A recent European judgment crosses new horizons in state- aid law, writes Kate McKenna in the March 2017 Gazette.
Recent high-profile investigations by the EU Commission have focused popular attention on the significant force and reach of state-aid law.
A new departure
The 21 December judgment of the Court of Justice in Commission v Aer Lingus, Ryanair and Ireland (C-164/15 P and C-165/15 P) did not attract as many headlines as the celebrated ‘Apple tax’ Commission investigation. However, it breaks new ground in this field, paving the way for the first-ever completion of High Court proceedings seeking recovery of state aid granted by Ireland.
The case arose from the Irish air travel tax, introduced in Ireland’s 2009 ‘emergency budget’. It also serves as a warning that state-aid complaints can backfire and expose the complainant to liability.
The travel tax case
Shortly after the introduction of the travel tax, Ryanair made two complaints – based on EU state-aid and free movement rules – to the EU Commission. In 2012, the Commission decision on Ryanair’s state-aid complaint found that details of the scheme breached state-aid law. The commission ordered Ireland to recover the ‘advantage’ obtained by the airlines that paid the lower rate. According to press reports, this decision leaves Ryanair facing a liability of €12 million (plus interest) and Aer Lingus facing a liability of €4 million (plus interest).
The complaint has prompted considerable litigation, some of which is still pending. Kate McKenna, a senior associate in Matheson’s EU competition and regulatory group, untangles the complex case and its meaning for the Gazette.
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