62016TJ0165
JUDGMENT OF THE GENERAL COURT (Sixth Chamber, Extended Composition)
13 December 2018 (
*1
)
(State aid — Agreements concluded with the airline Ryanair and its subsidiary Airport Marketing Services — Airport services — Marketing services — Decision declaring the aid to be incompatible with the internal market and ordering its recovery — Notion of State aid — Advantage — Private investor test — Recovery — Article 41 of the Charter of Fundamental Rights of the European Union — Access to the file — Right to be heard)
In Case T‑165/16,
Ryanair DAC, formerly Ryanair Ltd, established in Dublin (Ireland),
Airport Marketing Services Ltd, established in Dublin,
represented by G. Berrisch, E. Vahida, I.-G. Metaxas-Maranghidis, lawyers, and B. Byrne, Solicitor,
applicants,
v
European Commission, represented by L. Flynn, L. Armati, and S. Noë, acting as Agents,
defendant,
supported by
Council of the European Union, represented by S. Boelaert and S. Petrova, acting as Agents,
intervener,
ACTION under Article 263 TFEU for the partial annulment of Commission Decision (EU) 2016/287 of 15 October 2014 on State aid SA.26500 — 2012/C (ex 2011/NN, ex CP 227/2008) implemented by Germany for Flugplatz Altenburg-Nobitz GmbH and Ryanair Ltd (OJ 2016 L 59, p. 22),
THE GENERAL COURT (Sixth Chamber, Extended Composition),
composed of G. Berardis, President, S. Papasavvas, D. Spielmann (Rapporteur), Z. Csehi and O. Spineanu-Matei, Judges,
Registrar: P. Cullen, Administrator,
having regard to the written part of the procedure and further to the hearing on 4 July 2018,
gives the following
Judgment (
1
)
Background to the dispute
Measures at issue
1
The first applicant, Ryanair DAC, formerly Ryanair Ltd (‘Ryanair’), is an airline established in Ireland which operates more than 1800 flights daily connecting 200 destinations in 31 countries across Europe and North Africa. The second applicant, Airport Marketing Services Ltd (‘AMS’), is a subsidiary of Ryanair which provides marketing strategy solutions. Its activity consists primarily of selling advertising space on Ryanair’s website.
2
Altenburg-Nobitz airport is located in the south of Land Thüringen, Germany. That airport is owned and operated by the company Flugplatz Altenburg-Nobitz GmbH (‘AOC’), whose shareholders are public authorities or fully publicly owned.
3
Ryanair operated daily flights from that airport to London Stansted (United Kingdom) between 2003 and 2011. It also began operating a route to Barcelona-Girona airport (Spain) in 2007. Similarly, it launched a route to Edinburgh airport (United Kingdom) in 2009 and one to Alicante airport (Spain) in 2010.
4
On 3 March 2003, AOC and Ryanair signed an airport services agreement for a duration of 10 years under which Ryanair undertook to operate daily scheduled flights to London Stansted airport. Ryanair was required to pay a fee for the provision of airport services, in accordance with Altenburg-Nobitz airport’s schedule of airport charges in force at the time of their performance, as well as a sum comprising passenger security charges and State taxes. The applicants maintained that the airport services agreement served as a basis for an expansion of the parties’ cooperation to four routes (to London, Girona, Edinburgh and Alicante).
5
Furthermore, AOC concluded three marketing services agreements, the first with Ryanair and the other two with AMS.
6
Under the first marketing services agreement, signed on 7 April 2003 for a duration of 10 years, Ryanair was required to carry out marketing activities to promote the area of Altenburg-Nobitz. AOC was required in return to pay two charges. First, it paid a ‘success fee’ per departing passenger, resulting in a net charge to be paid by Ryanair per passenger in respect of landing, local air traffic control, lighting, parking (not including overnight parking), ramp and passenger handling, infrastructure and airport taxes per passenger. AOC calculated the net charge per passenger according to the passenger load sheets and presented the calculation to Ryanair at the end of each week. Ryanair calculated the success fee and presented the calculation to AOC within 30 days of the end of each month. The calculation was based upon the services of the preceding calendar month. Ryanair could deduct its success fee from AOC’s monthly bills for landing fees. Second, AOC paid a ‘success fee’, based on a certain percentage of any increase in fees at the airport, consisting in: 100% of any increase in the security tax levied by the government up to a maximum of 10% over the existing published rate in a five-year period, and 100% of any increase in published fees or additional fees, charges or taxes introduced in the published charges of the airport up to a maximum of 10% of the existing total published fee paid by Ryanair, in a five-year period.
