Ryanair has won a European court case against the EU’s decision to grant Lufthansa billions of euros in state aid to help the German carrier during the pandemic, in a major setback to regulators in Brussels.
The General Court said the European Commission made “several errors”, saying Brussels was wrong to consider that Lufthansa “was unable to obtain financing on the markets for the entirety of its needs”.
EU regulators approved €6bn in state aid to help Lufthansa as the German government sought to acquire a 20 per cent stake in the bloc’s largest airline to prevent its collapse.
At the time, Carsten Spohr, Lufthansa’s chief executive, said the original planned bailout exceeded what the company needed, drawing further scrutiny on regulators.
Under state aid rules companies cannot receive more than the amount necessary to keep trading without skewing competition.
Since then, Lufthansa said it had repaid or cancelled all remaining government support given in aid during the Covid-19 crisis.
The ruling is a setback for EU regulators and not the first time that Brussels has lost a court case relating to government aid to companies.
In July 2020, the General Court, the EU’s second court that makes sure it follows its own rules, quashed an order for Apple to pay back €14.3bn in taxes to Ireland.
“It’s a very hard-hitting ruling against the commission,” said Alec Burnside, a Brussels-based partner at law firm Dechert.
“The commission has had to work at breakneck speed during Covid. They really mobilised to allow member states to do what was necessary to save important players,” he said, noting that state aid rules were applied in haste during the crisis.
Lufthansa said it would examine the ruling and then decide on further action. It said the company had already fully repaid the bailout funds approved by the Commission, as well as about €92mn in interest.
Lufthansa added that the government body that arranged the bailout, the Economic Stabilisation Fund, had sold its shares in Lufthansa for €1bn. “The stabilisation was thus already fully terminated before today’s court ruling,” it said.
Ryanair welcomed the judgment, saying it confirmed “that the commission must act as a guardian of the level playing field in air transport”.
The commission, the executive arm of the EU, said it would “carefully study the judgment and reflect on possible next steps.” It is unclear whether it will appeal against the ruling before the European Court of Justice, the EU’s highest court.
The German economy ministry said it would study the verdict, but since it was directed against the commission, “the economy ministry cannot comment on it, nor assess its impact”.
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