Court of Justice of the European Communities (including Court of First Instance Decisions)

JUDGMENT OF THE GENERAL COURT (Tenth Chamber)

9 November 2022 (*)

(State aid – Croatian air transport market – Aid granted by Croatia to an airline in the context of the COVID‑19 pandemic – Direct grant – Decision not to raise any objections – Action for annulment – Individual concern – Admissibility – Serious difficulties – Aid intended to make good the damage caused by an exceptional occurrence – Equal treatment – Freedom of establishment – Free provision of services – Assessment of the damage – Obligation to state reasons)

In Case T‑111/21,

Ryanair DAC, established in Swords (Ireland), represented by E. Vahida, F.‑C. Laprévote, V. Blanc, S. Rating and I.‑G. Metaxas‑Maranghidis, lawyers,

applicant,

v

European Commission, represented by L. Flynn and C. Georgieva, acting as Agents,

defendant,

supported by

Republic of Croatia, represented by G. Vidović Mesarek, acting as Agent,

intervener,

THE GENERAL COURT (Tenth Chamber),

composed, at the time of the deliberations, of A. Kornezov, President, E. Buttigieg (Rapporteur) and D. Petrlík, Judges,

Registrar: E. Coulon,

having regard to the written part of the procedure,

having regard to the fact that no request for a hearing was submitted by the parties within three weeks after service of notification of the close of the written part of the procedure, and having decided to rule on the action without an oral part of the procedure, pursuant to Article 106(3) of the Rules of Procedure of the General Court,

gives the following

Judgment

1        By its action on the basis of Article 263 TFEU, the applicant, Ryanair DAC, seeks annulment of Commission Decision C(2020) 8608 final of 30 November 2020 on State aid SA.55373 (2020/N) – Croatia – COVID‑19: Damage compensation to Croatia Airlines (OJ 2021 C 17, p. 1) (‘the contested decision’).

I.      Background to the dispute

2        Croatia Airlines d.d. is an airline, established in Zagreb (Croatia), which provides air transport services for passengers and cargo, and aircraft maintenance services and also provides charter flights.

3        On 13 November 2020, the Republic of Croatia notified the European Commission of an aid measure in accordance with Article 108(3) TFEU. That notification was supplemented on 24 November 2020. The aid measure at issue was individual aid granted by the Republic of Croatia to Croatia Airlines in the form of a direct grant and was intended, under Article 107(2)(b) TFEU, to make good the damage suffered by that airline as a result of the imposition of travel restrictions and other containment measures linked to the COVID‑19 pandemic (‘the aid measure at issue’ or ‘the aid at issue’).

4        The amount of the aid at issue was 88.5 million kuna (HRK) (approximately EUR 11.7 million) and was intended to compensate for the damage suffered by Croatia Airlines during the period from 19 March to 30 June 2020.

5        On 30 November 2020, the Commission, without initiating the formal investigation procedure, adopted the contested decision, by which it concluded that the aid measure at issue, while falling within the scope of Article 107(1) TFEU, was compatible with the internal market on the basis of Article 107(2)(b) TFEU.

II.    Forms of order sought

6        The applicant claims that the Court should:

–        annul the contested decision;

–        order the Commission to pay the costs.

7        The Commission contends that the Court should:

–        dismiss the action as unfounded;

–        order the applicant to pay the costs.

8        The Republic of Croatia contends that the Court should dismiss the action as unfounded.

III. Law

A.      Admissibility

1.      The applicant’s standing and its interest in bringing proceedings

9        The applicant submits that, as a competitor of the beneficiary of the aid at issue, it is one of the ‘parties concerned’ within the meaning of Article 108(2) TFEU and an ‘interested party’ within the meaning of Article 1(h) of Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 TFEU (OJ 2015 L 248, p. 9) and that, therefore, it has standing to bring the present action in order to protect its procedural rights provided for in the abovementioned provision of the FEU Treaty. The protection of those rights also confers on it an interest in bringing proceedings.

10      Furthermore, the applicant submits that, by its action, it also intends to challenge the merits of the contested decision. In that regard, the applicant claims that it is individually concerned by the contested decision in that its ability to compete and its position on the market are seriously affected by that decision. It submits that, as the most direct competitor of the beneficiary of the aid at issue, it is in a factual situation similar to that of the beneficiary, but distinct from that of other airlines. The applicant explains that it is the only real challenger of the beneficiary of the aid at issue having regard to its position on the market.

11      The Commission does not dispute the admissibility of the action, in so far as it appears that the applicant competes with the beneficiary of the aid at issue. The Commission nevertheless disputes the applicant’s assertion that it is ‘the only real challenger’ of the applicant.

12      The Commission also does not dispute that the applicant’s interest in bringing proceedings.

13      The Republic of Croatia submits that the applicant is not a direct competitor of the beneficiary of the aid at issue and disputes its claim that its market position was affected by the grant of the aid at issue.

14      It should be recalled, first of all, that the admissibility of an action brought by natural or legal persons against an act which is not addressed to them, in accordance with the fourth paragraph of Article 263 TFEU, is subject to the condition that they be accorded standing to bring proceedings, which arises in two situations. First, such proceedings may be instituted if the act is of direct and individual concern to those persons. Second, such persons may bring proceedings against a regulatory act not entailing implementing measures if that act is of direct concern to them (see judgment of 15 July 2021, Deutsche Lufthansa v Commission, C‑453/19 P, EU:C:2021:608, paragraph 31 and the case-law cited).

15      Given that the contested decision, which was addressed to the Republic of Croatia, does not constitute a regulatory act under the fourth paragraph of Article 263 TFEU as it is not an act of general application, it is necessary to determine whether the applicant is directly and individually concerned by that decision, within the meaning of that provision (see, to that effect, judgment of 15 July 2021, Deutsche Lufthansa v Commission, C‑453/19 P, EU:C:2021:608, paragraph 32 and the case-law cited).

16      As regards whether the applicant is individually concerned, it is apparent from the case-law that, in the case of decisions on State aid adopted at the end of the preliminary examination stage established under Article 108(3) TFEU, as is the case with the contested decision in the present case, the criterion for determining the existence of an individual effect differs according to whether the applicant intends to protect its procedural rights as one of the ‘parties concerned’ within the meaning of Article 108(2) TFEU – and as an ‘interested party’ within the meaning of Article 1(h) of Regulation 2015/1589 – or to challenge the merits of the Commission’s assessment (see, to that effect, judgment of 15 July 2021, Deutsche Lufthansa v Commission, C‑453/19 P, EU:C:2021:608, paragraphs 35 to 37).

17      More specifically, where, without initiating the formal investigation procedure under Article 108(2) TFEU, the Commission finds, by a decision taken on the basis of Article 108(3) TFEU, that aid is compatible with the internal market, the persons intended to benefit from those procedural guarantees may secure compliance therewith only if they are able to challenge that decision before the EU judicature. For those reasons, an action for the annulment of such a decision brought by a person who is concerned within the meaning of Article 108(2) TFEU is to be declared to be admissible where that person seeks, by instituting proceedings, to safeguard the procedural rights available to him under the latter provision. The Court has stated that such concerned parties are any persons, undertakings or associations whose interests might be affected by the granting of aid, that is to say, in particular, undertakings competing with the recipients of the aid and trade associations (see judgment of 15 July 2021, Deutsche Lufthansa v Commission, C‑453/19 P, EU:C:2021:608, paragraph 36 and the case-law cited).

18      On the other hand, if the applicant calls into question the merits of a decision appraising the aid taken on the basis of Article 108(3) TFEU or after the formal investigation procedure, the mere fact that it may be regarded as ‘concerned’ within the meaning of Article 108(2) TFEU cannot suffice to render the action admissible. It must then demonstrate that it enjoys a particular status within the meaning of the judgment of 15 July 1963, Plaumann v Commission (25/62, EU:C:1963:17, p. 223). That applies in particular where the applicant’s position on the market concerned is substantially affected by the aid to which the decision at issue relates (see judgment of 15 July 2021, Deutsche Lufthansa v Commission, C‑453/19 P, EU:C:2021:608, paragraph 37 and the case-law cited).

