On July 5, 2016 on the website of the Court of Justice of the European Union (CJEU) the opinion of Advocate General Mengozzi in the joined Cases C‑164/15 P (European Commission versus Aer Lingus) and C-165/15 P (European Commission versus Ryanair) (ECLI:EU:C:2016:515) was published.
In the present joined cases, the Commission is seeking the partial annulment of the judgments handed down by the General Court on 5 February 2015 in Cases T‑473/12 Aer Lingus v Commission (EU:T:2015:78: ‘the Aer Lingus judgment’) and T‑500/12 Ryanair v Commission (EU:T:2015:73: ‘the Ryanair judgment’) (when both judgments are referred to: ‘the judgments under appeal’). The appeals raise the question of whether, and to what extent, the Commission is required to take into account, when calculating the amount of aid to be recovered, the fact that the beneficiaries passed on to their customers the economic advantage which they had obtained.
Aer Lingus and Ryanair (when both are referred to: ‘the appellants’) have each lodged a cross-appeal, raising various issues pertaining to the classification of a State measure as aid, particularly where the measure is likely at the same time to constitute a restriction on a fundamental freedom.
Background to the disputes
· As set out in the judgments under appeal, the background to the disputes may be summarised as follows.
· As of 30 March 2009, Ireland introduced an excise duty, known as the air travel tax (‘the ATT’), payable by every passenger embarking on an aircraft departing from an Irish airport and collected directly from the airlines. At the time of its introduction, the ATT was calculated on the basis of the distance between the departure airport and the arrival airport, and was set at the rate of EUR 2 in the case of a flight to an airport located no more than 300 km from Dublin airport and EUR 10 in all other cases.
· Ryanair lodged two separate complaints with the Commission regarding the ATT, one alleging a breach of the rules on State aid and the other based on Article 56 of the Treaty on the Functioning of the European Union (‘the TFEU’) and on Regulation No 1008/2008. In response to the second complaint, the Commission initiated an investigation regarding possible infringement of the provisions on freedom to provide services and, on 18 March 2010, sent the Irish authorities a letter of formal notice (‘the letter of formal notice addressed to the Irish authorities’). Ireland then amended, as of 1 March 2011, the rules on calculating the ATT and introduced a single rate of EUR 3, applicable regardless of the distance travelled. The Commission then concluded its investigation.
· On 13 July 2011, the Commission opened a formal investigation procedure, pursuant to Article 108(2) TFEU, in respect of the lower rate of the ATT applied between 30 March 2009 and 1 March 2011. On 25 July 2011, the Commission adopted Decision 2013/199/EU concerning State aid SA.29064 (11/C, ex 11/NN) — Differentiated air travel rates implemented by Ireland (‘the contested decision’). According to Article 1 of the decision, the aid in the form of a lower travel tax applicable to all flights operated by aircraft capable of carrying more than 20 passengers and not used for State or military purposes, departing from an airport handling more than 10 000 passengers a year to a destination located no more than 300 km from Dublin airport between 30 March 2009 and 1 March 2011, unlawfully put into effect by Ireland in breach of Article 108(3) TFEU was incompatible with the internal market. Article 4(1) required Ireland to recover the aid. Recital 70 in the preamble set the amount of the aid as the difference between the lower rate of the ATT and the standard rate of EUR 10 (that is to say, EUR 8 per passenger) and listed the appellants among the beneficiaries.
Procedure before the General Court and the judgments under appeal
· On 1 November 2012 and 15 November 2012 respectively, Aer Lingus and Ryanair brought actions before the General Court seeking to have the contested decision annulled. Each appellant raised five pleas in law in support of its action.
· In the judgments under appeal, the General Court examined and rejected, in each of the applications, the fifth plea in law, alleging a breach of the obligation to state reasons, and Ryanair’s fourth plea in law, alleging a failure on the part of the Commission to give notification of the decision to recover the aid. The cross-appeals do not relate to those parts of the judgments under appeal. The General Court then considered and rejected, in each of the actions, the first plea in law, by which the appellants, in essence, disputed the classification of the reduced rate of the ATT as aid. Those parts of the judgments under appeal form the subject matter of the cross-appeals. Lastly, the General Court examined and partially upheld the third and fourth pleas of Aer Lingus and the second and third pleas of Ryanair, which related to the methods of calculating the amount of aid. The appeals lodged by the Commission concern those parts of the judgments under appeal.
· By point 1 of the operative part of the judgments under appeal, the General Court annulled Article 4 of the contested decision ‘in so far as it orders the recovery of the aid from the beneficiaries for an amount that is set at EUR 8 per passenger in recital 70 of that decision’. The judgments under appeal dismiss the actions as to the remainder (point 2 of the operative part of the judgments) and order the Commission to pay, in addition to its own costs, half of the costs incurred by Aer Lingus and Ryanair (point 3 of the operative part of the judgments).
Conclusion
The Advocate General suggests that the Court dismiss the cross-appeals, uphold the main appeals, set aside the judgments under appeal and refer the cases back to the General Court. If, on setting aside the judgments under appeal, the Court decides to give final judgment itself in Cases T‑473/12 and T‑500/12, I propose that both actions be dismissed in their entirety and that Aer Lingus and Ryanair be ordered to pay the costs of the present proceedings and of the proceedings before the General Court.
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