7
Under the second marketing services agreement, signed on 28 August 2008 for an initial duration of two years, AMS was required to provide marketing services consisting of advertisements on Ryanair’s website, against payment by AOC of [confidential] (
2
) in 2008 and [confidential] in 2009. The agreement was linked to Ryanair’s commitment to operate a route between Altenburg-Nobitz airport and London Stansted airport in the summer (daily) and in the winter (four times a week) and a route to Girona (three times a week only in the summer).
8
Under the third marketing services agreement, signed on 25 January 2010 for an initial duration of one year, AMS again undertook to provide marketing services consisting in advertisements on Ryanair’s website, against payment by AOC of [confidential]. The agreement was related to Ryanair’s commitment to offer — as from summer 2010 and for the IATA summer season only starting on 28 March 2010 and ending on 30 October 2010 — routes between Altenburg-Nobitz airport and London Stansted airport (seven times a week), Girona airport (three times a week) and Alicante airport (twice a week).
9
The Barcelona-Girona, Edinburgh and Alicante airport routes were all subsequently withdrawn, as was the London Stansted airport route, on 31 March 2011, with the result that, as of that date, Ryanair completely ceased to operate out of Altenburg-Nobitz airport.
[omissis]
Procedure and forms of order sought
25
By application lodged at the Court Registry on 18 April 2016, the applicants brought the present action.
26
By separate document lodged at the Court Registry on 30 May 2016, the applicants applied for the adoption of measures of organisation of procedure.
27
By document lodged on 20 June 2016, the Commission submitted its observations on that application within the prescribed period.
28
By document lodged on 22 June 2016, the Council of the European Union applied for leave to intervene in the present case in support of the form of order sought by the Commission. By decision of 6 September 2016, the President of the Sixth Chamber of the General Court granted that application.
29
By decision of 15 March 2018, the Court decided to refer the case to the Sixth Chamber, Extended Composition.
30
Acting upon a report of the Judge-Rapporteur, the Court decided to open the oral part of the procedure and, by way of measures of organisation of procedure under Article 88 of its Rules of Procedure, requested the parties to answer certain questions.
31
The parties presented oral argument at the hearing on 4 July 2018.
32
The applicants claim that the Court should:
–
annul Article 1(4) and Articles 2 and 4 of the contested decision;
–
order the Commission to pay the costs.
33
The Commission, supported by the Council, contends that the Court should:
–
dismiss the action;
–
order the applicants to pay the costs.
Law
[omissis]
Third plea in law, alleging infringement of Article 107(1) TFEU as a result of the Commission’s failure to establish the existence of an advantage
[omissis]
The fourth part, alleging that the Commission committed manifest errors of assessment and failed to state reasons in its profitability analysis
[omissis]
– The complaint alleging use of inappropriate assumptions in the calculation of profitability
[omissis]
247
In the first place, as regards the argument that the Commission examined the profitability of the agreements in question using a time horizon limited to seven months, it must be recalled, first of all, that that argument must be examined directly in the light of the market economy operator principle as reflected in Article 107(1) TFEU and not in the light of the 2014 Guidelines.
248
Next, is apparent from the case-law (see paragraph 106 above) that it is necessary to examine whether the Commission was entitled to find, in the context of its incremental profitability analysis, that a market economy operator acting in place of the manager of Altenburg-Nobitz airport would have assessed the value in concluding the agreement of 25 January 2010, in combination with the airport services agreement of 3 March 2003 and the marketing services agreement of 7 April 2003, on the basis of a time horizon limited to seven months.
249
The conduct of a prudent operator in a market economy is guided by prospects of profitability in the longer term (judgment of 21 March 1991, Italy v Commission, C‑305/89, EU:C:1991:142, paragraph 20). Such an operator wishing to maximise profits is prepared to take calculated risks in determining the appropriate return to be expected for its investment.
250
In the present case, however, it is common ground that the three agreements in question, and in particular the marketing services agreement of 25 January 2010 were concluded for a fixed period. Thus, the Commission found in recital 259 of the contested decision that the latter agreement started on 25 January 2010 and ended one year after the start of the first flight connection, which was supposed to start with the 2010 summer season. Given that Ryanair’s air services extended solely over a seven-month period, namely the IATA summer season in 2010, the Commission carried out its profitability analysis only over that period.
251
It is also common ground that, as the Commission maintained, without being contradicted by the applicants, before the conclusion of the agreements in question, the operator of Altenburg-Nobitz airport had not prepared a business plan in respect of the operation of routes to London, Girona and Alicante airports.
