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CJEU annuls Volotea and easyJet state aid cases

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The CJEU said the General Court erred in law when it ruled that both companies benefitted from Italian state aid.

The Court of Justice of the EU decided on Friday, November 17, to set aside and annul a General Court judgment concerning airline companies Volotea and easyJet in joined cases C-331/20 P and C-343/20 P.

It followed a European Commission investigation into an Italian regional law after airports in Sardinia were granted state financing for the development of air routes on the island.

In a decision in July 2016, the Commission ruled that the measures were unlawful and that Volotea and easyJet benefited from state aid that was deemed incompatible with the internal market in connection to activities in Cagliari-Elmas and Olbia airports.

Both airlines demanded the actions be annulled.

In May 2020, the General Court dismissed the actions before Volotea and easyJet appealed to the CJEU for the judgment to be set aside.

Under Article 107 of the Treaty on the Functioning of the EU (TFEU), a state measure can be considered state aid if it offers an advantage to the recipient over its competitors. The TFEU prohibits state aid unless justified by reasons of economic development.

The CJEU ruled that the General Court’s judgment did not prove that the Commission determined whether contracts for the services made between the airports and the airlines followed market conditions.

By stating that Volotea and easyJet had benefited from an advantage under the contracts with the airports, the General Court also erred in law as the services provided did not meet the needs of Sardinia, the CJEU found.

The General Court also ruled there was no tender procedure before the contracts were concluded, said the CJEU in its ruling.

According to the CJEU, the General Court failed to apply the “market economy operator principle” in the case.

The court therefore set aside and annulled the decision concerning Volotea and easyJet. The aid granted to both airlines was ruled legitimate.

Other EU state aid cases, including the CJEU ruling against the Fiat-Chrysler group this month, show that companies and jurisdictions are under increasing scrutiny.

In its November 8 decision, the court said the Commission and General Court had incorrectly ruled that Luxembourg breached state aid rules in approving an advance transfer pricing agreement for Fiat Chrysler Finance Europe, formerly known as Fiat Finance and Trade.

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