19      In the present case, it is apparent from the documents before the Court that the applicant is active on the Croatian air transport market and that it is a competitor of the beneficiary of the aid at issue.

20      In that regard, it should be noted that recital 26 of the contested decision mentions the applicant among the airlines serving the Croatian market. Furthermore, it is apparent from the documents before the Court that, in 2019, the applicant held a 7% market share and held the fourth place in the Croatian market behind Croatia Airlines, which was in first place with a market share of 29%. In addition, the applicant claimed, without being challenged, that, in 2019, it was in competition with Croatia Airlines on air routes between the cities of Pula (Croatia) and Frankfurt (Germany) and between the cities of Zadar (Croatia) and Frankfurt. The Republic of Croatia’s line of argument shows, moreover, that the applicant remains active on the Croatian market.

21      On the basis of the information set out in paragraph 20 above, it must be concluded that the applicant is a competitor of the beneficiary of the aid at issue and, consequently, that it is individually concerned by the contested decision, in so far as, as is apparent from the third plea in law relied on, it seeks, by its action, to safeguard its procedural rights as a party concerned within the meaning of Article 108(2) TFEU, which, moreover, is not disputed by the Commission.

22      In so far as the applicant asserts that it also wishes to challenge the merits of the contested decision, it is necessary to determine whether the applicant satisfies the condition set out in paragraph 18 above.

23      It is apparent from the case-law that, with regard to the condition that the applicant’s market position must be substantially affected, the mere fact that a measure may exercise an influence on the competitive relationships existing on the relevant market and that the undertaking concerned is in a competitive relationship with the addressee of that measure cannot suffice. Therefore, an undertaking cannot rely solely on its status as a competitor of the undertaking in receipt of aid (see judgment of 15 July 2021, Deutsche Lufthansa v Commission, C‑453/19 P, EU:C:2021:608, paragraph 60 and the case-law cited).

24      It is also apparent from the case-law that the demonstration by the applicant of a substantial effect on its market position does not entail a definitive ruling on the competitive relationship between the applicant and the undertakings in receipt of aid, but requires only that the applicant adduce pertinent reasons to show that the Commission’s decision may harm its legitimate interests by substantially affecting its position on the market in question (see judgment of 15 July 2021, Deutsche Lufthansa v Commission, C‑453/19 P, EU:C:2021:608, paragraph 57 and the case-law cited).

25      Demonstrating a substantial adverse effect on a competitor’s position on the market cannot simply be a matter of the existence of certain factors indicating a decline in the applicant’s commercial or financial performance, such as a significant decline in turnover, appreciable financial losses or a significant reduction in market share following the grant of the aid in question. The grant of State aid can also have an adverse effect on the competitive situation of an operator in other ways, in particular by causing the loss of an opportunity to make a profit or a less favourable development than would have been the case without such aid (see judgment of 15 July 2021, Deutsche Lufthansa v Commission, C‑453/19 P, EU:C:2021:608, paragraph 61 and the case-law cited).

26      In the present case, the applicant claims to be the closest and most relevant competitor of the beneficiary of the aid at issue. It also claims to be the only real challenger of Croatia Airlines’ market position.

27      The applicant also submits that it recently ordered 210 Boeing 737 Max aircraft which joined its fleet at the beginning of 2021 and that, as a result of the 4% increase in seats and the 16% reduction in fuel consumption, it will be able to offer more routes and create new jobs in Croatia while significantly lowering its environmental footprint, assuming that it is able to compete fairly with heavily subsidised competitors like the beneficiary of the aid at issue. The applicant maintains that the direct corollary of closeness of competition vis-à-vis Croatia Airlines is that its competitive situation has been significantly affected by the aid measure at issue.

28      The applicant also claims that its losses in Croatia due to the COVID‑19 pandemic are ‘catastrophic’ and that, unlike Croatia Airlines, it does not benefit from any grant helping it to cushion the impact and to resume its activities in Croatia when travel restrictions are lifted.

29      However, first, the documents before the Court do not support the applicant’s claim that it is the main competitor of the beneficiary of the aid at issue. In particular, the file shows that the applicant held the fourth place on the Croatian market in terms of market shares in 2019 (see paragraph 20 above). Furthermore, it is apparent from recital 26 of the contested decision that the beneficiary of the aid at issue serves 38 destinations in 24 European countries. It is apparent from the documents before the Court that the applicant was in competition with that beneficiary only on two routes, that is to say between Pula and Frankfurt and between Zadar and Frankfurt. Competition between those two airlines thus appears to be limited.

30      Second, the arguments put forward by the applicant in paragraph 27 above are very general and hypothetical, in so far as they do not specifically concern its position on the market on which it competes with the beneficiary of the aid at issue.

31      The applicant’s other arguments are inadequately substantiated, with the result that it is not in a position to demonstrate that the aid at issue is liable to have a substantial adverse effect on its market position. Its line of argument is based, in reality, on the mere fact that it is a competitor of Croatia Airlines and that, unlike Croatia Airlines, it does not benefit from aid granted by the Croatian State, which constitutes a competitive disadvantage for the applicant. Such a general line of argument is not sufficient to demonstrate that the applicant’s market position was substantially affected.

32      In the light of the foregoing, it must be concluded that the applicant has not demonstrated that it is individually concerned and therefore does not have standing to challenge the merits of the contested decision.

33      In the light of the foregoing, it must be concluded that the applicant has standing only in order to safeguard its procedural rights under Article 108(2) TFEU.

34      It is also apparent that the applicant has an interest in bringing proceedings in order to safeguard its procedural rights.

2.      The admissibility of the action in the light of the pleas in law relied on

35      The applicant relies on four pleas in law in support of its action. The first plea alleges infringement of the specific provisions of the FEU Treaty and of the principles of non-discrimination, free provision of services and freedom of establishment, the second plea alleges misapplication of Article 107(2)(b) TFEU and a manifest error of assessment in the examination of the proportionality of the aid at issue in relation to the damage caused by the COVID‑19 pandemic, the third plea alleges failure to initiate the formal investigation procedure and, the fourth plea alleges infringement of the obligation to state reasons.

36      The action, in the light of the third plea in law, which seeks expressly to secure respect for the applicant’s procedural rights, is admissible, in view of the applicant’s status as a party concerned within the meaning of Article 108(2) TFEU. The applicant may, in order to preserve the procedural rights which it enjoys under the formal investigation procedure, rely only on pleas which show that the assessment of the information and evidence which the Commission had or could have had at its disposal during the preliminary examination phase of the notified measure ought to have raised doubts as to the compatibility of that measure with the internal market (see, to that effect, judgments of 22 December 2008, Régie Networks, C‑333/07, EU:C:2008:764, paragraph 81; of 9 July 2009, 3F v Commission, C‑319/07 P, EU:C:2009:435, paragraph 35; and of 9 June 2021, Ryanair v Commission (Condor; Covid-19), T‑665/20, EU:T:2021:344, paragraph 31).

37      The action, as regards the fourth plea in law, alleging an infringement of the obligation to state reasons, is also admissible in so far as the failure to fulfil the obligation to state reasons is a breach of essential procedural requirements and is a matter of public policy which must be raised by the EU judicature of its own motion and does not relate to the substantive legality of the contested decision (see, to that effect, judgment of 2 April 1998, Commission v Sytraval and Brink’s France, C‑367/95 P, EU:C:1998:154, paragraphs 67 to 72).

38      The action, with regard to the first and second pleas, in so far as they seek to call into question the merits of the contested decision, is not admissible to that extent, given that the applicant does not have standing to bring proceedings in that regard in order to challenge the merits of the contested decision.

39      That being said, it should be borne in mind that the applicant is entitled, in order to demonstrate the infringement of its procedural rights on account of the doubts that the measure at issue should have raised as to its compatibility with the internal market, to put forward arguments aimed at demonstrating that the Commission’s finding as to the compatibility of that measure with the internal market was incorrect, which, a fortiori, is such as to establish that the Commission should have harboured doubts in its assessment of the compatibility of that measure with the internal market. The Court is therefore entitled to examine the substantive arguments put forward by the applicant in the context of its first and second pleas in law in order to ascertain whether they are such as to support the plea expressly made by the applicant regarding the existence of doubts justifying the initiation of the procedure under Article 108(2) TFEU (see, to that effect, judgments of 13 June 2013, Ryanair v Commission, C‑287/12 P, not published, EU:C:2013:395, paragraphs 57 to 60, and of 6 May 2019, Scor v Commission, T‑135/17, not published, EU:T:2019:287, paragraph 77). It is from that point of view that the arguments relied on in the context of the first and second pleas will be examined below.

