Court of Justice rules on Italian airline COVID-19 aid

Background of the Case

The Court of Justice of the European Union (CJEU) recently delivered a judgment concerning the legality of state aid provided by Italy to airlines during the COVID-19 pandemic. The case was brought by Neos SpA, which sought to overturn a previous ruling by the General Court that annulled the European Commission's decision to approve the aid scheme.

Initial Decision and Appeal

The Italian government had established a compensation fund of EUR 130 million to support airlines affected by the pandemic, as outlined in Decree-Law No 34/2020. The European Commission initially deemed the aid compatible with the internal market under Article 107(2)(b) TFEU, which allows for compensation for damages caused by exceptional occurrences.

Ryanair challenged this decision, arguing that the aid was discriminatory and violated EU principles of non-discrimination, free provision of services, and freedom of establishment. The General Court ruled in favour of Ryanair, citing insufficient reasoning by the Commission regarding the compatibility of the aid with EU law.

Findings of the Court of Justice

On appeal, Neos contended that the General Court erred in its judgment, particularly concerning the Commission's obligation to state reasons. The CJEU examined whether the Commission's decision adequately explained the reasoning behind the aid's approval, especially regarding the minimum remuneration requirement for airlines.

The Court of Justice found that the Commission had indeed provided sufficient reasoning, noting that the decision was more detailed than other similar decisions made during the pandemic. The CJEU emphasized that the Commission's obligation to state reasons does not extend to addressing every potential provision of EU law.

Impact on State Aid Law

This ruling clarifies the scope of the Commission's obligations in assessing state aid measures, particularly in crisis contexts. The decision underscores the need for succinct reasoning that addresses core legal provisions without necessitating exhaustive analysis of all potential EU law interactions.

Next Steps

Having set aside the General Court's judgment, the CJEU referred the case back to the General Court for further examination of Ryanair's other legal claims, including the proportionality of the aid and procedural rights issues. The outcome of these proceedings could further refine the legal landscape regarding state aid in exceptional circumstances.

Significance for Legal Practitioners

This case is particularly relevant for legal professionals dealing with state aid, competition law, and EU regulatory compliance. It highlights the complexities involved in balancing national support measures with EU market rules, especially during unprecedented events like the COVID-19 pandemic.

Learn More

For more information on state aid and EU competition law, see BeCivil's guide to Shareholder Law.