Ryanair Wins Court Case Against Lufthansa’s State Bailout

KEY TAKEAWAYS
Ryanair wins court case: Ryanair has been successful in its legal challenge against Lufthansa's €6 billion state bailout granted in 2020. The European Union's second-highest court found errors in the EU competition regulators' decision to approve the German government's rescue package.
Implications for future state bailouts: The court ruling could have implications for future state bailouts, highlighting potential errors in the decision-making process by EU competition regulators.
Lufthansa's response: Lufthansa has stated that it will analyze the court's decision and decide on further action accordingly. The airline has already repaid the state aid in full.
Errors in the EU's decision: The General Court found multiple errors in the European Commission's decision, including issues with determining Lufthansa's financing capabilities, the lack of a mechanism to incentivize the repurchase of Germany's shareholding, and acceptance of commitments that did not ensure effective competition preservation.
Setback for EU regulators: This ruling represents a setback for EU regulators, who have previously lost court cases related to government aid for companies. The commission has the option to appeal the ruling to the Court of Justice of the European Union.
Ryanair's response: Ryanair has welcomed the judgment, emphasizing the commission's responsibility to ensure a level playing field in the air transport industry.

 

Ryanair has emerged victorious in its legal challenge against Lufthansa’s €6 billion ($6.6 billion) state bailout granted in 2020, as Europe’s second-highest court found errors in the European Union (EU) competition regulators’ decision to approve the German government’s rescue package.

The ruling could have implications for future state bailouts, even though Lufthansa has already repaid the aid in full.

Lufthansa to Analyze Ruling for Further Action

Lufthansa stated that it would examine the court’s decision and decide on further action accordingly.

The European Commission had previously cleared the German airline’s recapitalization, subject to conditions including a ban on dividends, share buybacks, and certain acquisitions until the state support was repaid.

Several European airlines, including Lufthansa, received state aid due to the COVID-19 pandemic’s prolonged impact on the travel industry.

Ryanair and German peer Condor challenged the EU’s decision on Lufthansa’s bailout.

Commission “Committed Several Errors”

The Luxembourg-based General Court found that the European Commission made multiple errors, especially in determining that Lufthansa could not secure financing on the markets for all its needs.

The court also found that the EU competition enforcer failed to require a mechanism to incentivize Lufthansa to repurchase Germany’s shareholding as quickly as possible. 

Furthermore, the court found that the commission had erred in denying Lufthansa’s significant market power at certain airports and accepting various commitments that failed to ensure effective competition preservation in the market.

Ryanair has emerged victorious in its legal challenge against Lufthansa’s €6 billion ($6.6 billion) state bailout granted in 2020, as Europe’s second-highest court found errors in the European Union (EU) competition regulators’ decision to approve the German government’s rescue package.

Setback for EU Regulators

This ruling marks a significant setback for EU regulators, who have previously lost court cases related to government aid for companies.

In 2020, the General Court rescinded an order for Apple to pay back €14.3bn in taxes to Ireland. 

The commission has the option to appeal the ruling to the Court of Justice of the European Union, Europe’s highest court.

Ryanair Welcomes Judgment

Ryanair has welcomed the judgment, stating that it confirms the commission’s responsibility to act as a guardian of the level playing field in air transport.

The commission, however, has said that it will “carefully study the judgment and reflect on possible next steps.”

It is unclear whether the commission will appeal against the ruling before the European Court of Justice.

Lufthansa has reported that it has already fully repaid the bailout funds approved by the commission, as well as approximately €92 million in interest.

The German Economic Stabilisation Fund, which arranged the bailout, has sold its shares in Lufthansa for €1 billion.

Lufthansa has stated that the stabilization was already fully terminated before the court ruling.

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