B.      Substance

40      In the light of the analysis set out in paragraphs 36 to 39 above, it is appropriate to begin by examining the third plea in law.

1.      The third plea in law, alleging failure to initiate the formal investigation procedure

(a)    Preliminary observations

41      The applicant claims that the Commission carried out an insufficient examination during the preliminary examination stage, which shows the existence of serious difficulties which should have led it to initiate the formal investigation procedure. Referring to its arguments put forward in the context of the first and second pleas, the applicant claims, first, that the Commission failed to verify compliance with the principles of non-discrimination, free provision of services and freedom of establishment and, second, that it carried out an inadequate assessment of the proportionality of the aid at issue in relation to the damage caused to Croatia Airlines by the COVID‑19 pandemic.

42      The applicant also submits that the failure to initiate the formal investigation procedure constitutes a procedural error which deprived it of the opportunity to submit to the Commission its comments on the notified measure and to provide it with information, in particular factual information. The applicant claims that, without that procedural error, the Commission’s decision might have been different.

43      The Commission maintains that this plea is unfounded.

44      According to the case-law, where the Commission is unable to reach a firm view, following an initial examination in the context of the procedure under Article 108(3) TFEU, that a State aid measure either is not ‘aid’ within the meaning of Article 107(1) TFEU or, if classified as aid, is compatible with the FEU Treaty, or where that procedure has not enabled the Commission to overcome the serious difficulties involved in assessing the compatibility of the measure under consideration, the Commission is under a duty to initiate the procedure provided for in Article 108(2) TFEU, and has no discretion in that regard (judgment of 10 May 2005, Italy v Commission, C‑400/99, EU:C:2005:275, paragraph 47). That duty is, moreover, expressly confirmed by the provisions of Article 4(4) in conjunction with Article 15(1) of Regulation 2015/1589 (see, by analogy, judgment of 22 December 2008, British Aggregates v Commission, C‑487/06 P, EU:C:2008:757, paragraph 113).

45      Article 4 of Regulation 2015/1589 shows in that regard that, in so far as the measure notified by the Member State concerned does in fact constitute aid, it is the presence or absence of ‘doubts’ as to the compatibility of that measure with the internal market that enables the Commission to decide whether or not to initiate the formal investigation procedure at the end of its preliminary examination.

46      The concept of doubts set out in Article 4(3) and (4) of Regulation 2015/1589, which takes the form of the existence of serious difficulties encountered by the Commission in its examination of whether the measure at issue constitutes aid or whether it is compatible with the internal market, is objective in nature. Whether or not such doubts exist requires investigation of both the circumstances under which the contested measure was adopted and its content. That investigation must be conducted objectively, comparing the grounds of the decision with the information available to the Commission when it took a decision on the compatibility of the aid at issue with the internal market. It follows that judicial review by the General Court of the existence of serious difficulties will, by nature, go beyond consideration of whether or not there has been a manifest error of assessment (judgment of 10 July 2012, Smurfit Kappa Group v Commission, T‑304/08, EU:T:2012:351, paragraph 80 and the case-law cited; see also, to that effect, judgment of 2 April 2009, Bouygues and Bouygues Télécom v Commission, C‑431/07 P, EU:C:2009:223, paragraph 63).

47      The information ‘available’ to the Commission includes that which seemed relevant to the assessment to be carried out and which could have been obtained, upon request by the Commission, during the preliminary examination stage (see, to that effect, judgment of 20 September 2017, Commission v Frucona Košice, C‑300/16 P, EU:C:2017:706, paragraph 71). Although it may thus be necessary for the Commission, where appropriate, to go beyond a mere examination of the matters of fact and law brought to its knowledge, it is not, on the other hand, for the Commission, on its own initiative and in the absence of any evidence to that effect, to seek all information which might be connected with the case before it, even where such information is in the public domain (judgments of 29 April 2021, Achemos Grupė and Achema v Commission, C‑847/19 P, not published, EU:C:2021:343, paragraphs 49 and 50, and of 2 September 2021, Commission v Tempus Energy and Tempus Energy Technology, C‑57/19 P, EU:C:2021:663, paragraph 45).

48      The onus is on the applicant to prove the existence of doubts, proof that can take the form of a consistent body of evidence (see, to that effect, judgment of 19 September 2018, HH Ferries and Others v Commission, T‑68/15, EU:T:2018:563, paragraph 63 and the case-law cited).

49      In the light of the case-law set out in paragraphs 39 and 44 to 48 above, it is necessary to examine the substantive arguments relied on by the applicant in the context of the first and second pleas in law in order to determine whether they enable the identification of serious difficulties in the presence of which the Commission was required to initiate the formal investigation procedure provided for in Article 108(2) TFEU (see, to that effect, judgment of 17 March 2015, Pollmeier Massivholz v Commission, T‑89/09, EU:T:2015:153, paragraph 53 (not published) and the case-law cited).

50      It is appropriate to examine first the arguments relied on in the context of the second plea and then those relied on in the context of the first plea.

(b)    The indications of misapplication of Article 107(2)(b) TFEU and a manifest error of assessment relating to the proportionality of the aid

51      As part of its line of argument, the applicant puts forward two complaints against the contested decision. First, the applicant maintains that that decision contains errors concerning the assessment of the damage suffered by Croatia Airlines (first part) and, second, that it disregards the competitive advantage conferred on that airline by the grant of the aid at issue (second part).

(1)    The first part of the applicant’s line of argument, relating to the assessment of the damage

52      The applicant maintains that the Commission made three errors in assessing the damage caused by the COVID‑19 pandemic to Croatia Airlines and that each of those errors constitutes a sufficient ground for the contested decision to be annulled.

53      In the first place, the applicant submits that the contested decision mechanically overestimates the damage which the aid measure at issue is supposed to compensate.

54      In the second place, the applicant complains that the Commission does not distinguish between the damage caused to Croatia Airlines by the travel restrictions linked to the COVID‑19 pandemic and losses caused by that airline’s pre-existing difficulties.

55      In the third place, the applicant complains that the Commission did not assess, in the contested decision, the damage caused by the COVID‑19 pandemic to airlines operating in Croatia other than Croatia Airlines.

56      The Commission and the Republic of Croatia dispute the applicant’s arguments.

57      It should be noted, as a preliminary point, that, since this is an exception to the general principle set out in Article 107(1) TFEU that State aid is incompatible with the internal market, Article 107(2)(b) TFEU must be interpreted narrowly. Therefore, only economic damage caused by natural disasters or exceptional occurrences may be compensated for under that provision (judgment of 23 February 2006, Atzeni and Others, C‑346/03 and C‑529/03, EU:C:2006:130, paragraph 79).

58      It follows that aid likely to exceed the losses incurred by the beneficiaries of that aid is not covered by Article 107(2)(b) TFEU (see, to that effect, judgment of 11 November 2004, Spain v Commission, C‑73/03, not published, EU:C:2004:711, paragraphs 40 and 41).

(i)    Contested decision

59      In the first place, the Commission observed, in recital 3 of the contested decision, that the objective of the aid measure at issue was to make good the damage suffered by Croatia Airlines due to the imposition of travel restrictions and other containment measures linked to the COVID‑19 pandemic.

60      In the second place, as is apparent from recital 27 of the contested decision, the Commission regarded the period between 19 March and 30 June 2020 as the relevant period for calculating the damage suffered by Croatia Airlines. The Commission explained, in recitals 9 and 27 of the contested decision, that, on 19 March 2020, the competent Croatian authorities had adopted a temporary ban on crossing Croatia’s borders and that that ban had lasted until 30 June 2020, the date on which the those authorities decided to lift travel bans, in particular as regards the Member States and the States associated with the Schengen Agreement. The Commission also noted, in recital 11 of the contested decision, that, during the period from 19 March to 30 June 2020, the Croatian authorities had adopted various containment measures limiting, inter alia, the freedom of movement of persons, the possibility of travel and the exercise of commercial activities, including the gradual suspension of most commercial flights to or from Croatia.

