State aid: Commission refers France to Court for failure to recover incompatible aid from airlines

The European Commission has referred France to the European Court of Justice for failing to recover incompatible aid received by Ryanair and its subsidiary Airport Marketing Services (AMS) for using Pau, Nîmes and Angoulême airports, as well as Transavia for using Pau airport.

The Commission decisions of 23 July 2014 (see also MEMO) required France to recover close to €10 million in total of incompatible state aid from the airlines. This is because through various contractual and marketing arrangements with the airports, the airlines paid less than the additional costs linked to their presence in the airport. The airlines had therefore benefited from an undue economic advantage, which has to be recovered to remedy the resulting distortion of competition.

On the basis of the information currently at available to the Commission, France has failed to fully recover the incompatible aid within the required period of four months. The French authorities have sent out the recovery orders but have not been able to execute them under national law because they are under appeal by the beneficiaries. Under a provision of French law recovery orders are automatically suspended in case of appeal. However, this goes against established European case law on the implementation of recovery decisions by member states, which prevents national courts from applying such provisions when deciding on appeals against recovery orders.

In order to ensure its state aid decisions are fully implemented the Commission has therefore decided to refer France to the European Court of Justice.

Background

Ryanair has also appealed two out of the three Commission's decisions (concerning Pau and Angoulême) before the EU General Court. These appeals also do not have a suspensory effect under EU law, meaning that France continues to be under an obligation to recover the incompatible aid.

In particular, the Commission decisions required France to recover €0.87 million for Angoulême (from Ryanair and AMS jointly), €2.8m for Pau (€0.42m from Ryanair, €1.97m from Ryanair and AMS jointly and €0.43m from Transavia) and €6.3 million for Nîmes (from Ryanair and AMS jointly).

Member states have to recover state aid that has been found incompatible by the Commission, within the deadline set in the Commission decision. This is very important because delays in the recovery of unlawful subsidies maintain the distortion of competition created by the aid. That is why Article 14 of Regulation n° 659/99 and the Notice on the implementation of decisions ordering the recovery of unlawful or incompatible aid (also see Press release) provide that Member States should effectively recover the aid from the beneficiary without delay. In particular, according to the Scott case law (C-232/05), any law impeding the effective and immediate implementation of the Commission recovery decision should be left unapplied.

If a member state does not implement a recovery decision, the Commission may refer the matter to the Court of Justice under Article 108(2) of the Treaty on the Functioning of the European Union (TFEU) that allows the Commission to directly refer cases to the Court for violations of EU state aid rules.

If a member state does not comply with the judgment, the Commission may ask the Court to impose penalty payments under Article 260 TFEU.