authorised by the Commission in order to remedy the consequences of the COVID-19 crisis should be of the same nature as those responding to that financial crisis.

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

100    Furthermore, the applicant’s argument based on point 45 of the Temporary Framework must be rejected. While this point requires the recapitalisation measures to be accompanied by stringent conditions to limit distortions of competition, it is explained that these conditions relate to the State’s entry into the equity of an undertaking, the remuneration related to that shareholding, the exit of the State from the equity of the undertaking concerned, the 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 is therefore not in a position to explain how the period for notifying a restructuring plan provided for in point 85 of the Temporary Framework, which was complied with by the Commission in the contested decision, contradicts that point.

101    In addition, it must be held that the applicant’s arguments raised in paragraph 74 of the application in support of the plea of illegality against point 85 of the Temporary Framework are not sufficiently substantiated and remain too general.

102    Consequently, the applicant’s arguments in the context of the fifth part of the present plea must be rejected.

 The sixth part of the first plea, alleging infringement of the alleged obligation to weigh the beneficial effects of the aid against its adverse effects on trading conditions and the maintenance of undistorted competition

103    The applicant argues that, when the Commission examines the compatibility of an aid measure, it is required to weigh its expected positive effects in terms of realisation of the objectives set out in Article 107(3)(b) TFEU against its adverse effects in terms of distortions of competition and the effect of the aid on trade between Member States. The Temporary Framework, in particular in section 1.2 and point 53 thereof, requires the Commission to carry out such a balancing test. It is alleged that the Commission failed to carry out that analysis in the contested decision. In the alternative, the applicant submits that, were the Court to find that the Temporary Framework exempts the Commission from carrying out such a test, it seeks to raise a plea of illegality in respect of the Temporary Framework, under Article 277 TFEU, in that the framework infringes the obligation to perform a balancing test.

104    The Commission, supported by the Republic of Estonia, disputes the applicant’s arguments.

105    In that regard, it should be noted that Article 107(3)(b) TFEU provides that ‘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 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. This textual interpretation of the wording of Article 107(3)(b) TFEU is confirmed by comparing it to 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).

106    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 faced with a serious disturbance in its economy and that the aid measures adopted to remedy that disturbance are, first, necessary for that purpose and, second, appropriate and proportionate, those measures are 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, in contrast to what is laid down in Article 107(3)(c) TFEU. In other words, such a balancing test 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).

107    Accordingly, 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, must be rejected. For the same reasons, the applicant 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, judgments 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).

108    Nor does the applicant raise a convincing argument when it asserts that the obligatory nature of a balancing test arises from the Temporary Framework, since there is no such obligation in that framework. In particular, section 1.2 of that framework, to which the applicant refers, concerning the ‘need for close European coordination of national aid measures’, consists of a single paragraph, point 10, which contains no requirements in that regard. Nor can the applicant rely on point 53 of the Temporary Framework in that regard. Indeed, as explained in paragraph 62 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, which relate to the amount of recapitalisation, the remuneration and exit of the State, governance and prevention of undue distortions to competition, and to the exit strategy of the State from the participation resulting from the recapitalisation.

109    It follows that the Commission was under no obligation to carry out, in the contested decision, the balancing test demanded by the applicant. Although the applicant raises a plea of illegality as regards the Temporary Framework, Article 107(3)(b) TFEU does not require the Commission, as is apparent from paragraph 106 above, to weigh the beneficial effects of the aid against its adverse effects on trading conditions and the maintenance of undistorted competition. Therefore, the Temporary Framework, which does not provide for such a balancing test, cannot infringe that provision.

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

111    In the light of all the foregoing considerations, the applicant’s first plea in law must be rejected.

 Second plea in law, alleging infringement of the principles of non-discrimination, freedom to provide services and freedom of establishment

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

113    The Commission, supported by the Republic of Estonia, disputes the applicant’s arguments.

114    As a preliminary point, it should be recalled that State aid which contravenes provisions of the Treaty or the 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).

