In two judgments delivered this week by the Court of Justice of the European Union in Cases C-320/21 P and C 321/21 P, Ryanair v Commission (SAS), the Court ruled that €137m in state aid by both Denmark and Sweden to Scandinavian Airlines at the beginning of the COVID pandemic was lawful state aid.
Ryanair have launched a series of direct actions before the EU courts over the past three and a half years since the onset of the COVID pandemic. Given Ryanair did not receive any state aid to the extent that ‘legacy carriers’ did, it has persistently argued that such state aid given by numerous Member States to certain airlines has impinged upon the internal market for transport. In some cases, it has succeeded. In others, like the two cases at hand, it has not.
In April 2020, at the beginning of the COVID pandemic, the both Denmark and Sweden separately established a guaranteed revolved credit facility for Scandinavian Airlines (SAS), an airline which they both have shareholdings, to the tune of 1.5bn SEK. The two states acted on the basis of the rescheduling and cancellation of flights, in light of travel restrictions..
In two decisions of the Commission in April 2020, it classified the notified measures of Denmark (SA.56795 (2020/N)) and Sweden (SA.57061 (2020/N)) as state aid that was compatible with the internal market pursuant to Article 107(2)(b) TFEU. The Commission’s reasoning was that state aid to make good the damage caused by natural disasters or exceptional occurrences is to be compatible with the internal market.
After Ryanair challenged the Commission’s decisions that approved the provision of state air to SAS, the General Court in Cases T-378/20 and T-379/20 held in April 2021 that SAS had a significantly higher market share than its closest competitor in Denmark and Sweden, and that it was more affected by the restrictions relating to the COVID pandemic than other airlines, the aid did not amount to unlawful discrimination. Those two judgments of the General Court were the first time, in the context of the COVID pandemic, the legality of individual aid measures adopted in order to address the consequences therefrom.
The General Court confirmed that Member States, in such circumstances, may only make good the damage caused by an exceptional occurrence, even if it benefits only an individual company. Second, it held that the Commission acted proportionally, in that the Commission had set out in sufficiently precise terms regarding calculation method for state aid, taking account of damage, thus reducing the possibility of overcompensation.
In two judgments this week by the Court of Justice in Cases C-320/21 P and C 321/21 P, Ryanair v Commission (SAS), it ruled, inter alia, that it was not necessary for state aid given by both Denmark and Sweden to benefit all undertakings that suffered damage caused by the COVID -19 pandemic. It further rejected all other pleas put forth by Ryanair, and upheld the underlying judgments of the General Court.
The two Commission decision’s, which accordingly have been fully upheld as to their lawfulness, contained obligations upon both Denmark and Sweden to carry out an ex post assessment of the damage actually suffered by SAS, and to request from SAS, if necessary, the repayment of aid exceeding that damage actually caused by COVID.
More information on the two Ryanair v Commission (SAS) cases can be accessed here (Cases C-320/21 P), and here (Cases C-321/21 P).