61      The Commission found, in recitals 13 and 14 of the contested decision, that all of those restrictions had caused a significant fall in demand for passenger flights in Croatia and had negatively affected Croatia Airlines’ activities, which, during the period from 19 March to 30 June 2020, could operate only cargo flights, repatriation flights and on-demand flights with the pre-approval of the Croatian authorities.

62      In the third place, according to recital 61 of the contested decision, the Commission found that the damage to be compensated, caused to Croatia Airlines during the period from 19 March to 30 June 2020, corresponded to the net loss sustained during that period, calculated as follows: loss of revenue minus avoided costs, net of Croatia Airlines’ profit margin compared to the revenues for the same period in 2019.

63      More specifically, the Commission, relying on the financial data provided by the Croatian authorities (and set out in Table 4 of the contested decision), found that, during the period between 19 March and 30 June 2020, Croatia Airlines had suffered a reduction in operating revenues amounting to HRK 400 830 377 (approximately EUR 53 241 428) compared with the same period in 2019. From that amount, HRK 290 804 457 (approximately EUR 38.5 million) was deducted, corresponding to reductions in costs incurred during the period between 19 March and 30 June 2020 compared with the costs incurred during the same period in 2019. The Commission thus calculated the amount of Croatia Airlines’ net loss during the period from 19 March to 30 June 2020, which would be eligible for compensation, namely HRK 110 025 920 (approximately EUR 14 614 504) (recital 28 and Table 5 of the contested decision).

64      In recitals 28 and 62 of the contested decision, the Commission explained that the avoided costs corresponded to the costs that Croatia Airlines would have had during the period from 19 March to 30 June 2020 had its operations not been affected by the COVID‑19 restrictions. Those avoided costs were calculated by taking into account reduced direct costs as result of the reduction of activity of Croatia Airlines air transport, reduced indirect costs as result of management measures adopted by that airline, and reduced cost of depreciation, and other financial costs, those reductions having been calculated by comparing the actual costs borne by Croatia Airlines during the same period in 2019 (recital 62 of the contested decision).

65      In recital 29 of the contested decision, the Commission stated that the Republic of Croatia had provided information on the earnings before interest and taxes (EBIT) of Croatia Airlines for the purposes of verifying loss of revenue. On the basis of those data, the Commission found that the difference between the EBIT during the period from 19 March to 30 June 2020 compared with the same period in 2019 amounted to approximately HRK −78 665 729 (approximately EUR −10 405 519). However, in recital 30 of the contested decision, the Commission also found that the difference between the EBIT could, in fact, be within a bracket of between HRK −78.7 million and −88.5 million.

66      Furthermore, the Commission found, in recital 64 of the contested decision, that the amount of the aid at issue (HRK 88.5 million) did not exceed the amount of the damage suffered by Croatia Airlines (HRK 110 025 920) and that it represented 80.4% thereof.

(ii) The first indication of the existence of serious difficulties, relating to the assessment of the damage

67      The applicant submits that the contested decision mechanically overestimates the damage which the aid measure at issue is supposed to compensate.

68      The applicant claims that, according to the contested decision, the damage to be compensated is that caused by the official ban on crossing Croatian borders between 19 March and 30 June 2020 and that it is not apparent from that decision that the domestic flights operated by Croatia Airlines were affected by the travel restrictions imposed by the Croatian Government. Therefore, according to the applicant, it is not clear that the entirety of the gap between the operating revenue for the period from 19 March to 30 June 2020 and the operating revenue for the same period in 2019 can be attributed to restrictions on cross-border travel, as the Commission assumes in the contested decision.

69      It should be noted that the applicant’s argument is based on the premiss that it is apparent from the contested decision that domestic flights in Croatia were not affected by the restrictions imposed by the Croatian authorities. That premiss is unfounded.

70      In that regard, reference should be made to recitals 3, 7 and 11 of the contested decision, from which it is apparent that the restrictive measures adopted by the Croatian authorities affected Croatia Airlines’ international and domestic flights. The Commission explained in recital 57 of the contested decision that those restrictions had had a negative impact on Croatia Airlines’ air transport activities, since they had led to the grounding of nearly all flights of that airline with the exception of some charter, repatriation and cargo flights.

71      In Section 2.3 of the contested decision, the Commission presented the impact which the restrictions adopted by the Croatian authorities had on Croatia Airlines’ air transport activities. In particular, it was noted that the number of flights operated by that airline during the period from March to June 2020 had decreased by 77% compared with the number of flights operated during the same period in 2019 (recital 15 of the contested decision). It was also noted that the number of passengers carried in March, April, May and June 2020 fell by 61.5%, 99.4%, 98.3% and 94.7% respectively compared with the same months in 2019 (recital 13 of the contested decision).

72      In so far as the Commission found in the contested decision that the restrictions imposed by the Croatian Government had affected not only international flights but also domestic flights, it was entitled not to distinguish, in its calculation of the damage, between those two types of flights, but to consider, as damage capable of being compensated, the net loss suffered by Croatia Airlines during the period from 19 March to 30 June 2020, calculated on the basis of the evidence presented in recital 61 of the contested decision (see paragraphs 62 and 63 above). That calculation made by the Commission took into account the fact that, during the period from 19 March to 30 June 2020, Croatia Airlines operated a very limited number of flights (both domestic and international), as is apparent from recital 16 of the contested decision. The revenues from those flights were included in the operating revenue (that is to say, revenue deriving exclusively from Croatia Airlines’ air transport activities) taken into account by the Commission for the purposes of calculating Croatia Airlines’ net loss.

73      In the light of the foregoing, it must be held that the applicant’s line of argument referred to above does not demonstrate the existence of serious difficulties in relation to the assessment of the damage suffered by Croatia Airlines.

(iii) The second indication of the existence of serious difficulties, relating to the assessment of the damage

74      The applicant complains that the Commission does not distinguish between the damage caused to Croatia Airlines as a result of the travel restrictions linked to the COVID‑19 pandemic and that airline’s losses due to its pre-existing financial difficulties. The applicant relies on a number of indications which should have led the Commission to examine whether a proportion of Croatia Airlines’ losses was due to the difficulties which that airline had encountered before the outbreak of the COVID‑19 pandemic.

75      In the first place, the applicant relies on the fact that, at the time of the adoption of the contested decision and probably even before, Croatia Airlines was an undertaking in difficulty within the meaning of the Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty (OJ 2014 C 249, p. 1) and that the COVID‑19 pandemic only accelerated its need for funds. In the second place, the applicant relies on the fact that the aid at issue was paid in breach of the obligation of prior notification laid down in Article 108(3) TFEU. In the third place, the applicant relies on the fact that the grant of the aid at issue was followed, a few weeks later, by the grant of further aid to Croatia Airlines of a larger amount. In the fourth place, the applicant maintains that Croatia Airlines was unable to overcome its financial difficulties by itself, since it appears that there were no shareholders who could potentially step in and rescue it, in view of the fact that the Croatian State held 99.9% of its shares. Furthermore, the attempt to recapitalise that company in spring 2019 failed as did its search for a strategic partner.

76      In that context, the applicant also maintains that the calculation of the damage suffered by Croatia Airlines is based on the difference between the EBIT estimated for the period from 19 March to 30 June 2020 and the EBIT for the same period in 2019. That approach presupposes that, in the absence of the COVID‑19 pandemic, the EBIT in 2020 would have been the same as the EBIT for 2019. In view of the losses suffered by that airline during 2017 and 2018, there was no justification for the Commission to assume that the EBIT of that undertaking would have remained stable and, at the very least, should have provided a reason for that assumption. The applicant concludes that it could not therefore be ruled out that part of the decline in the EBIT between 2019 and 2020 might have been due to Croatia Airlines’ pre-existing difficulties and not to the COVID‑19 pandemic.

