No State Aid present in Lübeck Airport-Infratil cases

After two ECJ judgments, three European Commission decisions, and a full decade’s worth of legal proceedings, DG Competition has concluded that a number of different measures concerning the financing and privatisation of Lübeck airport (IATA: LBC, ICAO: EDHL) to be in line with the Union’s EU state aid rules, in particular its 2014 Aviation Guidelines.

By way of background, Lübeck Airport is a small regional airport about 70km from Hamburg in Schleswig-Holstein. Until October 2009, Infratil Ltd, a New Zealand-based infrastructure investment company owned 90% of Lübeck Airport.  Upon Infrafill ending its engagement with the airport, its shareholding was bought back by the City of Lübeck.

Following an in-depth investigation the Commission has concluded in particular that the City of Lübeck’s re-purchase of the majority of shares in Lübeck airport from Infratil, Ltd did not provide Infratil with an undue economic advantage over its competitors under the Market Economy Investor Principle (“MEIP”).

Separately, the Commission had also received complaints from, the now defunct, Air Berlin that a 2006 schedule of airport charges and underlying discounts, de-icing charges and individual agreements between the airport’s operator (FLG, majority owned by Infratil) and Ryanair gave it an undue economic advantage over other airlines using the airport.

In 2012, the European Commission opened an in-depth investigation into these agreements. Regarding the 2006 airport charges and underlying discounts, the Commission noted that the airport charges at Hamburg Airport were substantially higher than those at Lübeck Airport, raising doubts about whether airlines using Lübeck Airport paid a market price.

The Commission’s preliminary view was that the 2006 schedule of airport charges involved State aid that could not be considered to be  compatible with the internal market. The Commission applied the same preliminary position  to the 2010 agreements between Ryanair and the airport’s operator, FLG.

The City of Lübeck challenged this decision before the General Court of the EU, and. In a 2014 landmark judgment (EU General Court, 9 September 2014, Hansestadt Lübeck v European Commission, T‑461/12) the General Court held that, to determine the selectivity criteria ,general tariffs set by an airport have to be assessed at the level of the airport. In this case, the airport charges applied to all airlines on a non-discriminatory basis. As they do not favour any airline,  they are not selective and do not constitute State aid.  Therefore, they do not have to comply with the MEIP.

The Commission decision to open the in-depth investigation into the 2006 schedule of charges was annulled. The EU Court of Justice confirmed this annulment in December 2016 (EU Court of Justice, 21 December 2016, European Commission v Hansestadt Lübeck, Case C-524/14).  Following that judgment, the European Commission had to review its preliminary analysis of Lübeck Airport’s charges.

In February 2017, the Commission adopted a formal decision on different measures concerning the financing and privatization of Lübeck Airport and a 2000 agreement between Lübeck Airport and Ryanair.

The Commission concluded that the Airport’s financing measures fell outside the scope of State aid rules, since Lübeck Airport has ceased its main economic activity and no longer operates scheduled or charter flights.

Finally, the Commission found that the terms of an agreement regarding airport charges and marketing arrangements concluded in 2000 between Lübeck airport and Ryanair would have been acceptable to a profit-driven airport manager and also involved no state aid.

The non-confidential version of the Commission’s decision will be made available under the case numbers SA.21877SA.27585 and SA.31149 in the State Aid Register on the competition website once any confidentiality issues have been resolved.