Case T‑388/20
Ryanair DAC
v
European Commission
Judgment of the General Court (Tenth Chamber, Extended Composition), 14 April 2021
(State aid – Finnish air-transport market – Aid granted by Finland to Finnair amid the Covid‑19 pandemic – State guarantee on a loan – Decision not to raise any objections – Temporary Framework for State aid measures – Measure intended to remedy a serious disturbance in the economy of a Member State – Failure to weigh up the beneficial effects of the aid against its adverse effects on trading conditions and the maintenance of undistorted competition – Equal treatment – Freedom of establishment – Freedom to provide services – Obligation to state reasons)
1. State aid – Prohibition – Exceptions – Aid capable of being regarded as compatible with the internal market – Aid to remedy serious disturbance in the economy of a Member State – Assessment – Aid measure benefiting an airline important for the Finnish economy in the context of the Covid-19 Pandemic – Included
(Art. 107(3)(b) TFEU)
(see paragraphs 31-34, 38-63)
2. State aid – Prohibition – Exceptions – Aid capable of being regarded as compatible with the internal market – Assessment in the light of Article 107(3)(b) TFEU – Criteria – Weighing up the beneficial effects of the aid against its adverse effects on trading conditions and the maintenance of undistorted competition – Not a necessary criterion
(Art. 107(3)(b) TFEU)
(see paragraphs 65-71)
3. State aid – Prohibition – Exceptions – Aid capable of being regarded as compatible with the internal market – Aid to remedy a serious disturbance in the economy of a Member State – Loan guarantee intended to support an airline important for the Finnish economy in the context of the Covid-19 pandemic – Aid compatible with the internal market under Article 107(3)(b) TFEU – No infringement of the principle of non-discrimination on grounds of nationality
(Arts 18, first para., and 107(3)(b) TFEU)
(see paragraphs 77, 81, 82, 92)
4. State aid – Prohibition – Exceptions – Aid capable of being regarded as compatible with the internal market – Aid to remedy serious disturbance in the economy of a Member State – Loan guarantee intended to support an airline important for the Finnish economy in the context of the Covid-19 pandemic – Assessment of the compatibility with the internal market – Criteria – Purpose of the aid measure – Proportionality of the aid measure
(Art. 107(3)(b) TFEU)
(see paragraphs 83-92)
5. Freedom to provide services – Provisions of the Treaty – Scope – Services in the transport sector within the meaning of Article 58(1) TFEU – Air-transport services – Specific legal regime
(Arts 56, 58(1) and 100(2) TFEU)
(see paragraphs 99-104)
6. Action for annulment – Natural or legal persons – Measures of direct and individual concern to them – Commission decision finding State aid compatible with the internal market without opening the formal investigation procedure – Action by interested parties within the meaning of Article 108(2) TFEU – Identification of the subject matter of the action – Action designed to safeguard the procedural rights of the persons concerned – Pleas capable of being invoked – Lack of any independent content of such a plea in the present case
(Arts 108(2) and 263(4) TFEU)
(see paragraphs 105-109)
7. State aid – Commission decision not to raise objections in respect of a national measure – Obligation to state reasons – Scope – Consideration of the context and all the legal rules governing the matter
(Arts 107(3)(b) and 296 TFEU)
(see paragraphs 112-125)
Résumé
Finland’s guarantee in favour of the airline Finnair to help it obtain a loan of EUR 600 million from a pension fund to cover its working capital requirements following the Covid-19 pandemic is compatible with EU law
The guarantee was necessary in order to remedy the serious disturbance in the Finnish economy in view of the importance of Finnair for that economy
On 13 May 2020, the Republic of Finland notified the Commission of an aid measure in the form of a State guarantee in favour of the Finnish airline, Finnair Plc (‘Finnair’), aimed at helping the latter obtain a loan of EUR 600 million from a pension fund to cover its working capital needs. The guarantee, which was supposed to cover 90% of that loan, was limited to a maximum duration of three years and could be relied upon in the event of Finnair’s default with regard to the pension fund.
Referring to its communication on the Temporary Framework for State aid measures to support the economy in the current Covid-19 outbreak, (1) the Commission classified the guarantee granted to Finnair as State aid which is compatible with the internal market in accordance with Article 107(3)(b) TFEU. (2) Under that provision, aid intended to remedy a serious disturbance in the economy of a Member State may, under certain circumstances, be considered to be compatible with the internal market.
