EU court declared approval of Lufthansa aid null and void

EU court declared approval of Lufthansa aid null and void
The EU Commission should not have approved the aid of 6 billion euros in June 2020.

This was announced by the judges in Luxembourg on Wednesday. The judgment can be appealed to the highest European court, the European Court of Justice.

The travel restrictions in the pandemic had almost brought Lufthansa’s business to a standstill. In the group with around 138,000 employees, tens of thousands of jobs were on the brink. That is why the German government supported the largest German airline in spring 2020 with an aid package worth billions. In return, Lufthansa had to undertake to avoid distortions of competition, such as handing over take-off and landing rights in Frankfurt and Munich to the competition.

The rescue plan called for the State Economic Stabilization Fund to subscribe to shares in a capital increase to build a 20 percent stake in the airline’s share capital. In addition, silent participations of up to EUR 5.7 billion and a loan of up to EUR 3 billion were planned. However, the latter was not subject to the conditions and had in principle already been approved beforehand.

The EU Commission approved the aid of 6 billion euros in June 2020. Lufthansa’s competitors Ryanair and Condor contested this decision before the EU court.

Error in assessment

The judges partially agreed with them. The EU Commission made several mistakes in its assessment. On the one hand, she wrongly assumed that Lufthansa could not obtain the necessary funds on the markets. In addition, they misjudged Lufthansa’s considerable market power at certain airports. The obligations imposed on the company have therefore not ensured that effective competition is maintained.

The practical consequences of the judgment are unclear. The EU Commission can lodge an appeal and improve its reasoning.

“Triumph for Fair Competition”

In a first reaction, Lufthansa pointed out that the aid had already been repaid and that stabilization had ended completely. The verdict will be analyzed and then a decision made on how to proceed.

Ryanair called the ruling a “triumph for fair competition and consumers across the EU”. As the guardian of competition, the Commission should not approve any discriminatory state aid under political pressure from national governments. The holiday airline Condor also welcomed the verdict. “The court thus shares our legal opinion,” the airline said. She could not immediately comment on any further details because the verdict had to be analyzed first.

Condor was itself supported by the state with half a billion euros during the pandemic. Ryanair had also successfully sued against this aid because the Commission had insufficiently justified its approval. The Commission was able to get rid of this with an improved decision in July 2021.

Source: Nachrichten

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