Joined Cases C‑331/20 P and C‑343/20 P

Volotea, SA
and
easyJet Airline Co. Ltd

v

European Commission

Judgment of the Court (Second Chamber), 17 November 2022

(Appeal – State aid – Article 107(1) TFEU – European Commission decision on compensation to Sardinian airports for public service obligations – Existence of unlawful State aid incompatible with the internal market, granted by the Italian Republic to airlines through airport operators – Concept of ‘State aid’ – Proof of the existence of an advantage – Determination of the amount – Market economy operator principle – Applicability and application – Test of the private acquirer of goods or services – Conditions – Burden of proof)

1. Appeal – Grounds – Specific criticism of a point of the General Court’s reasoning necessary – Need to indicate precisely the legal arguments supporting the grounds of appeal relied on

   (Art. 256 TFEU; Statute of the Court of Justice, Art. 58, first para.; Rules of Procedure of the Court of Justice, Arts 168(1)(d) and 169(2))

   (see paragraphs 86, 87, 94, 95)

2. State aid – Definition – Grant of an advantage to the beneficiaries – State intervention mitigating the burdens normally included in the budget of an undertaking – Included

   (Art. 107(1) TFEU)

   (see paragraphs 102-104, 107, 138)

3. State aid – Definition – Assessment in accordance with the market economy operator principle – Contractual relationships between airport operators and airlines – Implementation of an aid scheme by an airport operator not owned by the State – Factor not ruling out the applicability of the market economy operator principle

   (Art. 107(1) TFEU)

   (see paragraphs 105, 119)

4. State aid – Definition – Assessment in accordance with the market economy operator principle – Aid scheme established for the purpose of the economic development of a region – Exercise of public powers – Factor not ruling out the applicability of the market economy operator principle

   (Art. 107(1) TFEU)

   (see paragraphs 106-108, 120)

5. State aid – Definition – Assessment in accordance with the market economy operator principle – Purchase of services from an undertaking through bodies not subject to the public procurement rules – Not possible to infer the existence of an advantage from the fact that no tender procedure was carried out

   (Art. 107(1) TFEU)

   (see paragraphs 109, 110, 123, 125-128, 131, 132, 135-137, 152, 153)

6. State aid – Definition – Grant of an advantage to the beneficiaries – Burden of proving an advantage on the Commission – Commission’s investigation obligations

   (Art. 107(1) TFEU)

   (see paragraphs 111, 112, 129, 157)

7. State aid – Definition – Assessment in accordance with the market economy operator principle – Assessment of all factors relevant to the transaction at issue and its context – Burden of proof on the Commission – Scope

   (Art. 107(1) TFEU)

   (see paragraphs 113, 114, 128, 132)

Résumé

On 13 April 2010, the Autonomous Region of Sardinia (Italy) (‘the Region’) adopted Law No 10/2010 authorising financial support to Sardinian airports in order to develop air transport. That law was put into effect by a series of measures adopted by the Executive of the Region (together with the relevant provisions of Law No 10/2010, ‘the measures at issue’).

The measures at issue were intended, inter alia, to encourage the conclusion of contracts between the operators of the airports and airlines in order to improve Sardinia’s air transport connections and promote it as a tourist destination. To that end, those measures provided, in essence, that the Region would reimburse the amounts paid by the airport operators to the airlines under those contracts, provided that certain conditions and detailed rules, relating in particular to the profitability of those contracts, were complied with.

By decision of 29 July 2016 ( 1 ) (‘the decision at issue’), the European Commission classified the measures at issue, in part, as State aid that was incompatible with the internal market and ordered that it be recovered from the airlines, which were considered to be the sole beneficiaries of the aid.

The airlines Volotea SA and easyJet Airline Co. Ltd (‘easyJet’), which had concluded contracts for the provision of services falling within the scope of the measures at issue with the operators of Olbia (Italy) and Cagliari-Elmas (Italy) airports, brought two actions before the General Court for annulment of the decision at issue. Those actions were dismissed by judgments of 13 May 2020 ( 2 ) (‘the judgments under appeal’).

Hearing two appeals brought by Volotea and easyJet, the Court of Justice both sets aside the judgments under appeal and annuls the decision at issue to the extent that it concerns those two airlines. In that context, the Court reiterates the role of and the conditions for implementing the market economy operator principle in the field of State aid, going on to clarify the method to be employed for examining, from the perspective of Article 107(1) TFEU, the existence of an advantage arising from a Member State’s allocation of public funds to private operators in order to finance contracts for the provision of services that they have concluded with other private operators.

Findings of the Court

In the first place, the Court of Justice finds that the General Court erred in law in its interpretation of Article 107(1) TFEU by holding in the judgments under appeal that the question of whether Volotea and easyJet had benefited from an advantage granted by the Region was not to be examined in the light of the market economy operator principle.