77      As a preliminary point, it should be recalled that the occurrence giving rise to the damage, as defined in the contested decision, must be the determining cause of the damage which the aid at issue is intended to remedy and must be directly responsible for causing that damage. A direct link will only exist where the damage is the direct consequence of the occurrence in question without being dependent on the interposition of other causes. Accordingly, it is incumbent on the Commission to examine with particular care whether the occurrence was really the decisive cause of the damage suffered by the beneficiary of the aid concerned or, on the contrary, some of the damage suffered was due to the beneficiary’s pre-existing difficulties (see, to that effect, judgment of 9 June 2021, Ryanair v Commission (Condor; Covid-19), T‑665/20, EU:T:2021:344, paragraphs 45 and 58).

78      It is apparent from the documents before the Court that Croatia Airlines recorded net losses for 2018 and 2019, that is to say, even before the outbreak of the COVID‑19 pandemic.

79      That being so, even if the applicant’s argument that Croatia Airlines encountered financial difficulties even before the outbreak of the COVID‑19 pandemic appears to be well founded, it must be held that its line of argument does not show that the method used by the Commission for calculating the damage did not constitute an appropriate method for ensuring that the aid at issue compensated only for the damage suffered by Croatia Airlines as a result of the travel restrictions due to the COVID‑19 pandemic and not the financial losses of that undertaking which existed prior to the outbreak of that pandemic.

80      In that regard, it should be borne in mind (see paragraphs 62 to 64 above) that the Commission took into account the reduction in Croatia Airlines’ operating revenues, namely revenues directly linked to its air transport activities, in so far as the travel restrictions caused the grounding of nearly all flights operated by Croatia Airlines and that that grounding of flights clearly affected the operating revenues of that airline compared with the operating revenue for 2019. At the same time, the Commission found that the amount of Croatia Airlines’ loss of earnings (resulting from the reduction in operating revenues) had to be reduced because of the reduction in costs from which that undertaking had benefited as a result of the grounding of nearly all its flights. The Commission explained that that reduction resulted both from a reduction in direct costs (in particular, the reduced use of aircraft and fuel) and from the reduction of indirect costs (in particular, salary reductions and reductions in expenditure linked to staff training programmes) and the reduction in depreciation costs and other financial costs.

81      It is apparent that the method used by the Commission to calculate the damage suffered by Croatia Airlines is based on the assumption that, if there had been no restrictive measures linked to the COVID‑19 pandemic, Croatia Airlines’ operating revenues and costs during the period from 19 March to 30 June 2020 would have been the same as those recorded during that same period in 2019. The applicant’s line of argument does not show that the Commission’s hypothesis is incorrect or that, at the very least, the Commission was confronted with serious difficulties which obliged it to initiate the formal investigation procedure. On the contrary, the file shows an increase in Croatia Airlines’ income for 2019 compared with 2018 and for the first three quarters of 2018 compared with the first three quarters of 2017, which suggests that the trend towards the increase would also have continued in 2020 if it were not for the COVID‑19 pandemic and the restrictive measures adopted by the Croatian authorities. Moreover, Table 4 of the contested decision shows a positive increase in the EBIT for the period between March and June 2019 compared with the same period in 2018. In the light of those factors, which show a positive development in Croatia Airlines’ financial situation, the Commission was entitled to take operational revenues and costs recorded during the period between 19 March and 30 June 2019 as the reference value for the calculation of the damage suffered by Croatia Airlines and that counterfactual scenario appeared to be prudent. Furthermore, the applicant does not put forward any specific evidence capable of demonstrating that certain specific costs were taken into account for the purpose of calculating the damage, even though they were caused by alleged pre-existing difficulties on the part of the beneficiary of the aid at issue.

82      The applicant’s line of argument set out in paragraphs 75 and 76 above does not show that the Commission was faced with serious difficulties when examining the compatibility of the aid at issue.

83      First of all, as the Commission correctly points out, even on the assumption that Croatia Airlines may be legally classified as an undertaking in difficulty, within the meaning of Section 2.2 of the Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty, that classification does not in itself reveal any overcompensation, given that undertakings with such status may also benefit from aid on the basis of Article 107(2)(b) TFEU.

84      Next, the fact that the aid at issue was granted in breach of the obligation of prior notification laid down in Article 108(3) TFEU and that it therefore constitutes unlawful aid does not constitute an indication of overcompensation either. As is apparent from recital 43 of the contested decision, the Croatian authorities claimed that, because of the urgent nature of Croatia Airlines’ needs, the grant of the aid at issue could not wait for the Commission’s approval.

85      The applicant’s claim that Croatia Airlines was unable to overcome its financial difficulties on its own cannot be accepted either. By that claim, the applicant seeks to demonstrate the allegedly structural nature of the financial problems of that airline, which are independent of the COVID‑19 pandemic. As has already been noted, in any event, the method used by the Commission to calculate the damage was such as to ensure that there was no overcompensation of the damage suffered by Croatia Airlines.

86      As regards the applicant’s claim that Croatia Airlines received additional State aid, it is apparent from the documents before the Court that that airline actually received additional aid of EUR 79.7 million linked to the COVID‑19 pandemic. It appears that that aid was granted in December 2020, as is apparent from the documents before the Court. That said, in so far as that new aid was granted after the adoption of the contested decision, the Commission cannot, in any event, be criticised for not having taken it into account in the contested decision, since, in accordance with the case-law, facts subsequent to the adoption of the decision at issue have no effect on its legality (see, to that effect, judgments of 13 May 2015, Niki Luftfahrt v Commission, T‑162/10, EU:T:2015:283, paragraph 247, and of 5 October 2020, France and IFP Énergies nouvelles v Commission, T‑479/11 RENV and T‑157/12 RENV, EU:T:2020:461, paragraph 133).

87      As regards the applicant’s argument based on the EBIT of Croatia Airlines (see paragraph 76 above), it should be noted that, as is apparent from recitals 29 and 30 of the contested decision, the Republic of Croatia provided the Commission with data on the EBIT of that undertaking for March, April, May and June 2019 and 2020, in order to confirm that there was no overcompensation. The Commission, on the basis of those figures, and on the basis of the fact that the EBIT of Croatia Airlines, for the period from 19 to 31 March (13 days), had represented a proportion of 13/31 of the total EBIT for that month, found that the difference between the EBIT for the period from 19 March to 30 June 2019 and the EBIT for the same period in 2020 amounted to HRK −78 665 279 (approximately EUR −10 405 519) (see recital 29 and Table 6 of the contested decision).

88      At the same time, in recital 30 of the contested decision, the Commission explained, in essence, that, since there was no uniform distribution of profitability for a given month and the data showed a steady increase in the number of passengers transported in March 2019 and a sudden fall in that number in March 2020, the difference between the EBIT could in fact be between HRK −78.7 million and −88.5 million.

89      It follows from the foregoing explanations that, contrary to what the applicant claims (see paragraph 76 above), the Commission did not calculate the damage suffered by Croatia Airlines on the basis of the EBIT, but used that indication to verify and confirm that there was no overcompensation as it resulted from the method of calculating the damage based on Croatia Airlines’ net loss. It is true that the Commission’s approach was implicitly based on the assumption that, if there had been no restrictive measures linked to the COVID‑19 pandemic, the EBIT of that undertaking for 2020 would have been the same as that of 2019. By its arguments set out in paragraph 76 above, the applicant disputed the merits of that assumption, without, however, providing any specific evidence or proof in support of that challenge.

90      It should be added that, in its observations on the Commission’s reply to a written question put by the Court, the applicant maintains that the Commission underestimated Croatia Airlines’ avoided costs, which led to an overestimation of the damage calculated in accordance with the net loss method. The applicant also claims that the Commission ought to have calculated the damage on the basis of a methodology relating to the EBIT of Croatia Airlines, which is more transparent and demonstrates that the damage suffered by that airline amounted to HRK 78.7 million and was therefore lower than the amount of the aid at issue.

91      It should be noted that the complaints summarised in paragraph 90 above were not raised in the application and must be classified as new pleas raised in the course of the proceedings. It is clear from Article 84(1) of the Rules of Procedure of the General Court that no new plea in law may be introduced in the course of proceedings unless it is based on matters of law or of fact which come to light in the course of the procedure. The new pleas raised in the present case are not based on such matters of law or of fact and must therefore be rejected as being out of time and, consequently, inadmissible (see, to that effect, judgment of 11 May 2017, Deza v ECHA, T‑115/15, EU:T:2017:329, paragraphs 205 to 207).