252
In that context, the Commission was entitled to consider, without erring, that a market economy operator would assess the incremental profitability of the combination of the three agreements in question in relation to the costs and revenues during the operating period of the air route in question, namely seven months.
253
The applicants’ argument that the Commission was wrong to find in recital 259 of the contested decision that the marketing services agreement of 25 January 2010 ended one year after the launch of the first Ryanair route and not after the provision of AMS’s marketing services is ineffective. The applicants have not established that such an error, regrettable as it may be, had a tangible effect on the calculation of incremental profitability expected from the marketing services agreement of 25 January 2010. As the Commission explained at the hearing in reply to a question put by the Court, it appears that, even if the agreement had been concluded for an initial duration of one year from the introduction of the first marketing service by AMS, the incremental revenues from aeronautical and non-aeronautical activities and the incremental operating costs expected from the operation of Ryanair’s routes to Altenburg-Nobitz airport did not change. Likewise, it has not been established that the time lag for invoicing by AMS to AOC of the price of the marketing services had any effect on the amount payable by AOC under the marketing services agreement, which formed part of the costs to be taken into account in the incremental profitability analysis of the marketing services agreement of 25 January 2010.
254
The fact that the Commission took into account the actual duration of the operation of Ryanair’s route, and not the duration of the agreement of 25 January 2010, that is to say one year, does not affect the validity of the incremental profitability analysis carried out in the contested decision. The Commission was entitled to assume, without committing any manifest error of assessment, that a market economy operator would only count on the incremental revenues during the period in which Ryanair had undertaken to operate the route in question. In that regard, it must be recalled that the applicants have not shown that the Commission had committed a manifest error of assessment by assuming that the marketing services provided by AMS were not likely to have long-term effects on the behaviour of visitors to Ryanair’s website (see paragraphs 184 to 188 above).
255
Finally, the argument that the Commission should have analysed the profitability of the marketing services agreement of 25 January 2010 over the period from the date of the start of that agreement until the date of expiry of the airport services agreement of 3 March 2003 cannot succeed.
256
While acknowledging that the airport services agreement of 3 March 2003 and the marketing services agreement of 7 April 2003 continued to apply after the expiry of the marketing services agreement of 25 January 2010, it must be held that, after the entry into force of those 2003 agreements, which provided inter alia for daily scheduled flights to London Stansted airport throughout the year (recital 47 of the contested decision), the parties, reviewed, or added to, the terms of their subsequent collaboration both in terms of undertakings to operate flights and remuneration for marketing services. Thus, by the marketing services agreement of 28 August 2008, Ryanair undertook to operate a route to that airport on a daily basis in summer and four times a week in winter, as well as a route to Girona airport, in summer only, three times a week (recital 57 of the contested decision), whereas, by the marketing services agreement of 25 January 2010, Ryanair undertook to operate routes to London Stansted airport (seven times a week), Girona airport (three times a week) and Alicante airport (twice a week) during the IATA summer season. Likewise, by the marketing services agreement of 28 August 2008 and the marketing services agreement of 25 January 2010, AOC undertook to pay the amount of [confidential] (see paragraph 7 above) and [confidential] (see paragraph 8 above) for marketing services from AMS. Those payments were added to the ‘success fee’ stipulated in the marketing services agreement of 7 April 2003 as remuneration for the marketing services provided by Ryanair.
257
Consequently, it is reasonable to assume that a market economy operator, acting in place of AOC, would have expected at the time of concluding the agreement of 25 January 2010 that, at the time of expiry of that agreement, the applicants would not simply agree to go back to the terms of the airport services agreement of 3 March 2003 and the marketing services agreement of 7 April 2003, but would also insist on renegotiating the undertaking to operate flights from Altenburg-Nobitz airport and on new payments for marketing services.
258
Moreover, the fact that Ryanair was not prepared simply to go back to the initial terms of the 2003 agreements without requiring new payments is confirmed ex post by the fact that, first, Ryanair operated a single route during the IATA 2010/2011 winter season, starting on 30 October 2010 and ending on 28 March 2011, to and from London Stansted airport, with the financial support however of private regional undertakings (recital 32(d) and recital 64 of the contested decision), and by the fact that, second, after the shareholders and management of AOC refused to pay the sum of EUR 420000 required by Ryanair as marketing charges for the 2011 summer schedule, Ryanair ended its activities at Altenburg-Nobitz airport in March 2011.
