The Many Meanings of ‘Competition’ in EC State Aid Law

Abstract

In 2001, the Irish carrier Ryanair and the Walloon regional government reached an agreement the terms of which appeared to be attractive for both sides. Ryanair would commit towards operating a number of its flights from Charleroi airport. In return it would receive a 50 per cent reduction in the amount of landing charges charged by the Walloon regional government, the owner of Charleroi airport. As a result, Ryanair would decrease its operating costs and gain an advantage vis-à-vis its competitors, while the airport and its owner would benefit directly and indirectly from the effects of an increase in passenger traffic. When the agreement was examined by the Commission, the Walloon Region sought to defend the measure by arguing that it had acted in its capacity as owner of the airport and that, viewed in this light, the agreement was not an infringement of the state aid rules, but an economically sound transaction. The Commission rejected this point, holding instead that, in entering into the agreement, the regional government had ‘placed itself in a situation of confusion of powers’, as the commercial need to attract Ryanair to its jurisdiction had caused it to derogate from the generally applicable regulatory framework. Given that the regional government had exercised a power of a regulatory nature, it could not invoke commercial rationality to justify its actions.