Introduction
Member States are allowed to grant state to compensate undertakings for damage they suffer as a result of a natural disaster or exceptional occurrence. But, it is not always easy or possible to disentangle the damage caused by such an unforeseen event from losses caused by mismanagement or changes of market conditions. The art and science of calculating the cost of damage from a natural disaster or exceptional occurrence is to determine what would have happened in a credible counterfactual situation.
On 29 March 2023, the General Court, in case T‑142/21, Wizz Air Hungary v European Commission, had to determine whether the counterfactual scenario in the Commission’s assessment of aid to Romania’s Blue Air was credible and whether the amount of aid was limited to the minimum necessary.[1] One of the difficulties in this case was that Blue Air also received rescue aid.
Wizz Air Hungary sought the annulment of Commission decision SA.57026 which had found aid in the form of a 100% state guarantee on a loan of EUR 62.1 million with subsidised interest rates was compatible with the internal market.
The aid was granted under two different provisions of Article 107 TFEU, each covering a defined amount:
- damage compensation under Article 107(2)(b) TFEU in the amount of EUR 28.3 for the losses suffered directly by Blue Air as result of disruption to flights caused by covid-19.
- rescue aid under Article 107(3)(c) TFEU in the amount of EUR 33.8 million for a limited period of six months to cover Blue Air’s urgent liquidity needs while it worked out a restructuring plan.
Damage caused by an exceptional occurrence and pre-existing problems
Wizz Air raised several pleas one of which was that the Commission did not assess properly the alleged damage suffered by Blue Air because, allegedly, it failed to take into account the full extent of the airline’s pre-existing problems.
The General Court, first, reiterated the established principle that “(16) aid likely to exceed the losses incurred by its beneficiaries is not covered by Article 107(2)(b) TFEU”
“(18) Moreover, […], the occurrence giving rise to the damage, […], must be the determining cause of the damage which the aid at issue is intended to remedy and must be directly responsible for causing that damage. A direct link will only exist where the damage is the direct consequence of the occurrence in question without being dependent on the interposition of other causes. Accordingly, it is incumbent on the Commission to examine with particular care whether the travel restrictions imposed in the context of the COVID-19 pandemic were really the decisive cause of the damage suffered by the beneficiary of the aid concerned or, on the contrary, some of the damage suffered was due to the beneficiary’s pre-existing difficulties”.
The Court also noted that the Commission had assessed the damage by comparing Blue Air’s actual situation [i.e. with the damage] to a counterfactual situation that would have occurred in the absence of the travel restrictions that caused the damage. The counterfactual situation was based on what the airline had budgeted for the same period before the outbreak of the pandemic.
For this reason, the Court stated that “(20) Blue Air’s pre-existing difficulties prior to the COVID-19 pandemic were reflected in both scenarios.”
The Commission calculated the amount of the damage as the loss of revenue resulting from the restrictions minus avoided costs, in relation to the budgeted results for the same period. Moreover, the estimated net profit in the 2020 budget for the same period was excluded from the amount of damages.
The counterfactual scenario
Then the Court addressed the counter-argument of Wizz Air with respect to the chosen counterfactual scenario. Indeed, in the calculation of damages, the choice of the “reference” period or the “benchmark” period is vital. It has to be as realistic as possible.