92      In the light of the foregoing, it must be held that the applicant’s line of argument, set out in paragraphs 74 to 76 above, does not demonstrate the existence of serious difficulties in relation to the assessment of the damage suffered by Croatia Airlines.

(iv) The third indication of the existence of serious difficulties, relating to the assessment of the damage

93      The applicant submits that Article 107(2)(b) TFEU authorises aid to make good ‘the damage caused by … exceptional occurrences,’ and not just the damage of a selected victim of such occurrences. Thus, the applicant complains that the Commission did not assess, in the contested decision, the damage caused by the COVID‑19 pandemic to airlines operating in Croatia other than Croatia Airlines.

94      In that regard, it should be noted that the objective of the aid measure at issue was to compensate Croatia Airlines for the damage suffered as a direct consequence of the COVID‑19 pandemic. In order to assess the compatibility of that aid measure with the internal market in the light of Article 107(2)(b) TFEU, the Commission was under no legal obligation to assess the damage caused by the COVID‑19 pandemic to other airlines, which are competitors of Croatia Airlines.

95      For the purposes of applying Article 107(2)(b) TFEU, the Commission must ascertain, first, whether a natural disaster or an exceptional occurrence has occurred; second, the existence of a direct causal link between the damage and the natural disaster or exceptional occurrence (see paragraph 57 above) and, third, the absence of overcompensation (see paragraph 58 above). If those three conditions are fulfilled, the Commission is required, under Article 107(2)(b) TFEU, to declare the aid measure at issue compatible with the internal market, without there being any need for it to examine the effects of that aid on competition or to assess the damage caused by the exceptional occurrence to other economic operators (see, to that effect, judgment of 17 September 1980, Philip Morris Holland v Commission, 730/79, EU:C:1980:209, paragraph 17).

96      Furthermore, it does not follow from Article 107(2)(b) TFEU that Member States are obliged to make good the entirety of the damage caused by an exceptional occurrence, such that they similarly cannot be required to grant aid to all of the victims of that damage either (see, to that effect, judgment of 14 July 2021, Ryanair and Laudamotion v Commission (Austrian Airlines; COVID‑19), T‑677/20, under appeal, EU:T:2021:465, paragraphs 57 and 95).

97      It must therefore be concluded that the applicant is not justified in claiming that the Commission was required to assess, in the contested decision, the damage caused to airlines other than Croatia Airlines.

98      On the basis of the foregoing, the first part of the applicant’s line of argument must be rejected.

(2)    The second part of the applicant’s line of argument, relating to the competitive advantage created by the grant of the aid at issue

99      The applicant complains that the Commission did not take into account, as an advantage conferred on Croatia Airlines by the aid measure at issue, the competitive advantage which that measure had given to it. As a result, the Commission underestimated the amount of the advantage conferred on that undertaking by the aid measure at issue.

100    In that regard, it should be noted that, for the purposes of assessing the compatibility of aid with the internal market, the advantage procured by that aid for the recipient does not include any economic benefit the recipient may have enjoyed as a result of exploiting the advantage. That benefit may not be the same as the advantage constituting the aid, and there may indeed be no such benefit, but that cannot justify a different assessment of the compatibility of the aid with the internal market (see, to that effect and by analogy, judgment of 21 December 2016, Commission v Aer Lingus and Ryanair Designated Activity, C‑164/15 P and C‑165/15 P, EU:C:2016:990, paragraph 92).

101    It must therefore be concluded that the applicant is not justified in criticising the Commission for failing to take account of the competitive advantage conferred on Croatia Airlines by the aid measure at issue.

102    On the basis of the foregoing considerations, it must be concluded that the applicant’s line of argument examined in paragraphs 51 to 101 above does not demonstrate the existence of serious difficulties which would have required the Commission to initiate the formal investigation procedure.

(c)    The indications of breach of the principles of non-discrimination, the free provision of services and freedom of establishment

103    The applicant submits that the aid measure at issue infringes the principles of non-discrimination, free provision of services and freedom of establishment and that, consequently, the contested decision, which finds that that measure is compatible with the internal market, must be annulled.

104    The Commission, supported by the Republic of Croatia, disputes the applicant’s arguments.

105    As a preliminary point, it should be recalled that State aid which contravenes provisions of the Treaty or the general principles of EU law cannot be declared compatible with the internal market (judgments of 15 April 2008, Nuova Agricast, C‑390/06, EU:C:2008:224, paragraphs 50 and 51, and of 22 September 2020, Austria v Commission, C‑594/18 P, EU:C:2020:742, paragraph 44).

(1)    Breach of the principle of non-discrimination

106    The applicant maintains, in essence, that the contested decision authorises a difference in treatment between Croatia Airlines, the sole beneficiary of the aid at issue, and the other airlines operating in Croatia which have also suffered damage as a result of the COVID‑19 pandemic and are in a situation comparable to that of the beneficiary of that aid. According to the applicant, the need to remedy only the losses suffered by Croatia Airlines, but not the damage suffered by the other airlines operating in Croatia, is not established in the contested decision. The applicant also submits that the difference in treatment is not proportionate to the objective of the aid at issue, which is to make good damage caused by the COVID‑19 pandemic. Croatia Airlines received all (100%) of the aid at issue, whereas its share of the damage caused by the COVID‑19 pandemic is probably 15%, that is to say equal to its share of the Croatian market. The applicant submits that, if the aid at issue were granted to all airlines operating in Croatia, its objective would be achieved without discrimination. According to the applicant, the aid measure at issue constitutes a measure of ‘naked economic nationalism’.

107    The principle of non-discrimination requires that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment is objectively justified (judgment of 15 April 2008, Nuova Agricast, C‑390/06, EU:C:2008:224, paragraph 66; see also, to that effect, judgment of 5 June 2018, Montero Mateos, C‑677/16, EU:C:2018:393, paragraph 49).

108    The elements which characterise different situations, and hence their comparability, must in particular be determined and assessed in the light of the subject matter and purpose of the EU act which makes the distinction in question. The principles and objectives of the field to which the act relates must also be taken into account (judgment of 16 December 2008, Arcelor Atlantique et Lorraine and Others, C‑127/07, EU:C:2008:728, paragraph 26).

109    Furthermore, it should be borne in mind that the principle of proportionality, which is one of the general principles of EU law, requires that acts adopted by EU institutions do not exceed the limits of what is appropriate and necessary in order to attain the legitimate objectives pursued by the legislation in question (judgment of 17 May 1984, Denkavit Nederland, 15/83, EU:C:1984:183, paragraph 25); where there is a choice between several appropriate measures, recourse must be had to the least onerous measure and the disadvantages caused must not be disproportionate to the aims pursued (judgment of 30 April 2019, Italy v Council (Fishing quota for Mediterranean swordfish), C‑611/17, EU:C:2019:332, paragraph 55).

110    In the present case, in the first place, it should be borne in mind that, as is apparent from recitals 55 and 56 of the contested decision, the aid measure at issue is intended solely to compensate Croatia Airlines for the damage suffered by that airline as a result of the imposition of travel restrictions adopted by the Croatian authorities.

111    It is true, as the applicant correctly submits, that all airlines operating in Croatia were affected by those restrictions and that as a consequence they, like Croatia Airlines, have all suffered damage resulting from the halting of air transport activities following the introduction of the aforementioned restrictions.

112    However, the fact remains, as the Commission correctly submits in its defence, that there is no requirement for Member States to grant aid to make good the damage caused by an ‘exceptional occurrence’ within the meaning of Article 107(2)(b) TFEU.

113    More specifically, first, while Article 108(3) TFEU requires Member States to notify their plans as regards State aid to the Commission before they are put into effect, it does not, however, require them to grant any aid (order of 30 May 2018, Yanchev, C‑481/17, not published, EU:C:2018:352, paragraph 22).

114    Second, an aid measure may be directed at making good the damage caused by an exceptional occurrence, in accordance with Article 107(2)(b) TFEU, irrespective of the fact that it does not make good the entirety of that damage.

