Case T‑8/18
easyJet Airline Co. Ltd
v
European Commission
Judgment of the General Court (First Chamber, Extended Composition), 13 May 2020
(State aid — Aviation sector — Aid granted by Italy in favour of Sardinian airports — Decision declaring the aid partly compatible and partly incompatible with the internal market — Imputability to the State — Beneficiaries — Advantage for co-contracting airlines — Market economy operator principle — Effect on trade between Member States — Adverse effect on competition — Recovery — Legitimate expectations — Obligation to state reasons)
1. Action for annulment — Natural or legal persons — Measures of direct and individual concern to them — Individual concern — Conditions — Commission decision prohibiting a sectoral aid scheme — Action brought by an undertaking having received individual aid granted under that scheme and that must be recovered — Admissibility — Limits — Admissibility limited solely to claims pertaining to aspects of the decision concerning the applicant
(Art. 263, fourth para., TFEU)
(see paragraphs 59-70)
2. State aid — Concept — Grant attributable to the State of an advantage by means of State resources — Measures to improve air services to an island region and to promote that region as a touristic destination — Reimbursement by the State of sums paid by airport operators to airlines under agreements pursuing those objectives — Included
(Art. 107(1) TFEU)
(see paragraphs 72-140)
3. State aid — Concept — Aid from State resources — Concept of State resources — Funds transferred by a regional entity to airport operators and used by the latter to pay airlines — Included — Conditions — Public control over the grant of the advantage — Legal nature of intermediary dispensing bodies and objectives pursued — Irrelevant
(Art. 107(1) TFEU)
(see paragraphs 94-97, 106-113, 115)
4. State aid — Concept — Grant of advantages imputable to the State — Aid granted by regional or local bodies — Included — Advantages granted through bodies distinct from the State — Application of the criterion of public control — Involvement of public authorities in the adoption of measures and in the monitoring of their implementation — Included
(Art. 107(1) TFEU)
(see paragraphs 117, 122-124, 129, 137, 138)
5. State aid — Examination by the Commission — Aid scheme — Concept — Criteria for assessment — Definition of the essential elements of the scheme in the acts identified as the basis of the scheme — Taking into account of acts adopted subsequent to the notification of the measure forming the subject matter of the contested decision — Whether permissible — Acts falling within the individualised implementation of the scheme — Not included
(Arts 107(1) and 108(1) and (3) TFEU; Council Regulation 2015/1589, Art. 1(d))
(see paragraphs 148-150, 153-160, 163, 164, 232)
6. State aid — Concept — Assessment according to the criterion of the private investor — Contractual relations between the airport operators and the airlines — Implementation of an aid scheme by an airport operator not owned by the State — Not included
(Art. 107(1) TFEU)
(see paragraphs 175-177)
7. State aid — Concept — Assessment according to the criterion of the private investor — Aid scheme put in place solely with a view to the economic development of a region — State acting exclusively as a public authority — Not included
(Art. 107(1) TFEU)
(see paragraphs 187-191, 193)
8. State aid — Concept — Assessment according to the criterion of the private investor — Purchases of services from an undertaking through bodies not subject to public procurement rules — Absence of advantage only in the case of a normal commercial transaction — Conditions — Selection of service providers after an open, transparent and non-discriminatory procedure
(Art. 107(1) TFEU)
(see paragraphs 200-203, 206-211)
9. State aid — Effect on trade between Member States — Adverse effect on competition — Criteria for assessment — Scope of the burden of proof on the Commission
(Art. 107(1) TFEU)
(see paragraphs 230, 231)
10. State aid — Commission decision finding aid partly incompatible with the internal market and ordering its recovery — Obligation to state reasons — Scope
(Arts 108(2) and 296 TFEU)
(see paragraphs 234, 275, 278-280)
11. State aid — Prohibition — Exceptions — Aid capable of being regarded as compatible with the internal market — Discretion of the Commission — Complex evaluation of economic matters — Judicial review — Limits
(Art. 107(3) TFEU)
(see paragraphs 241-243)
12. State aid — Recovery of unlawful aid — Aid granted in breach of the procedural rules of Article 108 TFEU — Legitimate expectations entertained by the recipients — None save in exceptional circumstances
(Art. 108 TFEU)
(see paragraphs 265-270)
Résumé
By the judgment in easyJet Airline v Commission (T‑8/18), delivered on 13 May 2020, the General Court, ruling in the extended five-judge formation, dismissed the action brought by easyJet Airline Co. Ltd (‘the applicant’) seeking the annulment of the decision of the European Commission of 29 July 2016 which declared partly incompatible with the internal market the aid granted by Italy to various airlines serving Sardinia.(1) According to that decision, the aid scheme instituted, in Italy, by the Autonomous Region of Sardinia (‘the Region’) for the development of air transport constituted State aid granted not to the Sardinian airport operators, but to the airlines concerned.