“(23) As regards the applicant’s argument that the Commission should have verified whether the 2020 budget was realistic or potentially too optimistic, it should be noted that the Commission based its counterfactual scenario on the revenue and costs foreseen in the 2020 budget for the period from 16 March to 30 June 2020 as the reference values for the calculation of damages, since those values, according to Romania, provided a better approximation of the damages than the actual revenue and costs recorded in the corresponding months of 2019. In that regard, […] that choice is explained by the desire to take two factors into account. First, the transformation of Blue Air’s business model into an entirely low-cost air carrier prevented it from generating revenue from charter flights or from the leasing of aircraft with crew, maintenance and insurance included in 2020, contrary to what had occurred in 2019. Secondly, the delayed delivery of six new Boeing 737‑MAX aircraft forced Blue Air to continue operating six older aircraft, reducing the estimated average available seat capacity by 10% and the utilisation of the existing fleet by almost 10%, also increasing maintenance costs by EUR 25 million compared to 2019. It follows that, by relying on the 2020 budget, the Commission estimated the damage at EUR 28.57 million based on the earnings before interest and taxes (EBIT) for the period from 16 March to 30 June 2020. In so doing, the Commission adopted a conservative approach, which resulted in a lower quantification of damages than would have been obtained by using the actual financial results of the corresponding months of 2019 as a benchmark since these would have led to a higher estimate of damages, valued at EUR 33.51 million on the basis of EBIT.”
“(26) Moreover, as the Commission rightly points out in its defence, the number of passengers actually transported by Blue Air in January and February 2020, that is to say, before the imposition of the travel restrictions, was very close to the estimates in the 2020 budget. This demonstrates that the budgeted revenue for the period from 16 March to 30 June 2020 would also have been realistic in the absence of those restrictions.”
“(29) In addition, it should be noted that, in the present case, even though Blue Air was faced with pre-existing difficulties, the applicant has not identified any specific cost item which, in its view, should have been excluded or treated differently by the Commission on the ground that those costs were caused by those pre-existing difficulties, and not by the travel restrictions imposed during the period from 16 March to 30 June 2020 in the context of the COVID-19 pandemic.”
Avoidable costs
Next the Court addressed the argument of Wizz Air that Blue Air did not try hard enough to reduce its costs when the travel restrictions were in force.
“(32) As regards the applicant’s argument that the Commission failed to ensure that Blue Air had taken the necessary steps to reduce its costs during the period from 16 March to 30 June 2020, so that not only avoided costs but also ‘avoidable’ costs, that is to say, costs which it could have avoided but which it nevertheless incurred, are excluded from the compensation for damage, it should be noted that, in paragraphs 92 and 93 of the contested decision, the Commission explained that the damage to be compensated corresponded to the loss of added value, defined as the difference between, on the one hand, Blue Air’s loss of profit, that is to say, the difference between the turnover it could have expected to achieve during the period from 16 March to 30 June 2020 on the basis of the 2020 budget, in the absence of the travel restrictions and other containment measures related to the COVID-19 pandemic, and the turnover actually achieved during that period, adjusted by Blue Air’s profit margin, and, on the other hand, the avoided costs.”
“(33) In that regard, the Commission defined the avoided costs as being those which Blue Air would have incurred during the period from 16 March to 30 June 2020 if its activities had not been affected by the travel restrictions and containment measures linked to the COVID-19 outbreak, and which it did not have to bear as a result of the cancellation of its operations. The Commission stated, in paragraph 94 of the contested decision, that the avoided costs concerned, for example, fuel costs and personnel costs. It also explained that the avoided costs had to be quantified by comparing the costs foreseen in the 2020 budget with the costs actually incurred by Blue Air during the period from 16 March to 30 June 2020.”
“(35) The applicant still fails to specify in concrete terms what other costs, apart from the avoided costs already taken into account, Blue Air could have avoided and should therefore have been excluded from the assessment of the damage caused to it. In those circumstances, the Court cannot but find that the applicant’s complaint concerning an alleged failure by the Commission to take account of ‘avoidable’ costs is too abstract and is not substantiated by any specific data.”
The impact of damage compensation on competitors
Wizz Air also argued that the Commission failed to take account of the damage suffered by other airlines.
The Court, first, acknowledged that “(39) the applicant is correct in observing that Blue Air is not the only company, nor the only airline, to be affected by the exceptional occurrence at issue.”
“(40) However, the fact remains, […], that there is no requirement for Member States to grant aid to make good the damage caused by an exceptional occurrence within the meaning of Article 107(2)(b) TFEU.”