115    Consequently, it does not follow from either Article 108(3) TFEU or from Article 107(2)(b) TFEU that Member States are obliged to make good the entirety of the damage caused by an exceptional occurrence, such that they similarly cannot be required to grant aid to all of the victims of that damage.

116    In the second place, it should be noted that individual aid, such as the aid at issue, by definition benefits only one company, to the exclusion of all the other companies, including those in a situation comparable to that of the recipient of that aid. Consequently, such individual aid, by its nature, brings about a difference in treatment, or even discrimination, which is nevertheless inherent in the individual character of that measure. To argue, as the applicant does, that the grant of the aid at issue is contrary to the principle of non-discrimination amounts, in essence, to calling into question systematically the compatibility of any individual aid with the internal market solely on account of its inherently exclusive and thus discriminatory nature, even though EU law allows Member States to grant individual aid, provided that all the conditions laid down in Article 107 TFEU are met (see, to that effect, judgment of 14 July 2021, Ryanair and Laudamotion v Commission (Austrian Airlines; COVID‑19), T‑677/20, under appeal, EU:T:2021:465, paragraph 58).

117    In the third place and in any event, even if, as the applicant claims, the difference in treatment established by the aid measure at issue, in so far as it benefits only Croatia Airlines, may amount to discrimination, it is necessary to ascertain whether it is justified by a legitimate objective and whether it is necessary, appropriate and proportionate in order to attain that objective. In so far as Article 107(2)(b) TFEU constitutes the legal basis of the contested decision, it is necessary to ascertain whether that difference in treatment is permitted in the light of the abovementioned provision. That examination requires, first, that the objective of the aid measure at issue satisfies the requirements laid down in that provision and, second, that the conditions for granting that measure, namely, in the present case, that it benefits only Croatia Airlines, are such as to enable that objective to be achieved and do not go beyond what is necessary to achieve it.

118    As regards the objective of the aid measure at issue, the applicant does not dispute that compensation for damage resulting from the abrupt halting of air transport activities by reason of the imposition of travel restrictions and other containment measures in the context of the COVID‑19 pandemic makes it possible to remedy the damage caused by that pandemic. Nor does the applicant dispute that the COVID‑19 pandemic constitutes an exceptional occurrence within the meaning of Article 107(2)(b) TFEU.

119    As regards the conditions for granting the aid measure at issue, it is apparent from a document provided by the applicant that Croatia Airlines held the largest share of the Croatian market in seats for 2019, namely 29%, the applicant coming only fourth with a market share of 7%. Moreover, in recital 26 of the contested decision, the Commission found that Croatia Airlines operated flights to 38 destinations in 24 countries and that, in 2019, it had carried 1.9 million passengers with a passenger load factor of 73.6%. In addition, it is apparent from recital 14 of the contested decision that, during the period from 19 March to 30 June 2020, Croatia Airlines operated cargo flights and repatriation flights which were important during the pandemic. The Commission also relied, in recital 25 of the contested decision, on the fact that Croatia Airlines had generated a turnover of approximately EUR 230.4 million in 2019 and that it employed 1 021 people.

120    The Republic of Croatia drew attention, in its statement in intervention, to Croatia Airlines’ strategic role in the Croatian transport infrastructure, in particular during the crisis period. It also emphasised the fact that that airline operated throughout the year, while the applicant was active on the Croatian market only for a limited period during the summer and only in coastal airports. That information provided by the Republic of Croatia has not been disputed by the applicant.

121    In view of the significance of Croatia Airlines, especially as regards its contribution to the connectivity of Croatia throughout the year, it must be concluded that the grant of the aid measure at issue only to Croatia Airlines was an appropriate measure to achieve the objective of remedying the damage caused by the travel ban and by the other restrictive measures adopted in the context of the COVID‑19 pandemic.

122    That conclusion is not called into question by the applicant’s argument that the grant of the entire aid to Croatia Airlines is disproportionate, in so far as that airline has suffered only a fraction of the damage caused to airlines by the COVID‑19 pandemic. In that context, the applicant claims that it holds 7% of the Croatian market and that it has therefore suffered 7% of the damage caused by the COVID‑19 pandemic in Croatia.

123    It is apparent from the documents before the Court that Croatia Airlines, because of its essential role for Croatia’s air transport connectivity, was affected more by the abrupt halting of air transport activities than the other airlines in that country. In particular, as regards the applicant, it is not apparent from the documents before the Court that it played as important a role in that air transport connectivity as Croatia Airlines.

124    Last, as regards the question whether the aid measure at issue goes beyond what is necessary to attain the objective pursued, it should be noted that the amount of that aid is lower than that of the damage caused to Croatia Airlines (see paragraph 66 above). Therefore, that measure does not go beyond what is necessary to achieve the legitimate objective it pursues.

125    Consequently, it must be held that the difference in treatment in favour of Croatia Airlines is appropriate for the purpose of making good the damage resulting from the abrupt halting of air transport activities in Croatia as a result of the imposition of travel bans and other containment measures in the context of the COVID‑19 pandemic and does not go beyond what is necessary to achieve that objective.

126    It should also be added that the applicant has not established that sharing the amount of the aid at issue between all the airlines operating in Croatia (on the basis of their market share) would not have deprived that measure of its practical effect.

127    In any event and in so far as the difference in treatment brought about by the aid measure at issue may amount to discrimination, it follows that granting the benefit of that measure only to Croatia Airlines was justified and that the grant of that aid does not infringe the principle of non-discrimination.

(2)    Infringement of the freedom of establishment and of the free provision of services

128    The applicant claims that the aid measure at issue confers on Croatia Airlines, which is established in Croatia, an advantage over airlines operating in that Member State under the principle of free provision of services or the freedom of establishment and therefore constitutes a restriction on the exercise of those two freedoms and also infringes Regulation (EC) No 1008/2008 of the European Parliament and of the Council of 24 September 2008 on common rules for the operation of air services in the [European Union] (OJ 2008 L 293, p. 3), which implements the principle of the free provision of services in the air transport sector. The applicant complains that the Commission did not examine the compatibility of the aid measure at issue with those two freedoms and the abovementioned regulation.

129    First, it should be noted that the provisions of the FEU Treaty concerning freedom of establishment are aimed at ensuring that foreign nationals and companies are treated in the host Member State in the same way as nationals of that State (see judgment of 6 October 2015, Finanzamt Linz, C‑66/14, EU:C:2015:661, paragraph 26 and the case-law cited).

130    Second, the free provision of services precludes the application of any national legislation which has the effect of making the provision of services between Member States more difficult than the provision of services purely within one Member State, irrespective of whether there is discrimination on the grounds of nationality or residence (see, to that effect, judgment of 6 February 2003, Stylianakis, C‑92/01, EU:C:2003:72, paragraph 25). However, it should be pointed out that, pursuant to Article 58(1) TFEU, freedom to provide services in the field of transport is governed by the provisions of the title relating to transport, namely Title VI of the FEU Treaty. The freedom to provide services in the field of transport is therefore governed, in the primary law, by a special legal regime (judgment of 18 March 2014, International Jet Management, C‑628/11, EU:C:2014:171, paragraph 36). Consequently, Article 56 TFEU, which enshrines the free provision of services, does not apply as such to the air transport sector (judgment of 25 January 2011, Neukirchinger, C‑382/08, EU:C:2011:27, paragraph 22).

131    Therefore, measures liberalising air transport services may only be adopted under Article 100(2) TFEU (judgment of 18 March 2014, International Jet Management, C‑628/11, EU:C:2014:171, paragraph 38). As the applicant rightly notes, the EU legislature adopted Regulation No 1008/2008 on the basis of that provision, and its very purpose is to define the conditions for applying in the air transport sector the principle of free provision of services (see, by analogy, judgment of 6 February 2003, Stylianakis, C‑92/01, EU:C:2003:72, paragraphs 23 and 24).

132    In the present case, it should be noted that the applicant submits, in essence, that the aid measure at issue constitutes a restriction on the freedom of establishment and the free provision of services on account of its discriminatory nature.

