62021TJ0142_RES
Case T‑142/21
Wizz Air Hungary Légiközlekedési Zrt. (Wizz Air Hungary Zrt.)
v
European Commission
Judgment of the General Court (Tenth Chamber, Extended Composition), 29 March 2023
(State aid – Romanian air transport market – Aid granted by Romania to Blue Air in the context of the COVID-19 pandemic – Blue Air rescue aid – Loan guaranteed by the Romanian State – Decision not to raise any objections – Action for annulment – Aid intended to make good the damage caused by an exceptional occurrence – Article 107(2)(b) TFEU – Assessment of the damage – Causal link – Beneficiary’s pre-existing difficulties – Taking avoidable costs into account – Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty – Article 107(3)(c) TFEU – Contribution of the aid to an objective of common interest – ‘One time, last time’ condition for rescue aid – Principle of non-discrimination – Freedom to provide services – Freedom of establishment – Obligation to state reasons)
State aid – Prohibition – Exceptions – Aid compatible with the internal market – Aid to make good the damage caused by natural disasters or exceptional occurrences – Restrictive interpretation
(Art. 107(2)(b) TFEU)
(see paragraphs 15-17)
State aid – Prohibition – Exceptions – Aid compatible with the internal market – Aid to make good the damage caused by natural disasters or exceptional occurrences – Subsidy in favour of an airline in order to compensate that airline in the context of the COVID-19 pandemic – Assessment in the light of Article 107(2)(b) TFEU – Criteria
(Art. 107(2)(b) TFEU)
(see paragraphs 18-36)
State aid – Prohibition – Exceptions – Aid compatible with the internal market – Aid to make good the damage caused by natural disasters or exceptional occurrences – Assessment – Aid measure which does not make good all the damage caused by the exceptional occurrence – Included
(Art. 107(2)(b) TFEU)
(see paragraphs 37-44)
State aid – Prohibition – Exceptions – Aid capable of being regarded as compatible with the internal market – Aid for rescuing an undertaking in difficulty – Assessment in the light of Article 107(3)(c) TFEU and the Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty – Criteria – Undertaking in difficulty – Company in difficulty not belonging to a group – Undertaking eligible for aid under the Guidelines
(Art. 107(3)(c) TFEU; Commission Notice 2014/C 249/01, point 22)
(see paragraphs 55-59)
State aid – Prohibition – Exceptions – Aid capable of being regarded as compatible with the internal market – Aid for rescuing an undertaking in difficulty – Assessment in the light of Article 107(3)(c) TFEU and the Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty – Criteria – Pursuit of an objective of common interest – Measure that aims to prevent social hardship or address a market failure – Risk of disruption to an important service which is hard to replicate in the event of the failure of the beneficiary of the aid
(Art. 107(3)(c) TFEU; Commission Notice 2014/C 249/01, points 43 and 44)
(see paragraphs 63-71, 82-85, 91, 94, 95)
State aid – Commission decision – Assessment of the legality by reference to the information available at the time of adoption of the decision – Obligation of the Commission to search for all information connected with the case and in the public domain – None
(Art. 107(1) TFEU)
(see paragraphs 146-148)
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 180, 181)
State aid – Commission decision not to raise objections in respect of a national measure – Obligation to state reasons – Infringement – None
(Arts 107(2)(b) and (3)(c) and 296 TFEU)
(see paragraphs 196-208)
Résumé
The action against the Commission decision approving the aid from Romania to the airline Blue Air in the context of the COVID-19 pandemic is dismissed in its entirety
On 18 August 2020, Romania notified the European Commission of an aid measure in favour of the airline Blue Air Aviation S.A. (‘Blue Air’) in the form of a State-guaranteed loan in the amount of approximately EUR 62130000 with subsidised interest rates.
The notified measure included two separate aid measures granted on two different legal bases, each covering a defined aid amount. The first aid measure consisted of a loan in the amount of EUR 28290000 to make good the damage suffered directly by Blue Air due to the cancellation or rescheduling of its flights following the imposition of travel restrictions linked to the COVID-19 pandemic in the period from 16 March 2020 to 30 June 2020 (‘the compensation measure’). The second aid measure concerned a loan in the amount of EUR 33840000 to partially cover Blue Air’s urgent liquidity needs resulting from operating losses recorded as a result of the pandemic (‘the rescue aid’).