“(41) More specifically, first, while Article 108(3) TFEU requires Member States to notify their plans as regards State aid to the Commission before they are put into effect, it does not, however, require them to grant any aid”.
“(42) Secondly, an aid measure may be directed at making good the damage caused by an exceptional occurrence, in accordance with Article 107(2)(b) TFEU, irrespective of the fact that it does not make good the entirety of that damage.”
“(43) Consequently, it does not follow from Article 108(3) TFEU or from Article 107(2)(b) TFEU that Member States are obliged to make good the entirety of the damage caused by an exceptional occurrence, such that they similarly cannot be required to grant aid to all of the victims of that damage either”.
Compensation and competitive advantage
Wizz Air claimed that the Commission failed to take into account the competitive advantage resulting from the discriminatory nature of the compensation of damage.
The Court, first, explained that “(48) for the purposes of assessing the compatibility of aid with the internal market, the advantage procured by that aid for the recipient does not include any economic benefit the recipient may have enjoyed as a result of exploiting that advantage. That benefit may not be the same as the advantage constituting the aid, and there may indeed be no such benefit, but that cannot justify a different assessment of the compatibility of the aid with the internal market”.
“(49) Consequently, it must be held that the Commission was right to take account of the advantage conferred on Blue Air, as it resulted from the damage compensation measure. However, the Commission cannot be criticised for not having determined the existence of any possible economic benefit resulting from that advantage.”
Infringement of Article 107(3)(c) TFEU
Wizz Air argued that the Commission misapplied the Guidelines on Aid for Rescue & Restructuring [RRG]. The Court examined the application of each of the conditions laid down in the RRG.
Blue Air’s eligibility for rescue aid
“(55) Point 22 of the Guidelines sets out three cumulative conditions in order for aid granted to a company belonging to a group to be regarded as compatible with the internal market. Accordingly, it is the task of the Commission to examine (i) whether the beneficiary of the aid belongs to a group and, as the case may be, the composition of that group, (ii) whether the difficulties faced by the beneficiary are intrinsic and are not the result of an arbitrary allocation of costs within the group and (iii) whether those difficulties are too serious to be dealt with by that group itself.”
“(56) The objective of that prohibition is therefore to prevent a group of undertakings from having the State bear the cost of a rescue operation for one of the undertakings belonging to the group, when that undertaking is in difficulty and the group itself has created those difficulties or has the means to deal with them on its own”.
“(57) It is apparent from paragraphs 27 and 105 of the contested decision that 99.99% of Blue Air’s shares are held by the Romanian company Airline Invest, established in December 2019, and that the remaining 0.01% belong to a US citizen. It is also stated that 99.99% of the shares in Airline Invest, which does not carry out any activities other than holding the shares in Blue Air, are themselves held by an individual who does not carry on any direct or indirect activity.”
The Court concluded that there was no arbitrary allocation of costs.
Contribution of the rescue aid to an objective of common interest
“(63) The Commission may declare aid compatible with Article 107(3) TFEU only if it can establish that that aid contributes to the attainment of one of the objectives specified, something which, under normal market conditions, the recipient undertaking would not achieve by using its own resources. In other words, an aid measure cannot be declared compatible with the internal market if it brings about an improvement in the financial situation of the recipient undertaking without being necessary to achieve the objectives laid down in Article 107(3) TFEU”.
“(64) It follows from point 43 of the Guidelines that the mere fact of preventing an undertaking from leaving the market is not sufficient to justify the use of rescue aid. It must be clearly demonstrated that the aid pursues an objective of common interest in that its purpose is to avoid social hardship or address market failure. Point 44 of the Guidelines sets out seven examples of situations in which it is established that the aid pursues a common interest. In particular, point 44(b) of the Guidelines provides that Member States must demonstrate that the failure of the beneficiary would be likely to involve serious social hardship or severe market failure, in that ‘there is a risk of disruption to an important service which is hard to replicate and where it would be difficult for any competitor simply to step in (for example, a national infrastructure provider)’.”