 Infringement of the principle of non-discrimination

115    The applicant claims, in essence, that the Commission treated airlines operating routes to and from Estonia differently, despite their comparable situations, by favouring Nordica without any objective justification. The Commission failed to establish either the need to grant aid only to Nordica or the proportionality of the difference in treatment between Nordica and the other airlines in the light of the objective of remedying a serious disturbance in the Estonian economy under Article 107(3)(b) TFEU. It adds that if the aid had been allocated to all the airlines that operate in Estonia, on the basis of their market share, the objective of the measure would have been reached with no discrimination. The applicant infers from this that the measure at issue is a ‘measure of mere economic nationalism’.

116    The Commission, supported by the Republic of Estonia, disputes the applicant’s arguments.

117    In that regard, it should be recalled 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).

118    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).

119    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).

120    In the present case, it should be recalled that, according to paragraphs 4 to 8 of the contested decision, the measure at issue is intended solely to meet Nordica’s liquidity and equity needs following the loss of revenue suffered by that undertaking as a result of the outbreak of the COVID-19 pandemic in order to remedy a serious disturbance in the economy of a Member State.

121    In the first place, it is true that other airlines contribute to a certain extent to Estonia’s connectivity and that they are affected just as much as Nordica by the COVID-19 pandemic and the travel restrictions resulting from it.

122    However, the fact remains, as the Commission submits, that there is no requirement for Member States to grant aid to remedy a serious disturbance in the economy, within the meaning of Article 107(3)(b) TFEU (see, to that effect, judgment of 14 July 2021, Ryanair and Laudamotion v Commission (Austrian Airlines; Covid-19), T‑677/20, under appeal, EU:T:2021:465, paragraph 54). While Article 108(3) TFEU requires Member States to notify their plans as regards State aid to the Commission before they are put into effect, it does not, however, require them to grant any aid (order of 30 May 2018, Yanchev, C‑481/17, not published, EU:C:2018:352, paragraph 22).

123    In addition, as stated in paragraphs 18 and 19 above, 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.

124    Therefore, contrary to the applicant’s arguments, the Republic of Estonia cannot be required to grant aid to all undertakings which contribute, in some way or other, to the connectivity of its territory.

125    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 recipient of that aid. Thus, by its nature, such individual aid introduces a difference in treatment, or even discrimination, which is inherent in the individual character of that measure. To maintain, as the applicant does, that the individual aid at issue is contrary to the principle of non-discrimination amounts essentially to calling into question systematically the compatibility with the internal market of any individual aid solely on account of its inherently exclusive and thus 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 (see, to that effect, judgment of 14 April 2021, Ryanair v Commission (Finnair I; Covid-19), T‑388/20, under appeal, EU:T:2021:196, paragraph 81).

126    In the third place and in any event, even if, as the applicant claims, the difference in treatment established by the measure at issue, in so far as it benefits only Nordica, may amount to discrimination, it is necessary to ascertain whether it is justified by a legitimate objective and whether it is necessary, appropriate and proportionate in order to attain that objective. 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 the 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 requires, first, that the objective of the measure at issue satisfies the requirements of that provision and, second, that the conditions for granting the measure at issue, namely, in the present case, the fact that it benefits only Nordica, are such as to enable that objective to be achieved and do not go beyond what is necessary in order to attain it (see, to that effect, judgment of 14 April 2021, Ryanair v Commission (Finnair I; Covid-19), T‑388/20, under appeal, EU:T:2021:196, paragraph 82).

127    As regards the objective of the measure at issue, it is common ground that the COVID-19 pandemic led to a serious disturbance in the Estonian economy and that it had significant adverse effects on the Estonian air transport market. In that context, for the reasons set out in paragraphs 23 to 25 above, the objective of the measure at issue, namely to maintain Nordica’s viability and its air transport services, was capable of remedying the serious disturbance in the Estonian economy due to that pandemic.

128    As regards the conditions for granting the measure at issue and the fact that the measure at issue benefited only Nordica, as is apparent from paragraphs 52 to 55 above in the context of the examination of the second part of the first plea, the Commission sufficiently demonstrated in the contested decision that Nordica contributed significantly to Estonia’s economy and connectivity.

129    According to the applicant, those circumstances do not justify the difference in treatment arising from the measure at issue. The measure granted Nordica all the aid whereas other airlines, such as the applicant, were also well placed to remedy a serious disturbance in the Estonian economy. In that regard, the applicant notes in particular that those airlines operate an equal or greater number of routes to and from Estonia in comparison to Nordica and that, contrary to what is stated in the contested decision, Nordica’s market share expressed in terms of the number of passengers at Tallinn Airport is only 14%.

