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August 7, 2019

France must recover EUR 8.5m in illegal aid to Ryanair

The European Commission (EC) has found that the marketing agreements concluded between the local Association for the Promotion of Touristic and Economic Flows (APFTE) and Ryanair at the airport of Montpellier are illegal under EU state aid rules. Ryanair is being required to return EUR 8.5m in what the EC defined as illegal aid.

Competition commissioner Margrethe Vestager said: "Competition between airports and between airlines is crucial for consumers, growth and jobs. Our investigation showed that certain payments by the French local authorities in favour of Ryanair to promote Montpellier airport gave Ryanair an unfair and selective advantage over its competitors and caused harm to other regions and other regional airports. This is illegal under EU state aid rules. France must now recover the illegal state aid."

Montpellier airport is a regional airport located in the French region of Occitanie. The airport served nearly 1.9 million passengers in 2018. Ryanair was present at the airport until April 2019.

Following a complaint by a competitor of Ryanair, in July 2018 the Commission opened an in-depth investigation into marketing agreements between the Association for the Promotion of Touristic and Economic Flows (Association de Promotion des Flux Touristiques et Economiques, APFTE) and Ryanair and its subsidiary AMS.

Between 2010 and 2017, APFTE concluded various marketing agreements with Ryanair and AMS, under which the airline and its subsidiary received payments worth around EUR 8.5m in exchange for promoting Montpellier and the surrounding area as a destination on Ryanair's website.

The Commission's investigation revealed that:

  • The agreements with Ryanair were financed through state resources and were attributable to the state. APFTE is an association unrelated to the airport operator, funded almost entirely by regional and local French public entities. These public entities closely control the use of the association's budget.
  • The payments in favour of Ryanair on the basis of the marketing agreements did not correspond to effective marketing needs of APFTE but only served as an incentive for Ryanair to maintain its operations at Montpellier airport.
  • APFTE either concluded the agreements directly with Ryanair and AMS and not with other airlines or organised public tenders that were biased towards Ryanair.

On this basis, the Commission found that the marketing agreements gave an undue and selective advantage to Ryanair over its competitors. The Commission therefore concluded that the agreements amounted to illegal and incompatible aid under EU State aid rules and that the advantage must be recovered.

As a matter of principle, EU State aid rules require that incompatible state aid be recovered in order to remove the distortion of competition created by the aid. However, there are no fines under EU state aid rules and recovery does not penalise the company in question. It simply restores equal treatment with other companies.

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