“(66) As regards the important nature of the service provided by Blue Air, […] that airline ensured the connectivity of Romania”. “(69) The Commission was right to consider that Blue Air performed an important service by offering, on the one hand, routes to and from several remote Romanian regions, whose connectivity by air was of particular economic importance in view of the state of the national land infrastructure, and, on the other hand, routes to and from several major European cities, thereby contributing to the international connectivity of those regions.”
“(82) As regards the question whether the services provided by Blue Air were complicated to replicate within the meaning of point 44(b) of the Guidelines, […], it would not have been possible for other airlines, in particular low-cost airlines, in the short term to ensure all those services, since several of them had already recently closed some of their air routes, also operated by Blue Air, thus leaving Blue Air alone to operate them.”
The appropriateness of the rescue aid
“(99) First, as regards the applicant’s argument that the interest rate applied to the loan in question is not sufficiently high in relation to the risks associated with that loan, it should be noted that point 56 of the Guidelines provides as follows:
‘The level of remuneration that a beneficiary is required to pay for rescue aid should reflect the underlying creditworthiness of the beneficiary, discounting the temporary effects of both liquidity difficulties and State support, and should provide incentives for the beneficiary to repay the aid as soon as possible. The Commission will therefore require remuneration to be set at a rate not less than the reference rate set out in the Reference Rate Communication […] for weak undertakings offering normal levels of collateralisation (currently 1-year IBOR plus 400 basis points) […] and to be increased by at least 50 basis points for rescue aid the authorisation of which is extended in accordance with point 55(d)[(ii)].’”
“(100) In the present case, it is not disputed by the parties that the interest rate attached to the loan in question is equivalent to or close to the reference rate referred to in point 56 of the Guidelines and therefore does not infringe the threshold imposed.”
“(104) Furthermore, […] the applicant’s argument that the interest rate should be higher in the absence of securities provided by the beneficiary is the result of a misreading of point 56 of the Guidelines. This point provides for the application of the rate to weak undertakings offering normal levels of collateralisation (see paragraph 99 above). Thus, that point requires the application of a minimum interest rate that applies to all rescue aid, irrespective of the guarantees provided by the beneficiaries in each case. As the Commission points out, this is due to the urgency inherent in rescue aid, which requires the establishment of a clear rule applicable in all cases, so that the Commission does not need to carry out an examination of the appropriateness of the remuneration of rescue aid on a case-by-case basis.”
“(106) It is apparent from the wording of point 55(d) of the Guidelines that the Commission is not entitled to refuse to authorise rescue aid in a situation where the Member State concerned intends to use the full six-month period allowed by the Guidelines to draw up and submit a restructuring or liquidation plan. Thus, although a Member State may set a shorter period, the Commission cannot lawfully oblige it to do so. Moreover, the six-month period is intended, as stated in point 60 of the Guidelines, to enable the beneficiary to restore its liquidity.”
“(110) Point 55(d)(ii) of the Guidelines clearly provides, in the event that the Member State has submitted a restructuring plan, that the authorisation of the rescue aid will automatically be extended until the Commission takes a final decision on that plan. Moreover, no such authorisation was granted in the contested decision.”
The proportionality of the rescue aid
“(117) It should be noted that the damage compensation measure was intended to compensate Blue Air for the damage suffered during the period between 16 March and 30 June 2020, whereas the rescue aid allowed Blue Air to cover its liquidity needs for a different period, namely from September 2020 to February 2021. Moreover, as is apparent from the contested decision, the aid granted to Blue Air under the damage compensation measure was taken into account in the liquidity plan for the period from September 2020 to February 2021 and thus reduced the amount of rescue aid required.”
Wizz Air argued that the rescue aid exceeded the minimum necessary to achieve the objective of common interest.
The Court noted that “(120) in that regard, point 60 of the Guidelines provides as follows:
‘Rescue aid must be restricted to the amount needed to keep the beneficiary in business for six months. In determining that amount, regard will be had to the outcome of the formula set out in Annex I. Any aid exceeding the result of that calculation will only be authorised if it is duly justified by the provision of a liquidity plan setting out the beneficiary’s liquidity needs for the coming six months.’”