On 13 April 2010, the Region had adopted Law No 10/2010,(2) subsequently notified by Italy to the Commission pursuant to Article 108(3) TFEU, which authorised the financing of the island’s airports with a view to the development of air transport, inter alia through the de-seasonalisation of air routes to and from Sardinia. That law was implemented by a series of measures adopted by the executive of the Region, including Regional Council Decision No 29/36 of 29 July 2010 (hereinafter referred to, together with the relevant provisions of Law No 10/2010, as ‘the measures at issue’). The measures at issue provided inter alia for the conclusion by the airport operators of agreements with the airlines with a view to improving the island’s air service and promoting it as a touristic destination. They determined, moreover, the conditions and arrangements of reimbursement, by the Region, to the airport operators of the sums paid by those operators to the airlines under such agreements.
On 29 July 2016, the Commission adopted a decision declaring the aid scheme established by the measures at issue partly incompatible with the internal market and ordering the recovery of the aid concerned from the airlines considered as beneficiaries, which included the applicant. In support of its action for annulment, it put forward several pleas alleging, inter alia, various manifest errors of assessment as well as infringement of the principle of legitimate expectations.
The Court first of all rejected the plea alleging a manifest error of assessment of the Commission as regards the classification of the payments, transferred by the airport operators to the applicant, as State resources the grant of which was imputable to the Italian State.
In that regard, the Court confirmed, in the first place, that the payments made by the airport operators to the airlines under the concluded agreements represented a mobilisation of State resources, in so far as the funds transferred by the Region to the airport operators had been used to effect the payments at issue. In supporting that conclusion, the Court relied primarily on the analysis of the arrangements prescribed by the measures at issue for the reimbursement by the Region of the payments made by the airport operators to the airlines under the concluded agreements. The Court thereby noted the existence of a supervision mechanism which made the reimbursement — in instalments — of the funds incurred conditional on the presentation of accounting and supporting reports establishing the conformity of the agreements, under which the payments had been made, with the objectives pursued by Law No 10/2010 as well as their proper implementation. According to the Court, the State nature of the resources thus transferred was called into question neither by the absence of determination, by Law No 10/2010, of the arrangements for transfer of the funds by the airport operators to the airlines nor by the alleged existence of other sources of funding of the airport operators. Having recalled that the objective pursued by State measures was irrelevant to the classification as ‘aid’ within the meaning of Article 107 TFEU, the Court also emphasised that, where an advantage originating from State resources has been transferred by the immediate recipient, in this case the airport operators, to a final beneficiary, it is irrelevant that that transfer was made by the recipient in accordance with commercial principles or, on the contrary, that that transfer met an objective of general interest. The Court inferred from this that the prohibition of State aid could apply to various payments made by the airport operators to the airlines under the measures at issue, even though those operators had not been vested with prerogatives of public authority or missions of general interest and established or appointed to administer the aid.
