The European Commission has made mistakes in assessing state aid to airlines Lufthansa and SAS. That is what the European Court of Justice says. A blow to the Commission, a win for Ryanair.
The European Commission should never have approved that the German government gave 6 billion euros in corona support to airline Lufthansa and its subsidiaries in 2020. Nor should the Danish and Swedish governments have supported airline SAS with almost 1.1 billion euros.
This follows from two judgments published on Wednesday by the European Court of Justice, the second highest court in the EU. The General Court has annulled the approval of the corona package. Lufthansa has since repaid the aid.
The Court’s rulings are a victory for the plaintiffs, Irish low-cost carrier Ryanair and, in the case of Lufthansa, German competitor Condor. Ryanair has been battling lawsuits against billion-dollar airline aid for several years now.
Earlier, the European judges ruled that the Commission had to substantiate better why the Netherlands should be allowed to give billions to KLM and why holding company Air France-KLM received support twice, from the Netherlands and from France.
Touched by corona
The German group – which includes not only Lufthansa but also Brussels Airlines, Austrian Airlines, Swiss Air and Edelweiss Air – received the 6 billion euros in three parts. The German government bought shares for 300 million euros and took two ‘silent participations’, of 4.7 billion and 1 billion euros. SAS received support from the Danish (583 million euros) and the Swedish state (486 million) for a recapitalization.
This support required the approval of the European Commission. He had to assess whether the financial aid would be at the expense of the free market and fair competition. The General Court now argues that the Commission committed several errors of assessment.
Curb power
For example, the Commission wrongly believed that Lufthansa was unable to find ’emergency money’ on the financial markets. Moreover, the Commission has not required Germany and Lufthansa to agree to pay off the aid as quickly as possible. The latter is also the main objection to the Danish and Swedish support to SAS.
The Commission also failed to appreciate that Lufthansa has great market power at Frankfurt and other (German) airports. If that is the case and the state aid exceeds EUR 250 million, additional measures are required to curb that power. The European Commission can appeal against the judgment of the General Court.
2023-05-10 19:44:00
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