133    While it is true that the aid measure at issue relates to individual aid which benefits Croatia Airlines only, the applicant has not established how that exclusive character is such as to deter it from establishing itself in Croatia or from providing services to and from that country. In particular, the applicant is not in a position to identify the matters of fact or of law which would result in that measure producing restrictive effects going beyond those triggering the prohibition in Article 107(1) TFEU, but which, as held in paragraphs 118 to 125 above, are nevertheless necessary and proportionate to make good the damage caused to Croatia Airlines by the exceptional occurrence that is the COVID‑19 pandemic, in accordance with the requirements laid down in Article 107(2)(b) TFEU.

134    Consequently, the aid measure at issue cannot constitute a restriction on the freedom of establishment or the free provision of services. It follows that the applicant is not justified in complaining that the Commission failed to examine the compatibility of that measure with the freedom of establishment and the free provision of services, and Regulation No 1008/2008.

135    In those circumstances, it must be concluded that the applicant’s line of argument examined in paragraphs 103 to 134 above does not demonstrate the existence of serious difficulties which would have required the Commission to initiate the formal investigation procedure.

(d)    Conclusion on the third plea in law

136    It should be borne in mind that the applicant’s arguments raised in the context of the first and second pleas do not demonstrate the existence of serious difficulties encountered by the Commission which should have led it to initiate the formal investigation procedure.

137    Moreover, the applicant’s line of argument, set out in paragraph 42 above, that, if it had had the opportunity to submit comments to the Commission in the formal investigation procedure, the Commission’s decision might have been different is also irrelevant, since, as has just been found, the applicant has not succeeded in demonstrating the existence of serious difficulties which would have required the Commission to initiate the formal investigation procedure.

138    On the basis of the foregoing, the third plea in law must be rejected.

2.      The fourth plea in law, alleging infringement of the second paragraph of Article 296 TFEU

139    The applicant submits that the Commission failed to fulfil its obligation to state reasons, since it failed to provide reasons for a series of issues relating to the first and second pleas in law.

140    As regards the first plea, the Commission did not provide reasons to justify the fact that Croatia Airlines was distinguished from other airlines by being the only one to receive aid in the form of compensation, whereas other airlines, including the applicant, also suffered damage as a result of the COVID‑19 pandemic.

141    As regards the second plea, the Commission did not assess the value of the competitive advantage conferred on Croatia Airlines by the grant of the aid at issue. The Commission also failed to state reasons for its calculation of the amount of the aid at issue, in so far as it ignored the proportion of Croatia Airlines’ losses arising from its difficulties before the COVID‑19 pandemic. Furthermore, the Commission failed to assess the damage caused by the COVID‑19 pandemic, in particular by not limiting the specific damage caused directly by the restrictions applied to cross-border travel – which are supposed to be the event giving rise to the damage – and by failing to take into account the fact that Croatia Airlines had continued its domestic flight activity and some of its international flights during the period between 19 March and 30 June 2020.

142    Furthermore, the applicant, in its observations on the Commission’s response to a written question put by the Court, criticised the Commission for failing to explain, in the contested decision, the reason for the existence of a discrepancy between the amount of the damage calculated according to the methodology based on net losses (HRK 110 025 920) and the amount of the damage calculated according to the methodology based on the EBIT of Croatia Airlines, which, according to the applicant, amounted to HRK 78 665 279.

143    The Commission disputes the applicant’s complaints and contends that the contested decision contains an adequate statement of reasons.

144    In that regard, it should be borne in mind that the statement of reasons required by Article 296 TFEU is an essential procedural requirement (judgment of 18 June 2015, Ipatau v Council, C‑535/14 P, EU:C:2015:407, paragraph 37) and must be appropriate to the measure at issue and disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in question in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the competent court to exercise its power of review. Accordingly, the requirements to be satisfied by the statement of reasons depend on the circumstances of each case, in particular the content of the measure in question, the nature of the reasons given and the interest which the addressees of the measure, or other parties to whom it is of direct and individual concern, may have in obtaining explanations. It is not necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements laid down in Article 296 TFEU must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question (judgments of 2 April 1998, Commission v Sytraval and Brink’s France, C‑367/95 P, EU:C:1998:154, paragraph 63; of 22 June 2004, Portugal v Commission, C‑42/01, EU:C:2004:379, paragraph 66; and of 15 April 2008, Nuova Agricast, C‑390/06, EU:C:2008:224, paragraph 79).

145    Furthermore, a decision adopted at the end of the preliminary examination phase and declaring a State aid measure compatible with the internal market, which is taken within a short period, must simply set out the reasons for which the Commission takes the view that it is not faced with serious difficulties in assessing the compatibility of the aid at issue with the internal market (judgments of 22 December 2008, Régie Networks, C‑333/07, EU:C:2008:764, paragraph 65, and of 27 October 2011, Austria v Scheucher-Fleisch and Others, C‑47/10 P, EU:C:2011:698, paragraph 111).

146    In the present case, as regards the applicant’s complaint set out in paragraph 140 above, it is apparent from the examination of the first plea that, from a legal point of view, the difference in treatment between the beneficiary of the aid measure at issue and other economic operators which did not receive aid and who are in a situation comparable to that of that beneficiary is inherent in the individual nature of that measure (see paragraph 116 above). It has also been held that Member States are not required to grant aid to all victims of damage caused by an exceptional occurrence referred to in Article 107(2)(b) TFEU. In the light of that legal analysis, the Commission was not required to explain in the contested decision why it considered that the grant of the aid at issue solely to Croatia Airlines was lawful.

147    As regards the applicant’s complaints set out in paragraph 141 above, first, it must be borne in mind that the Commission was not required to determine the value of the competitive advantage conferred on Croatia Airlines by the grant of the aid at issue. Therefore, it cannot be criticised for not having given reasons for its calculations in that regard. Second, it must be borne in mind that the Commission clearly set out, in particular in recitals 27, 28 and 61 of the contested decision, the method used to calculate the damage caused to Croatia Airlines. It follows from that method – which is based on the calculation of the decline in Croatia Airlines’ operating revenue during the period from 19 March to 30 June 2020 compared with the same period in 2019 – that it took into account the fact that Croatia Airlines had operated a certain number of international and domestic flights during the period between 19 March and 30 June 2020, in so far as the revenue from those flights was included in operating revenues. Nor was there any need for the Commission to limit the damage caused solely by the restrictions on cross-border travel, since, as has already been found, the Commission found that the damage suffered by Croatia Airlines did not arise solely from the ban on crossing the national border, but also from other containment measures imposed by the Croatian authorities (see paragraph 69 above). There is therefore no failure to state reasons as regards the calculation of the damage suffered by Croatia Airlines.

148    With regard to the applicant’s complaint set out in paragraph 142 above, it should first of all be noted that, in recital 30 of the contested decision, the Commission explained why it considered that the amount of the damage calculated in accordance with the methodology based on the EBIT could in fact reach HRK 88.5 million, thus corresponding to the amount of the aid at issue (see paragraph 88 above). It must be concluded, in that regard, that the Commission’s analysis, irrespective of whether it is well founded, is sufficiently reasoned.

149    As regards the discrepancy between the amount of the damage calculated according to the net loss method and the amount of the damage calculated in accordance with the method based on the EBIT of Croatia Airlines, it should be noted that, as is apparent from recital 29 of the contested decision, the Commission used the second method in order to confirm that there was no overcompensation as it resulted from the use of the first method. Having established that there was no overcompensation, the Commission was not obliged to explain the reason for the discrepancy referred to above.

150    It follows from all of the foregoing that the fourth plea in law must be rejected and, consequently, that the action must be dismissed in its entirety.

IV.    Costs

151    Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered to bear its own costs and to pay those incurred by the Commission, in accordance with the form of order sought by the latter.

152    The Republic of Croatia is to bear its own costs, in accordance with Article 138(1) of the Rules of Procedure.

On those grounds,

THE GENERAL COURT (Tenth Chamber)

hereby:

1.      Dismisses the action;

2.      Orders Ryanair DAC to bear its own costs and to pay those incurred by the European Commission;

3.      Orders the Republic of Croatia to bear its own costs.

Delivered in open court in Luxembourg on 9 November 2022.

*      Language of the case: English.

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