So far as concerns, in the second place, the imputability to the Region of the payments made by the airport operators to the benefit of the airlines, the Court found that the degree of control exerted by the State over the grant of an advantage — as is apparent inter alia from the context in which the measure in question was taken, its compass, its content and the conditions which it contains — must also be taken into account in order to ascertain the involvement of the public authorities in its adoption, failing which the advantage granted cannot be imputed to them. Examining the contested decision in the light of those criteria, the Court then found that, in the case at hand, the degree of control exerted by the Region over the grant of the funds to the airlines demonstrated to the requisite legal standard its involvement in making the funds available. Indeed, even though the precise arrangements for allocating the funds obtained by each of the airport operators were not determined in Law No 10/2010, the fact remains that the decisions taken by the Regional Executive in application of that law enabled the Region to monitor closely the behaviour of the airport operators that had decided to request the financing measures provided for under the aid scheme at issue, whether that be through the prior approval of their plans of activities or through the requisite conditions for reimbursement of the sums transferred by those operators to the airlines. According to the Court, the exertion of such control by the Region proves that the financing measures at issue were imputable to it, including owing to the insertion — required by the Region — of penalty clauses into the agreements concluded between the airport operators and the airlines with a view to protecting public investment. Consequently, the Court approved the Commission’s finding that the airport operators could be considered as intermediaries between the Region and the airlines, since they had transferred in full the funds received from the Region to the airlines and had thus acted in accordance with the instructions received from the Region through the plans of activities approved by that region.
In examining the second plea, alleging a manifest error of assessment as regards the receipt of an advantage by the airlines, the Court held, in the first place, that the Commission had been right to categorise the measures at issue as an ‘aid scheme’ within the meaning of Article 1(d) of Regulation 2015/1589.(3) After having recalled that such a categorisation cannot be applied to a set of provisions requiring further implementing measures, the Court considered that an aid scheme may nevertheless consist of general provisions and their implementing provisions, provided that the set of those provisions is sufficient to rule on the grant of individual aid. In the light of those principles, the Commission was entitled, in the case at hand, to determine the legal framework of the aid scheme at issue taking account of acts adopted subsequent to notification of the measures at issue, which were of no relevance to the thrust of the mechanism, but while excluding the plans of activities and the individual agreements between the airport operators and the airlines. Those were not further implementing measures, but already fell within the individualised implementation of the aid scheme at isssue. The Court last specified that the absence of formal identification of the airlines as final and real beneficiaries of the aid at issue in Law No 10/2010 was no obstacle to the categorisation of the mechanism as an ‘aid scheme’, as the Commission could rely on all the elements of the mechanism put in place to support its conclusion.
The Court held, in the second place, that the Commission had been right not to examine the transactions between the airlines and the airport operators in the light of the market economy operator test. Indeed, those operators, which were not owned by the Region, had been essentially limited to implementing the aid scheme at issue put at their disposal by the Region. So far as concerns, on the other hand, the application of that test to the decisions of the Region, the Court found that that region had not acted as an investor, given that it had put in place the aid scheme at issue solely with a view to the island’s economic development. In so far as the Region had acted as an acquirer of marketing services, the Court moreover emphasised that the existence of an advantage constituting aid can be excluded not on account of the existence of reciprocal commitments, but on account of the services at issue having been acquired in compliance with the public procurement rules laid down by EU law or, at least, after organising an open and transparent tender procedure guaranteeing observance of the principle of equal treatment between providers and the acquisition of services at market prices. In the case at hand, however, the calls for expressions of interest published prior to the conclusion of the agreements with the airlines were not regarded by the Court as equivalent to tender procedures, in the absence in particular of any selection according to precise criteria amongst the airlines that had responded to the calls.
After having rejected any manifest error of assessment as to the fact that the measures at issue distorted or threatened to distort competition, that they affected trade between Member States and that it was not possible to declare them compatible with the internal market by way of derogation, pursuant to Article 107(3) TFEU, the Court ultimately held, in examining the fifth plea, that the Commission had likewise not disregarded the principle of legitimate expectations in ordering the recovery of the amounts received by the applicant in performance of the contracts concluded with the airport operators under the measures at issue. It noted, in that regard, that the applicant could not have any legitimate expectation as to the legality of the aid, in so far as it was unlawful due to having been implemented without awaiting the Commission’s pronouncement on the measures that had been notified to it, or as to the commercial nature of its contractual relations with the airport operators, since it could not disregard the financing mechanisms provided for in Law No 10/2010, which had been the subject of an official publication at the national level, and, therefore, the State origin of the funds concerned.