130    In that regard, it should be noted that the Commission based its conclusion relating to Nordica’s importance for Estonia’s economy and connectivity on a body of evidence and not only on Nordica’s market share and on the number of regular routes operated by Nordica from Tallinn Airport at the time when the contested decision was adopted. Thus, the Commission found in paragraphs 19, 20 and 79 to 83 of the contested decision that Nordica employed a significant number of people in Estonia, was of great importance for many operators in the aviation sector in Estonia, including Tallinn Airport where its fleet was based, had played a significant role in the repatriation of citizens and the delivery of medical equipment during the outbreak of COVID-19 in the spring of 2020 and played an essential role in Estonia’s connectivity through the ACMI services which it provided to other airlines. It follows from that economic and social weight of Nordica in Estonia that the Commission was entitled to take the view that ensuring the continuity of Nordica’s economic activities was more likely to contribute to remedying a serious disturbance in the Estonian economy than maintaining the activities of other airlines operating in Estonia.

131    As regards the question whether the aid measure at issue goes beyond what is necessary to achieve the objective pursued, the Commission noted, in paragraph 91 of the contested decision, that that measure did not go beyond restoring Nordica’s capital structure to that existing on 31 December 2019, that is, before the COVID-19 pandemic.

132    As regards the applicant’s argument that the aid measure at issue remains disproportionate in that it benefits Nordica alone and that the objective of the measure at issue for the Republic of Estonia is simply to protect its national champion, of which it is the shareholder, it must be recalled that the Commission was under no obligation to examine whether the Republic of Estonia should widen the circle of beneficiaries of the aid, since the contested decision established to the requisite legal standard the need to preserve Nordica’s contribution to the Estonian economy.

133    As regards the applicant’s arguments that the measure at issue was not necessary, since Nordica could have found alternative market solutions and its bankruptcy would not necessarily have jeopardised Estonia’s economy and connectivity, they overlap with the arguments already put forward in the second part of the first plea and rejected in paragraphs 35 to 55 above.

134    In any event, and in so far as the difference in treatment brought about by the measure at issue may amount to discrimination, it follows that the grant of the benefit of the measure at issue to Nordica alone was justified.

 Breach of the principles of freedom to provide services and freedom of establishment

135    The applicant argues, in essence, that, in so far as it goes beyond what is necessary to achieve the stated objective of the aid, the measure at issue unjustifiably restricts the freedom to provide services and the freedom of establishment. In that regard, the applicant submits that granting the aid at issue solely to Nordica leads to fragmentation of the internal market and, in the case of airlines from another Member State operating in Estonia, curtails their rights freely to provide air transport services within the internal market as granted to them by the European operating licensing scheme provided for in 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).

136    The Commission, supported by the Republic of Estonia, disputes the applicant’s arguments.

137    It should be noted, first, that the provisions of the FEU Treaty concerning freedom of establishment are directed to 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).

138    Second, the freedom to provide services precludes the application of any national legislation which has 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 the grounds of nationality or residence (judgment of 6 February 2003, Stylianakis, C‑92/01, EU:C:2003:72, paragraph 25). However, it should be pointed out that, pursuant to 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 therefore governed, in primary law, by a special 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).

139    Measures liberalising air transport services may therefore be adopted only under Article 100(2) TFEU (judgment of 18 March 2014, International Jet Management, C‑628/11, EU:C:2014:171, paragraph 38). As the applicant rightly notes, the EU legislature adopted Regulation No 1008/2008 on the basis of that provision, and its very purpose 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, paragraph 24).

140    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 the freedom to provide services on account of its discriminatory nature, since it benefits only Nordica.

141    While it is true that the measure at issue concerns individual aid which benefits only Nordica, the applicant does not demonstrate how that exclusivity is capable of discouraging it from establishing itself in Estonia or providing services to and from that Member State. In particular, the applicant is unable to identify the elements of fact or law which would cause that measure to produce restrictive effects that would go beyond those which trigger the prohibition in Article 107(1) TFEU. On the contrary, as found in paragraphs 14 to 25 above, those effects are necessary and proportionate to remedy the serious disturbance in the Estonian economy caused by the COVID-19 pandemic, in accordance with the requirements of Article 107(3)(b) TFEU.

