Ryanair fails in EU court challenge to €10bn Spanish Covid solvency scheme

Ryanair fails in EU court challenge to €10bn Spanish Covid solvency scheme

Ryanair has lost an EU court challenge against the European Commission’s approval of a €10 billion solvency support fund launched by the Spanish government in response to the Covid-19 pandemic.

Spain notified the Commission in July 2020, at the height of the pandemic, of the aid scheme to set up a solvency support fund. The beneficiaries were (non-financial) strategic Spanish undertakings experiencing temporary difficulties as a result of the pandemic.

The aid scheme provided for the adoption of various recapitalisation measures. It sought to remedy the serious disturbance in the Spanish economy, taken as a whole, in its diversity and with a view to sustainable economic development.

The scheme’s budget, financed by the State, was fixed at €10 billion until 30 June 2021.

By decision of 31 July 2020, the Commission declared the notified aid scheme compatible with the internal market.

Irish airline Ryanair brought an action before the General Court of the European Union against the Commission’s decision, which was dismissed in May 2021.

Ryanair subsequently appealed to the Court of Justice, which yesterday dismissed the appeal.

In its ruling, the Court of Justice confirmed the General Court’s analysis that the aid scheme at issue did not breach the principle of non-discrimination on grounds of nationality and that it was proportionate.

EU law allows for differences in treatment between undertakings in the case of aid intended to remedy a serious disturbance in the economy of a member state.

That type of aid has restrictive effects which are also accepted. Ryanair failed to demonstrate that the Spanish aid scheme produced restrictive effects which went beyond those inherent in that type of aid and that the aid scheme therefore constituted an obstacle to the freedom to provide services and the freedom of establishment.

According to the Court of Justice, the General Court correctly held that the Commission was not required to weigh the beneficial effects of the aid scheme at issue against its adverse effects on trading conditions between member states and the maintenance of undistorted competition.

The exceptional nature and the particular weight of the objectives pursued by that aid scheme permit the inference that a fair balance was struck between its beneficial effects and its adverse effects on the internal market, with the result that it is in the common interest of the EU.

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