The General Court ("GC") partially annulled a Commission decision ordering Ireland to recover alleged aid to beneficiary airlines including Ryanair and Aer Lingus of EUR 8.00 per passenger per short-distance flight. In two judgments of 5 February 2015, the GC ruled that the Commission erred in determining the amount of the State aid to be recovered (T-473/12 and T-500/12).
If the Commission establishes that a Member State has granted State aid incompatible with the internal market, it will order recovery in order to restore competitive market conditions. According to settled case-law, it is sufficient for the Commission to include in its recovery decision information enabling the recipient of the aid to work out the amount to be paid back without much difficulty. However, if the Commission decides to order the recovery of a specific amount, it must assess as accurately as possible the actual value of the benefit received.
The factual background to the cases is the air travel tax ("ATT") imposed on airlines in Ireland since 30 March 2009. Until 1 March 2011, different rates applied for short-distance flights (less than 300 km) and long-distance flights. The Commission considered the discounted ATT of EUR 2.00 for short-distance flights to be State aid incompatible with the internal market as it benefited domestic flights in comparison to cross border flights for which an ATT of EUR 10.00 was applicable. The Commission furthermore ordered that the amount of the aid was equal to the difference between the ATT for short-distance flights and the ATT for long-distance flights.
The beneficiary airlines appealed the decision to the GC. They did not dispute that the reduced ATT constituted State aid, but they contested the extent of the advantage, and therefore, the amount to be recovered.
The GC sided with the airlines and ruled that the advantage for the airlines does not necessarily consists of the difference between the two rates. It considered that the economic advantages of the reduced ATT could have been passed on in full or in part to the passengers of the beneficiary airlines. Only if the airlines had systematically increased the prices of the short-haul flights with EUR 8.00, could the Commission have concluded that the advantage enjoyed by the airlines was always EUR 8.00. The Commission had not established such facts. Moreover, the GC ruled that the Commission failed to show that the recovery of EUR 8.00 per passenger was necessary in order to ensure the re-establishment of the status quo ante, since the airlines could not retroactively recover that amount from their customers. Therefore, the recovery would actually be liable to lead to over-recovery, and therefore create an additional distortion of competition. The GC thus annulled the Commission decision.