The case involves an appeal by Ryanair DAC against a decision by the European Commission on 31 July 2020 regarding a state aid scheme notified on 20 July 2020 by Spain (Article 108(3) TFEU) to support strategic undertakings amid the COVID-19 pandemic (the Fund).
The aid scheme, managed by the Sociedad Española de Participaciones Industriales (SEPI), aimed to provide financial support to non-financial undertakings established in Spain that were considered systemic or strategic for the Spanish economy and were experiencing temporary difficulties due to the pandemic.
The aid scheme’s budget was EUR 10 billion, financed by the Spanish State budget. The Fund’s support interventions generally exceeded EUR 25 million per beneficiary, with aid exceeding EUR 250 million requiring individual notification to the European Commission. Temporary support operations were granted until 30 June 2021.
To access the Fund, undertakings had to meet several cumulative eligibility criteria, including:
1. Being non-financial undertakings established and having their principal places of business in Spain;
2. Having systemic or strategic importance to the Spanish economy;
3. Experiencing temporary difficulties due to the COVID-19 pandemic;
4. Demonstrating that a forced cessation of activities would negatively impact economic activity or employment;
5. Establishing medium-to long-term viability through a viability plan;
6. Presenting a planned schedule for reimbursement of the State support;
7. Not being in difficulty as of 31 December 2019;
8. Demonstrating that private funding sources were either unavailable or accessible only at prohibitive costs.
Ryanair challenged the European Commission’s decision not to raise objections to the aid scheme, arguing that it breached principles of non-discrimination, freedom to provide services, and freedom of establishment, among other points.
The General Court dismissed Ryanair’s action (judgment of the General Court of the European Union of 19 May 2021). Ryanair appealed to the Court of Justice of the European Union (CJEU).
The Court addressed Ryanair’s concerns regarding the principles of non-discrimination, freedom to provide services, and freedom of establishment as follows:
Non-discrimination: The Court found that the General Court did not err in law by examining the aid scheme under Article 107(3)(b) TFEU instead of Article 18 TFEU (prohibit ‘any discrimination on the grounds of nationality’ so that all nationals and EU citizens could be treated equally within the scope of the Treaties). The court held that Article 107(3)(b) TFEU constitutes a special provision that allows for differences in treatment between undertakings, provided the derogation conditions are met. Therefore, the differences in treatment brought about by the aid scheme did not need to be justified on the grounds set out in Article 52 TFEU.
Freedom to provide services: The court rejected Ryanair’s argument that the General Court applied an incorrect test to assess whether the aid scheme impeded the freedom to provide services. The court held that the General Court correctly analyzed the proportionality of the aid scheme in light of the situation of all airlines operating in Spain, not just Ryanair. The court concluded that the restrictive effects of the aid scheme were inherent in its selective nature and did not constitute a restriction prohibited by the Treaty.
Freedom of establishment: Similar to the freedom to provide services, the court found that the General Court did not err in law by holding that the aid scheme’s requirement for airlines to have their principal place of business in Spain was justified under Article 107(3)(b) TFEU. The court noted that this requirement was indissolubly linked to the objective of remedying a severe disturbance in the Spanish economy caused by the COVID-19 pandemic.
The Court of Luxembourg also ordered Ryanair to bear its own costs and to pay those incurred by the European Commission.