259
In those circumstances, it has not been established that it would have been more appropriate for the Commission to examine the expected profitability of the marketing services agreement of 25 January 2010 over the period from the contractual start date of that agreement until the contractual end date of the airport services agreement of 3 March 2003, to which it was linked, that is to say in April 2013, and thus extend the time horizon from 2010 to 2013 instead of the seven months used by the Commission. In that regard, it must be held that, it is true that the note of 14 April 2016 produced by the applicants states that the conclusion of the marketing services agreement of 25 January 2010, in combination with the two other agreements, would have been profitable if the profitability analysis had been carried out over the period from January 2010 to April 2013. However, as the Commission correctly maintained, the analysis in the note of 14 April 2016 does not include the new payments expected for marketing services.
260
In the light of the foregoing, the applicants’ complaint concerning the time horizon of the profitability analysis must be rejected.
261
In the second place, as regards the applicants’ argument concerning the load factor measuring the use of an aircraft’s capacity, it must be held that, in order to calculate the expected number of passengers by virtue of the marketing services agreement of 25 January 2010, the Commission used, in recital 264 of the contested decision, a factor of 80% in an aircraft with 189 seats corresponding to the capacity referred to in that agreement.
262
The Commission explained before the Court that a load factor of 80% was a reasonable hypothesis. In that regard, the Commission refers to Ryanair’s 2009 annual report, which states, first, that flights operated by Ryanair on its network had an average load factor of 81% and, second, that the load factors on new routes such as the new route to Alicante airport provided for in the marketing services agreement of 25 January 2010 were generally lower.
263
Moreover, in reply to a question put by the Court, the Commission explained that the load factor of 80% that it applied was a more optimistic scenario than that adopted by Altenburg-Nobitz airport concerning the revenues expected from Ryanair’s activities. In that regard, the Commission produced the table that the German authorities provided during the administrative procedure which included several scenarios concerning load factors of 70% to 90%. That table provided that, even with a load factor of 70%, a positive result could be obtained with Ryanair’s activity (see recital 99 of the contested decision).
264
It follows that, in order to determine the load factor applied in the contested decision, the Commission relied on objective factors which, moreover, sufficiently justified that divergence from the 85% load factor applied in other State aid cases concerning agreements concluded by the applicants with other airports. Since the load factor calculation methods applied in those other cases and the contested decision were different, it must be held that the Commission’s approach cannot be regarded as inconsistent.
265
Accordingly, the applicants’ complaint concerning a load factor of 80% must be rejected.
266
In the third place, as regards the applicants’ argument concerning the failure to take into account the network externalities in calculating the non-aeronautical revenues for 2010, it must be noted that, in the absence of relevant ex ante information, the Commission proceeded from the assumption that, in January 2010, when the marketing services agreement was signed, Altenburg-Nobitz airport took into consideration, in the calculation of the non-aeronautical revenues, its actual revenues from the preceding years, which had risen significantly in comparison with 2006 and 2007. Thus, the Commission assumed that in 2010 Altenburg-Nobitz airport had based its forecasts of non-aeronautical revenues on the two preceding years, with an average amount of EUR 1.80 to 2.30 per passenger for 2008 and 2009 (recital 263(b) of the contested decision).
267
It must be held that that calculation of non-aeronautical revenues for 2010 is not vitiated by any manifest error of assessment on the part of the Commission.
268
As the Commission explained, it follows from the evidence in the case file that the applicants had provided very similar services in previous years under the agreement of 28 August 2008, in combination with the airport services agreement of 3 March 2003 and the marketing services agreement of 7 April 2003, with the result that there was no reason for a market economy operator to suppose that there would be a sudden increase in non-aeronautical revenues per passenger on account of network externalities.
269
The complaint alleging use of inappropriate assumptions in the calculation of profitability must therefore be rejected.
[omissis]
On those grounds,
THE GENERAL COURT (Sixth Chamber, Extended Composition)
hereby:
1.
Dismisses the action;
2.
Orders Ryanair DAC and Airport Marketing Services Ltd to bear their own costs and to pay those incurred by the European Commission;
3.
Orders the Council of the European Union to bear its own costs.
Berardis
Papasavvas
Spielmann
Csehi
Spineanu-Matei
Delivered in open court in Luxembourg on 13 December 2018.
E. Coulon
Registrar
G. Berardis
President
(
*1
)	Language of the case: English.
(
1
)	Only the paragraphs of the present judgment which the Court considers it appropriate to publish are reproduced here.
(
2
)	Confidential data omitted.