142    Consequently, the measure at issue cannot constitute a restriction on the freedom of establishment or the freedom to provide services. It follows that the applicant is not justified in complaining that the Commission failed to examine the compatibility of that measure with the freedom of establishment and the freedom to provide services.

143    It follows from the foregoing that the arguments put forward by the applicant in the context of the second plea have not demonstrated the existence of an error on the part of the Commission. Accordingly, that plea must be rejected.

 The third plea in law, alleging infringement of Article 108(2) TFEU and of the applicant’s procedural rights

144    The applicant submits that the examination carried out by the Commission was insufficient, in particular as regards the adverse effects of the measure at issue on trading conditions and on the maintenance of undistorted competition, the conditions laid down in the Temporary Framework and the compatibility of the measure at issue with the principles of non-discrimination, freedom to provide services and freedom of establishment. The insufficient nature of that examination is evidence of the existence of serious difficulties, which should have led the Commission to initiate the formal investigation procedure under Article 108(2) TFEU and give the applicant the opportunity to submit its observations and, thus, to influence that investigation.

145    The Commission, supported by the Republic of Estonia, disputes the applicant’s arguments.

146    As a preliminary point, it should be borne in mind that the lawfulness of a decision not to raise objections, such as the contested decision, based on Article 4(3) of Regulation 2015/1589, depends on the question 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 lead to 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).

147    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 constitutes aid or whether it is compatible with the internal market, is objective in nature. The existence of such doubts must be sought both in the circumstances in which the contested measure was adopted and in its content, in an objective manner, 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 (see, to that effect, judgment of 2 April 2009, Bouygues and Bouygues Télécom v Commission, C‑431/07 P, EU:C:2009:223, paragraph 63). It follows that judicial review by the General Court of the existence of serious difficulties will, by nature, go beyond consideration of whether or not there has been a manifest error of assessment (see judgment of 10 July 2012, Smurfit Kappa Group v Commission, T‑304/08, EU:T:2012:351, paragraph 80 and the case-law cited).

148    It is apparent also from the case-law that if the examination carried out by the Commission during the preliminary examination phase 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).

149    In the present case it should be noted, as in essence the Commission argues, that the applicant’s third plea is in fact subsidiary in nature, in case the Court did not examine the overall merits of the assessment of the aid. According to settled case-law, the aim of such a plea is to enable interested parties to be held to have standing, in that capacity, to bring an action under Article 263 TFEU, which otherwise would be unavailable to them (see, to that effect, judgments of 24 May 2011, Commission v Kronoply and Kronotex, C‑83/09 P, EU:C:2011:341, paragraph 48, and of 27 October 2011, Austria v Scheucher-Fleisch and Others, C‑47/10 P, EU:C:2011:698, paragraph 44).

150    Next, it must be observed that this plea repeats in condensed form the arguments raised in the context of the first and second pleas without identifying new evidence relating to potential serious difficulties.

151    It is apparent from the examination of the first and second pleas 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 the arguments raised by the applicant are also not capable of constituting conclusive evidence of an incomplete examination, as claimed by the applicant. Therefore, the applicant’s arguments have not demonstrated the existence of doubts within the meaning of Article 4(3) and (4) of Regulation 2015/1589.

152    Accordingly, the Court rejects the applicant’s third plea.

 The fourth plea in law, alleging infringement of the second paragraph of Article 296 TFEU

153    The applicant claims that the Commission failed to fulfil its obligation to state reasons for the contested decision in accordance with the second paragraph of Article 296 TFEU. More specifically, the Commission did not adequately explain, first, how aid granted to Nordica alone could remedy a serious disturbance in the Estonian economy, second, why the refusal to grant financing by a single bank would have relieved Nordica from seeking other forms of market-based financing and, third, whether the recapitalisation instrument chosen was the least distortive of competition. Fourth, the Commission failed to weigh the positive effects against the adverse effects of the measure at issue and, fifth, it failed to assess whether the aid was non-discriminatory and complied with the principles of freedom to provide services and freedom of establishment.