In that regard, the Court observes that, in order to establish the existence of an advantage for the purpose of Article 107(1) TFEU, it is necessary to take into consideration the effects on the recipient undertakings of the measure under examination, irrespective of the objectives pursued by the Member State concerned or of whether that advantage is granted directly by the State or by a public or private body which it has appointed or established for that purpose. Consequently, that must be considered as including any measure which, whatever its form or objectives, favours one or more undertakings directly or indirectly, or which confers an advantage on them which they would not have been able to obtain under normal market conditions.

In addition, the characterisation of such an advantage as existing is, in principle, carried out by applying the market economy operator principle, unless there is no possibility of comparing the State conduct at issue in a particular case with that of a private operator because, for example, that conduct is inseparably linked with the existence of infrastructure that no private operator would ever have been able to create, or the State acted in its capacity as a public authority.

It follows that, contrary to what the General Court held in the judgments under appeal, neither the public policy objectives pursued by the measures at issue, nor the situation that the operators of Olbia and Cagliari airports were private undertakings, nor the fact that those operators did not have significant autonomy in relation to the Region in the implementation of those measures were capable of ruling out the applicability of the market economy operator principle in the present case.

In the second place, since the General Court, despite its conclusion that the market economy operator principle was inapplicable, nevertheless examined whether the Region had behaved like a private acquirer of goods or services, before going on to conclude that an advantage had been conferred by the measures at issue, the Court of Justice examines whether that additional reasoning on the part of the General Court is capable of founding the operative part of the judgments under appeal, despite the errors of law identified previously.

After stating that the private acquirer test, like the private vendor test of which it is the counterpart, constitutes one of the various tests which give specific expression to the market economy operator principle, the Court of Justice observes, in particular, that, pursuant to that test, the General Court considered that Volotea and easyJet had benefited from an advantage under the contracts concluded with the airport operators for the provision of air transport, marketing and advertising services on the ground that those contracts had not been preceded by a tender procedure or an equivalent procedure.

Although it follows from the settled case-law of the Court that, where a Member State decides to sell or acquire goods or services directly from one or more private undertakings, the holding of a tender procedure allows for the presumption, in certain conditions, that the contracts or other acts which are concluded to that end following that procedure reflect normal market conditions, it also follows from that case-law that the holding of such a procedure does not constitute the sole method of ruling out the existence of an advantage for the purpose of Article 107(1) TFEU, and that this is particularly the case where the State does not carry out the sale or acquisition of goods or services to or from private undertakings directly, but does so through the intermediary of other private undertakings that are not obliged to make use of a tender procedure. Furthermore, whichever method is used, the question of whether such an advantage must be ruled out or, conversely, found to exist requires an assessment of whether or not the contracts or other acts providing for that sale or acquisition reflect normal market conditions.

In the light of those considerations, the Court of Justice finds that the General Court erred in law in finding the existence of an advantage in favour of Volotea and easyJet on the ground that the contracts concluded with the airport operators had not been preceded by the holding of a tender procedure or an equivalent procedure. It also observes that the General Court did not carry out an appropriate examination of whether those contracts reflect normal market conditions.

On those grounds, the Court upholds the complaints by Volotea and easyJet alleging an infringement of Article 107(1) TFEU and sets aside the judgments under appeal.

Since the state of the proceedings permits judgment to be given, the Court proceeds to dispose of the case and, in the third and final place, examines the complaints put forward by Volotea and easyJet in support of their respective actions for annulment of the decision at issue.

In that regard, the Court states that the Commission made a first error of law by rejecting – on grounds that were based on the public policy objectives pursued by the Region, the private character of the airport operators, and the form that those measures took – the applicability of the market economy operator principle in order to examine the existence of an advantage, for the purpose of Article 107(1) TFEU. Next, it observes that the Commission made a second error of law by accepting the existence of such an advantage without assessing, in an overall and concrete manner, whether the Region and the airport operators had sought to acquire the services at issue under normal market conditions.

In the light of those considerations, the Court also annuls the decision at issue, owing to an infringement of Article 107(1) TFEU, to the extent that it concerns Volotea and easyJet.

( 1 ) Commission Decision (EU) 2017/1861 of 29 July 2016 on State aid SA 33983 (2013/C) (ex 2012/NN) (ex 2011/N) – Italy – Compensation to Sardinian airports for public service obligations (SGEI) (OJ 2017 L 268, p. 1).

( 2 ) Judgments of 13 May 2020, Volotea v Commission (T‑607/17, EU:T:2020:180), and of 13 May 2020, easyJet Airline v Commission (T‑8/18, EU:T:2020:182).