The ECJ’s new decision regarding state aid

When public authorities buy goods and services, they have to pay the market price, otherwise, they provide unlawful state aid to the sellers. On 14 June 2023 the European Court of Justice (ECJ) ruled in the case No. T 79/21, Ryanair & Airport Marketing Services vs. European Commission that public authorities still provide unlawful state aid by buying goods and services that they do not really need, even if they pay market prices.

In the specific case, Ryanair sought the annulment of the EU Commission’s decision concerning unlawful state aid granted by France to Ryanair in connection with their operations at Montpellier airport. The aid was in the form of marketing agreements between Ryanair and Montpellier’s Association for the Promotion of Tourist and Economic Flows – the owners of which were public French authorities. The alleged aim of the agreements was to promote the Montpellier region to foreign tourists. For that purpose, Ryanair undertook to advertise the region on its website. However, the Commission concluded that the marketing agreements did not serve a real need of the region and the airport, instead, they could be seen as ‘cover contracts’ under which consideration was provided to Ryanair to operate flights to Montpellier airport. The most important element of the marketing contracts was Ryanair's obligation to maintain the flights, so that the real purpose of the 'cover contract', which could otherwise not be a central or even marginal element of a marketing contract, was manifested in the wording of the contracts.

The Commission found that such ‘hidden’ consideration provided to Ryanair shall be considered as state aid which is incompatible with the internal market. Similarly, the ECJ dismissed Ryanair’s action and found that the state aid provided to the airline by France is illegal under EU internal market rules.