The airline Ryanair brought an action for annulment of the Commission’s decision, which was nevertheless rejected by the Tenth Chamber (Extended Composition) of the General Court. In that context, that Chamber examines for the first time, the legality of individual State aid adopted to address the consequences of the Covid-19 pandemic in the light of Article 107(3)(b) TFEU. (3)
Findings of the Court
In the first place, the Court analyses the legality of the contested decision in the light of Article 107(3)(b) TFEU.
With regard, first, to the complaints that aid benefiting a single individual undertaking could not remedy a serious disturbance in the economy of a Member State within the meaning of Article 107(3)(b) TFEU, the Court points out, first of all, that that provision applies both to aid schemes and to individual aid. Thus, individual aid may be declared to be compatible with the internal market if it is a necessary, appropriate and proportionate measure for remedying a serious disturbance in the economy of the Member State concerned.
Next, the Court states that Finnair’s possible failure would have had serious consequences for the Finnish economy, so that the State guarantee, in so far as it is intended to maintain Finnair’s activities and prevent its possible failure from further disrupting the Finnish economy, is appropriate to contribute to remedying the serious disruption to the Finnish economy caused by the Covid-19 pandemic.
The Court’s conclusion is based on the fact that Finnair:
(i) is the main air carrier in Finland, with almost 15 million passengers carried in 2019, or 67% of all passengers carried to, from and within Finland;
(ii) is the main air cargo operator in Finland, serves the needs of a number of companies located in Finland, both for the export and import of goods, and has an extensive Asian network;
(iii) has 6 800 employees, with purchases from suppliers, who are mostly Finnish, coming to EUR 1.9 thousand million in 2019;
(iv) makes significant efforts in respect of research in Finland and is the 16th largest company in Finland in terms of its contribution to that country’s GDP.
Secondly, with regard to the complaints that the Commission failed to balance the beneficial effects of the aid against its adverse effects, the Court holds that Article 107(3)(b) TFEU does not require such an analysis, contrary to what is prescribed by Article 107(3)(c) TFEU. Nor is such a balancing act required on the basis of the Communication on the Temporary Framework.
In the second place, the Court examines the alleged infringement of the principle of non-discrimination. In that regard, the Court observes, first of all, that, by its nature, individual aid introduces a difference in treatment, or even discrimination, which is inherent in the individual character of the measure. Arguing that such aid is contrary to the principle of non-discrimination would, in essence, amount to calling into question systematically the compatibility with the internal market of any individual aid, when EU law allows Member States to grant such aid in accordance with the conditions laid down in Article 107 TFEU.
Furthermore, even if the difference in treatment brought about by the guarantee granted to Finnair could be regarded as discrimination, it must be ascertained whether it is justified by a legitimate objective and whether it is necessary, appropriate and proportionate to achieve that objective.
According to the Court, the arrangements for providing Finnair with the guarantee are capable of attaining the objective envisaged, since the existence of a serious disturbance in the Finnish economy as a result of the Covid-19 pandemic and the significant adverse effects of that pandemic on the Finnish air-transport market have been established to the requisite legal standard. Moreover, the aid measure is necessary because Finnair was at risk of going into liquidation due to the sudden erosion of its business and the fact that it could not cover its liquidity needs through the credit markets. Finally, in view of Finnair’s importance for the Finnish economy, the grant of the State guarantee only to Finnair does not go beyond the limits of what is appropriate and necessary in order to achieve the objectives pursued by the Republic of Finland.
In the third place, as regards the complaints alleging infringement of the freedom to provide services and the freedom of establishment, the Court finds that Ryanair has not established how the exclusive nature of the grant of the State guarantee is capable of dissuading it from establishing itself in Finland or from providing services to and from Finland. The Court states that Ryanair has failed to identify the factual or legal elements which would cause the individual aid at issue to produce restrictive effects which go beyond those which trigger the prohibition in Article 107(1) TFEU, but which are nevertheless necessary and proportionate to remedy the serious disturbance in the Finnish economy caused by the Covid-19 pandemic, in accordance with the requirements of Article 107(3)(b) TFEU.
Finally, the Court rejects as unfounded the pleas alleging breach of the obligation to state reasons and finds that it is not necessary to examine the merits of the plea alleging breach of the procedural rights under Article 108(2) TFEU.