The CJEU confirmed that the 2006 Lübeck airport fees schedule was not State aid
The Court of Justice of the EU
(CJEU) has recently handed down a judgement on the Commission v Hansestadt
Lübeck[1],
by which it rejected all the
grounds of appeal submitted by the European Commission against the first
instance judgment made by the General Court of the EU (GC)[2].
Upholding all the challenged rulings of the CJ, the CJEU confirmed that the CJ
was right in setting aside the decision of the Commission to open a State aid investigation
into the airport fees set by the Lübeck Airport amounted to State aid. The reason why the EU courts decided against
the Commission was because the contested measures did not meet the selectivity
requirement that is one of the condition for the application of Article 107(1)
TFEU.
The decision of the Commission
In February 2012, the Commission
opened a formal investigation against the Lübeck Airport pursuant to Article
108(2) TFEU[3].
The target of the Commission’s investigation was the 2006 schedule of airports
charges and fees (the 2006 schedule), which was adopted by the airport manager
after being submitted to the local authorities of the Land of Schleswig
Holstein for prior approval as required by the German legislation. In
particular, the Commission had concerns that the 2006 schedule granted undue advantages
to the carriers flying from/to the Lübeck Airport. Considering that the 2006
schedule only applied to the airlines using the Lübeck Airport, the Commission found
that the 2006 schedule was selective because it conferred on the above airlines
an advantage over the airliners flying from other airports.
The judgment of the General Court
The manager of the Lübeck Airport
(Hansestadt Lübeck) appealed the decision of the Commission before the GC. The
crux of the ensuing judgment made by the GC was whether the contested 2006
schedule met the selectivity requirement in Article 107 TFEU. Hansestadt Lübeck
pleaded that this was not the case and that, accordingly, the airport fees laid
down by the 2006 schedule were not selective and fell outside Article 107 TFEU.
In order to establish whether the
fees charged by a public authority for the supply or goods or services are selective,
the GC said that it is necessary to take into consideration all the firms that
use or intend to use such goods and services and ascertain if some of them might
benefit of an advantage. The GC also observed that, because the German aviation
legislation empowered each airport manager to set the fees applicable to
airlines using its facilities, the 2006 schedule applied only to airliners
operating at the Lübeck Airport and not to airlines using other airports. Accordingly,
only the airlines using the Lübeck Airport were in a comparable situation,
since all of them paid the fees set in the 2006 schedule, whereas this could
not be the case with airlines flying from other airports because they were
charged the fees determined by those airports. Such airlines were outside the
scope of selectivity assessment. Therefore, the GC reached the conclusion that the
2006 schedule did not confer any selective advantages on beneficiaries over
competitors being in a comparable situation. It then ruled that the 2006
schedule constituted state aid and set aside the decision of the Commission to open
an in-depth State aid investigation into it.
The Judgment of the CJEU
The Commission challenged the
judgment of the GC before the CJEU before which it submitted several grounds of
appeals, among which the incorrect assessment of the selectivity of the 2006
schedule. In that regard, first, the Commission submitted that a measure laying
down the conditions on which a public undertaking offers its goods or services
never applies to all economic operators and, accordingly, is always a selective
measure regardless of its discriminatory nature. The Commission also argued
that the GC wrongly followed the Adria-Wien[4]
objectives-based approach, which should apply only to tax measures.