154    The Commission, supported by the Republic of Estonia, disputes the applicant’s arguments.

155    As a preliminary point, it should be recalled that the statement of the reasons for the decision of an EU institution, body, office or agency is particularly important in so far as it allows persons concerned to decide in full knowledge of the circumstances whether it is worthwhile to bring an action against the decision and the court with jurisdiction to review it, and it is therefore a requirement for ensuring that the judicial review guaranteed by Article 47 of the Charter is effective (see judgment of 15 July 2021, Commission v Landesbank Baden-Württemberg and SRB, C‑584/20 P and C‑621/20 P, EU:C:2021:601, paragraph 103 and the case-law cited).

156    It is settled case‑law that the statement of reasons required by Article 296 TFEU 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 measures 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 for a measure meets the requirements of that article 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 (judgment of 15 April 2008, Nuova Agricast, C‑390/06, EU:C:2008:224, paragraph 79; see also judgment of 8 September 2011, Commission v Netherlands, C‑279/08 P, EU:C:2011:551, paragraph 125 and the case-law cited).

157    While it is true that the institutions are not obliged, in the statement of reasons for decisions which they adopt, to take a position on all the arguments relied on by the parties concerned before them during an administrative procedure, it nonetheless remains the case that they are required to set out the facts and the legal considerations having decisive importance in the context of their decisions (see judgments of 10 July 2008, Bertelsmann and Sony Corporation of America v Impala, C‑413/06 P, EU:C:2008:392, paragraph 169 and the case-law cited, and of 18 September 2018, Duferco Long Products v Commission, T‑93/17, not published, EU:T:2018:558, paragraph 67 and the case-law cited).

158    In the present case, in the first place, as regards the ability of the measure at issue to remedy by itself the serious disturbance in the Estonian economy, it should be recalled that Article 107(3)(b) TFEU does not require the measure at issue to be capable, on its own, of remedying the serious disturbance in the economy of the Member State concerned (see paragraphs 18 and 19 above). Accordingly, it was not necessary for the Commission to give reasons in that regard.

159    In the second place, as regards financing solutions on the markets, the Commission found in paragraph 84 of the contested decision not only that Nordica was refused financing from a bank, but also that the provision of financing on the markets by Nordica on affordable terms was made impossible in view of the very difficult situation in the aviation sector and the fact that it did not own aircraft which it could sell and lease back as part of a financing package. Therefore, the Commission set out, to the requisite legal standard, the reasons why it had concluded that Nordica could not benefit from financing on the markets, fulfilling the eligibility condition relating to recapitalisation measures laid down in point 49(c) of the Temporary Framework.

160    In the third place, it is apparent from paragraphs 59 to 63 above in the context of the third part of the first plea that point 53 of the Temporary Framework, to which the applicant refers in the application, does not require the Commission to assess whether there were other recapitalisation instruments less distortive to competition available besides the recapitalisation measure at issue. In that regard, 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 in order to comply with point 53 of the Temporary Framework, to which the applicant refers in the application. Accordingly, the Commission was not required to provide reasons in that regard.

161    In the fourth place, as regards the balancing of the beneficial effects of the aid measure against its adverse effects on trading conditions and on the maintenance of undistorted competition, it suffices to note that, as is apparent from paragraphs 105 to 110 above, neither Article 107(3)(b) TFEU nor the Temporary Framework requires such a balancing test to be carried out. Consequently, the Commission did not have to provide any reasoning in that regard.

162    In the fifth place, as regards the principles of non-discrimination, freedom to provide services and freedom of establishment, it must be held that the contested decision contains elements, in particular in paragraphs 19, 20 and 79 to 83 thereof, which make it possible to understand the particular importance of Nordica for Estonia’s economy and connectivity and therefore the reasons why the Republic of Estonia chose that company as the sole beneficiary of the aid measure 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 155 to 157 above.

163    It follows that the applicant’s arguments in the context of the fourth plea have not shown that the Commission infringed its duty to state reasons.

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

 Costs

165    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, in accordance with the form of order sought by the latter.

166    In addition, in accordance with Article 138(1) of the Rules of Procedure, the Member States which have intervened in the proceedings are to bear their own costs. The Republic of Estonia must therefore bear its own costs.

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;

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

Kornezov Kowalik-Bańczyk Hesse

Delivered in open court in Luxembourg on 18 October 2023.

V. Di Bucci M. van der Woude

Registrar President

*      Language of the case: English.