Without initiating the formal investigation procedure provided for in Article 108(2) TFEU, the Commission found, by decision of 20 August 2020, (
1
) that the notified measure constituted State aid, both aspects of which were compatible with the internal market. Accordingly, the Commission declared the compensation measure compatible with the internal market within the meaning of Article 107(2)(b) TFEU. (
2
) The rescue aid was, in turn, declared compatible under Article 107(3)(c) TFEU, (
3
) read in conjunction with the Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty (‘the Guidelines’). (
4
)
The airline Wizz Air Hungary Zrt. brought an action for annulment against that decision, which is dismissed by the General Court (Tenth Chamber, Extended Composition). In its judgment, the Court confirms the Commission’s analysis that the notified measure is compatible with the internal market.
Findings of the Court
The Court rejects, first, the plea for annulment alleging incorrect application of Article 107(2)(b) TFEU. In that regard, the applicant complained, inter alia, that the Commission had erred in its assessment of the damage suffered by Blue Air as a result of the travel restrictions imposed in the context of the COVID-19 pandemic.
On that point, the Court recalls that only economic disadvantages directly caused by natural disasters or exceptional occurrences may be compensated under Article 107(2)(b) TFEU. It follows that aid likely to exceed the losses incurred by its beneficiaries does not fall within the scope of Article 107(2)(b) TFEU. Moreover, the Court also points out that the occurrence giving rise to the damage, as defined in the contested decision, must be the determining cause of the damage which the aid is intended to remedy and must be directly responsible for causing it.
In order to be able to declare the compensation measure compatible with the internal market under Article 107(2)(b) TFEU, it was therefore incumbent on the Commission to consider with particular care whether the travel restrictions imposed amid the COVID-19 pandemic actually represented the decisive cause of the damage that that measure was intended to compensate for or whether, on the contrary, part of that damage was due to Blue Air’s pre-existing difficulties.
In the light of those clarifications, the Court rejects, in particular, the applicant’s argument that, by not excluding Blue Air’s losses resulting from pre-existing difficulties, the Commission overestimated the damage suffered as a result of the COVID-19 pandemic. In that regard, the Court notes that the Commission compared Blue Air’s actual financial situation with a counterfactual scenario that would have occurred in the absence of the travel restrictions, based on the projected revenues and costs provided for in the 2020 budget for the period from 16 March to 30 June 2020. For the purposes of that counterfactual scenario, the Commission had taken into account Blue Air’s pre-existing difficulties prior to the COVID-19 pandemic. As these difficulties were also reflected in Blue Air’s actual results and were therefore included in both scenarios that the Commission compared, the Court finds that their impact was neutralised in the calculation of the damages suffered by Blue Air as a result of the travel restrictions imposed in the context of the COVID-19 pandemic.
Second, the Court rejected the plea for annulment alleging misapplication of Article 107(3)(c) TFEU, read in the light of the Guidelines. In that context, the applicant argued, in particular, that the Commission had erred in stating that the rescue aid pursued an objective of common interest within the meaning of point 43 of the Guidelines.
The Court notes in that context that it is clear from point 43 of the Guidelines that, in order to be declared compatible with the internal market on the basis of the Guidelines, the notified aid must pursue an objective of common interest, in that its purpose is to avoid social hardship or to address a market failure. This is confirmed by point 44 of the Guidelines, according to which Member States must demonstrate that the failure of the beneficiary would be likely to lead to serious social hardship or severe market failure, in particular by proving that there is a risk of disruption to an important service which is hard to replicate and where it would be difficult for a competitor to take the place of the beneficiary.
With regard to the importance of the service provided by Blue Air, it is apparent from the Commission’s decision that the airline ensured the connectivity of Romania by serving domestic and international air routes, while targeting two specific categories of passengers whose travel depended heavily on low-cost air routes, namely small local entrepreneurs and the Romanian community established outside the country. In the Commission’s view, Blue Air’s air services were, moreover, complicated to replicate, as other low-cost airlines had little or no presence on the majority of Blue Air’s routes and Blue Air therefore occupied a niche that was not exploited by other low-cost airlines in the Romanian market.
Since none of the arguments put forward by the applicant is capable of calling those findings into question, the Court concludes that the Commission was right to find that, in the event of Blue Air’s exit from the market, there would have been a specific risk of disruption to certain passenger air transport services, which were considered to be important and complicated to replicate in the particular circumstances of the case, so that the notified aid pursued an objective of common interest.
As the other pleas raised by the applicant also proved to be unfounded, the Court dismisses the action in its entirety.
(
1
)	Commission Decision C(2020) 5830 final of 20 August 2020 on State aid SA.57026 (2020/N) – Romania – COVID-19: Aid to Blue Air.
(
2
)	In accordance with that provision, aid to make good the damage caused by natural disasters or exceptional occurrences is to be compatible with the internal market.
(
3
)	Under that provision, aid to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest, may be considered to be compatible with the internal market.
(
4
)	Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty (OJ 2014 C 249, p. 1).