“(121) The Commission assessed [the liquidity plan drawn up by Romania], which was based on revenue and cost projections […] In its assessment, it considered that the liquidity plan did not include unusual or illegitimate expenditure such as the financing of structural measures or the expansion of activities beyond previous commitments.”
“(125) It should be noted that, according to the Guidelines, rescue aid must be limited to the amount necessary to keep the beneficiary in business for six months and cannot be used to finance structural measures, such as the acquisition of important branches or assets. However, as the Commission has argued, it cannot be ruled out that the need for liquidity during those six months also includes the payment of instalments due during that period under earlier commitments concerning the replacement of aircraft. The non-repayment of such instalments could lead to the insolvency of the undertaking in difficulty, which would clearly run counter to the objective pursued.”
“(126) As regards the applicant’s complaint that the Commission did not impose burden-sharing in order to have part of the losses absorbed by the beneficiary’s shareholders, it should be pointed out, in that regard, that to share the burden among existing investors are required only during the restructuring period and not during the rescue period, as is clear from the wording of point 61 of the
Guidelines.”
Adequacy of the RRG
Wizz Air contended that the RRG were not appropriate for the assessment of financial problems resulting from the covid-19 pandemic.
The Court recalled that “(131) the Commission has a wide discretion in the application of Article 107(3) TFEU, the exercise of which involves complex economic and social assessments that must be carried out in the European Union context. In the specific case of rescue aid, it limited itself in the exercise of that discretion in that regard by adopting the Guidelines, from which it cannot, in principle, depart”.
“(133) In support of its argument, the applicant cites the judgment of 8 March 2016, Greece v Commission (C‑431/14 P, EU:C:2016:145), paragraph 70 of which states that, ‘in the specific area of State aid, the Commission is bound by the guidelines that it issues, to the extent that they do not depart from the rules in the TFEU, including, in particular, Article 107(3)(b) TFEU […] and to the extent that their application is not in breach of general principles of law, such as equal treatment, in particular where exceptional circumstances, different from those envisaged in those guidelines, distinguish a given sector of the economy of a Member State’.”
“(134) Paragraph 72 of [that judgment], states that ‘the adoption of such guidelines does not relieve the Commission of its obligation to examine the specific exceptional circumstances relied on by a Member State, in a particular case, for the purpose of requesting the direct application of Article 107(3)(b) TFEU, and to provide reasons for its refusal to grant such a request, should the case arise’.”
“(136) It should be noted that, […], the applicant has neither identified the specific rules of the Guidelines which, in its view, were rendered inappropriate because of the exceptional circumstances linked to the COVID-19 pandemic, nor explained the reasons why that is the case. Nor has it clarified whether, in its view, the Commission should disapply the Guidelines and instead apply Article 107(3)(c) TFEU directly. Such an argument is therefore too general and unsupported and thus does not enable the Court to understand its substance.”
The negative effects of the rescue aid and the ‘one time, last time’ condition
“(141) First, […] it is because the negative effects of that aid on competition and trade are limited that the Commission was able to conclude that that aid did not affect trading conditions to an extent contrary to the common interest, as is apparent from paragraph 130 of the contested decision. That conclusion implies that, according to the contested decision, the positive effects of the aid in question on competition and trade outweighed its negative effects.”
This is an important statement. Even though in Commission decisions there is almost always a distinction between the assessment of whether, on the one hand, the negative effects are the minimum possible and whether, on the other, the positives outweigh the negatives, the Court here seems to conflate these two stages into one and conclude that if the aid generates positive effects and the negative effects are the minimum possible [i.e. the minimum unavoidable negative effects of aid], then the positives outweigh the negatives. Although I believe that in practice this is what the Commission actually does [because it does not quantify the positives and negatives], this is not what it claims it does.