The CJEU replied that Adria-Wien was still good law referring
to the findings in that judgment whereby the selectivity assessment required to
determine ‘whether, under a particual
regime, a national measure is such as to favour certain undertakings or the
production of certain goods over others which, in the light of the objective
pursued by that regime, are in a comparable factual and legal situation’. A
measure that differentiates between undertakings and then is prima facie
selective cannot be considered as State aid ‘where that differentiation arises from the nature or the overall
structure of the system of which they form part’. The CJEU made clear that
no EU law authority supports the Commission’s submission that a measure by
which a public undertaking lays down the conditions for the use of its goods or
services is always, by its very nature, selective. On the contrary, the CJEI
pointed out that the EU case law embraced an effects-based approach to the
selectivity assessment. According to it, the selectivity of a measure has to be
established not on the base of its nature but with regard to its effects. It is
then necessary to ascertain whether the measure confers benefits only to some of
the undertakings that, in the light of the objective pursued by the regime
concerned, are in a comparable factual and legal situation. It is within the
context of that particular regime that he selectivity assessment must be
conducted. That requires a prior definition of the relevant reference framework
within which the contested measure fits must be determined. The CJEU outlined
that this methodology is to be followed in all State aid cases, not only in those
regarding tax measures as wrongly argued by the Commission. The CJEU also
stressed that the selectivity assessment also requires to ascertain whether the
measure under review applies in a non-discriminatory manner.
Second, the Commission argued that
the GC disregarded the effects of the contested measure and that measures that
benefit only one economic sector are selective. Bearing in mind that the Lübeck
Airport competed with the nearby airport of Hamburg, the Commission inferred
the selective nature of the 2006 schedule from the mere fact of the advantages
that the 2006 schedule awarded to the airlines using the Lübeck Airport.
The CJEU noted that the GC followed
the effects-based approach in reviewing the decision of the Commission.
Importantly, it added that, contrary to what was argued by the Commission, the
mere fact that Lübeck Airport competed with the airport of Hamburg or other
German airports the 2006 schedule is not sufficient to establish the selective
nature of the 2006 schedule. To this end, the Commission would have established
that, within the context of the legal regime applicable to all airports, the
2006 schedule conferred on the airliners using the Lübeck Airport an advantage
to the detriment of airliners using other airports which were, in the light of
the objective pursued by that regime, in a comparable factual and legal
situation. The following question addressed by the CJEU was to determine which
undertakings were in situation comparable to those of the airliners at the Lübeck
Airport. The CJEU said that the set of undertakings being in a comparable
situation must be determined having regard to the previously defined reference
frameworks. Because national law empowered each German airport to adopt its own
airport charges, the relevant reference framework in the European Commission v
Hansestadt Lubeck case was the regime applicable to the Lübeck Airport
alone. Then, the CJEU agreed on the GC findings concerning the relevant
reference framework and the selectivity of the 2006 schedule. The GC correctly identified
the relevant reference framework in the regime applicable to the Lübeck Airport.
Alike correctly, the GC ruled out that airliners operating at other German
airports were in a comparable situation to those serving the Lübeck Airport. Finally,
after pointing out that the 2006 schedule applied in a non-discriminatory
manner to all airliners using or intending to use the Lübeck Airport, the GC
correctly set aside the decision by which the Commission had mistakenly found
that the 2006 schedule was selective.
Commentary and practical
consequences
The CJEU
by the judgment handed down in the Commission v Hansestadt Lübeck case
embraced the Adria-Wien objective-based approach to selectivity
assessment. Commission v Hansestadt Lübeck adopted a concept of
selectivity favourable for a granting public authority by narrowing down the
relevant reference framework to the legal regime that applies to that authority.
The set of undertakings being in a comparable situation to the aid
beneficiaries was accordingly restricted. In Commission v Hansestadt Lübeck
no airliners being in a comparable situation to those using the Lübeck Airport could be found with the result that the
2006 schedule adopted by the manager of the airport could not meet the
selectivity condition for the application of the prohibition in Article 107
TFEU. The adoption of such restrictive conception of relevant reference
framework should be welcome by publicly-owned airports. Commission v Hansestadt Lübeck, indeed,
leaves them quite a wide discretionary margin as to how shape their pricing
policies provided that the airport charges are not applied discriminatorily.
Within those boundaries, airports can rely on prices as a primary competition
parameter differentiating their airport charges from those determined by their
competitors without running the risk of being targeted by Commission’s State
aid investigations.
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