“(143) Secondly, […], the Commission concluded that the ‘one time, last time’ condition, laid down in points 70 and 71 of the Guidelines, was satisfied.” “(144) In the present case, […] Romania, when it notified the Commission of its planned rescue aid to Blue Air, indicated that Blue Air had not received other rescue aid, restructuring aid or temporary restructuring support in the last 10 years.”
The principle of non-discrimination
Wizz Air claimed infringement of the principle of non-discrimination on the ground that the aid benefitted only Blue Air.
“(159) As a preliminary point, it should be recalled that the principle of non-discrimination requires that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment is objectively justified”.
“(160) The elements which characterise different situations, and hence their comparability, must in particular be determined and assessed in the light of the subject matter and purpose of the EU act which makes the distinction in question. The principles and objectives of the field to which the act relates must also be taken into account”.
“(161) In addition, it should be noted that individual aid such as the measure at issue, by definition, benefits only one undertaking, to the exclusion of all other undertakings, including those in a situation comparable to that of the recipient of that aid. Thus, by its very nature, such individual aid introduces a difference in treatment, or even discrimination, which is nevertheless inherent in the individual nature of that measure”.
At this point the General Court cited its judgment in case T-388/20, Ryanair v Commission (Finnair I; Covid-19), paragraph 81. An appeal by Ryanair is pending before the Court of Justice.”
“(162) To maintain, as the applicant does, that the measure at issue is contrary to the principle of non-discrimination in essence amounts to calling into question systematically the compatibility with the internal market of any individual aid solely on account of its inherently exclusive and thus discriminatory character, even though EU law allows Member States to grant individual aid provided that all the conditions laid down in Article 107 TFEU are satisfied.”
“(163) That being said, […], it is necessary to ascertain whether it is justified by a legitimate objective and whether it is necessary, appropriate and proportionate in order to attain that objective. Similarly, in so far as the applicant refers to Article 18 TFEU, it must be pointed out that, under that provision, any discrimination on grounds of nationality within the scope of application of the Treaties ‘without prejudice to any special provisions contained therein’ is prohibited.”
“(164) Therefore, it is important to ascertain whether that difference in treatment is permitted under Article 107(2)(b) and (3)(c) TFEU, which is the legal basis for the contested decision. That examination requires, first, that the objective of the measure at issue satisfies the requirements laid down in those two provisions and, secondly, that the conditions for granting the measure at issue, namely, in the present case, that it benefits only Blue Air, are such as to enable that objective to be achieved and do not go beyond what is necessary to achieve it.”
“(165) In the present case, as regards the objective of the measure at issue, […], namely the damage compensation measure, is aimed solely at compensating Blue Air […]. In that regard, it must be noted that the applicant does not dispute that such a compensation measure makes it possible to remedy the damage caused by that pandemic, nor does it call into question the fact that the pandemic constitutes an exceptional occurrence within the meaning of Article 107(2)(b) TFEU. As regards the other part of the measure, namely the rescue aid, it is intended to cover in part Blue Air’s urgent liquidity needs resulting from the heavy operating losses which it recorded as a result of that pandemic and thus to enable it to continue its operations while drawing up a viable restructuring plan.”
“(166) As regards the question whether the arrangements for granting the measure at issue are capable of achieving the objective pursued and do not go beyond what is necessary to achieve it, it is apparent [that the aid] is appropriate to achieve the objective pursued by the measure at issue and to satisfy the conditions laid down in Article 107(2)(b) and (3)(c) TFEU.”
“(167) However, the applicant claims that the favourable treatment given to Blue Air is neither necessary nor proportionate to the objective pursued by Romania.”
“(168) In that regard, first, it should be noted that, contrary to what the applicant claims, the measure at issue does not have the objective, apart from partially compensating Blue Air for the damage resulting from the COVID-19 pandemic, of ‘preserving the connectivity’ of Romania’s air transport. In the light of the objectives of that measure, recalled in paragraph 165 above, and in the light of the factors set out in paragraph 166 above, it must be held that the granting of two loans guaranteed at 100% by the Romanian State to Blue Air is necessary in order to pursue those objectives.”
Therefore, according to the General Court, even though Blue Air was found to be important for the connectivity of Romania, the objective of the aid measure was to support only Blue Air. The logic of this syllogism is difficult to understand because all aid must be granted to undertakings in order for the state to achieve a public policy objective. The Treaty refers to aid that makes good the damage caused by an exceptional occurrence and the development of certain economic activities. The aid recipients are merely the means by which these two objectives are achieved. No aid can be granted to an undertaking unless it seeks to achieve an objective allowed by the Treaty.
“(169) Secondly, contrary to what the applicant claims in its application, it must be pointed out that there was no obligation on the Commission to examine whether, in addition to maintaining Blue Air, the Member State concerned had to broaden the circle of beneficiaries of the measure at issue, since the contested decision establishes to the requisite legal standard the need to remedy the damage caused by the COVID-19 pandemic to Blue Air and to keep Blue Air on the market. It is important to note that, while the Commission is empowered to verify the compatibility of State aid with the common market, it does not conceive or design the aid and does not allocate it. Moreover, it cannot require a Member State to pay the same State aid to competing undertakings. It can only require a State not to pay out aid which it considers to be incompatible with the common market.”
“(170) In addition, as regards, more specifically, Article 107(2)(b) TFEU, it should be recalled that Member States are not obliged to make good all the damage caused by an exceptional occurrence and, consequently, to grant aid to all the victims of that damage.”
This reasoning of the Court, however, does not consider the fundamental aspect of the principle of non-discrimination spelled out in paragraph 159 of the judgment that any difference in treatment “must be objectively justified”. What the Court basically held in paragraphs 168-170 of its judgment is that Romania decided to grant State aid only to Blue Air and that was the end of the matter.
In response to the claim of Wizz Air that the aid to Blue Aid was disproportionate, the Court, first, recalled that “(173) the principle of proportionality, which is one of the general principles of EU law, requires that acts adopted by EU institutions do not exceed the limits of what is appropriate and necessary in order to attain the legitimate objectives pursued by the legislation in question […]; where there is a choice between several appropriate measures, recourse must be had to the least onerous and the disadvantages caused must not be disproportionate to the aims pursued”.
“(174) In the present case, it must be held that, in any event, […], the grant of rescue aid only to Blue Air did not exceed the limits of what was appropriate and necessary in order to achieve the legitimate objectives pursued by Romania and was not, therefore, contrary to what the applicant claims, disproportionate.”
“(175) As regards the damage compensation measure, it must be held, […], that the Commission did not err in its assessment of the proportionality of the aid to the damage caused by the COVID-19 crisis.”
“(176) In addition, it should be added that an allocation of the measure at issue to all airlines operating in Romania, on the basis of their market share, as proposed by the applicant, would have the effect of reducing the amount of aid granted to Blue Air, with the result that its liquidity needs would not be covered, which, therefore, could have serious repercussions on the mobility of small entrepreneurs and on the economy, in particular local economy, in Romania, given the importance of that company for them.”
A comments is in order here. The principle of proportionality requires that the chosen method of intervention must be the “least onerous”. The Court does not explain to whom or for what it must be the least onerous. We may reasonably suppose that state intervention is the least onerous when it causes the least distortion of competition. Does the granting of aid to a single undertaking cause the least distortion of competition?
Conclusion
The General Court went on to examine and reject other pleas concerning impediments to the freedom to provide services and the freedom of establishment. It also rejected Wizz Air’s claims that the Commission failed to explain sufficiently its assessment. In the end, the Court dismissed the action in its entirety.
[1] The full text of the judgment can be accessed at:
https://curia.europa.eu/juris/document/document.jsf?text=&docid=272022&pageIndex=0&doclang=en&mode=lst&dir=&occ=first&part=1&cid=3254830
