Indirect Beneficiaries of State aid

By: Phedon Nicolaides (State Aid Hub)

Article 107(1) of the Treaty on the Functioning of the European Union (TFEU) prohibits State aid, encompassing both direct and indirect beneficiaries. While the direct beneficiary is the formal recipient of the aid, they may serve as a conduit for passing on benefits to designated third parties. The European Commission is tasked with assessing whether any undertaking indirectly benefits from a State aid measure and must evaluate its compatibility for both direct and indirect beneficiaries. This determination holds particular significance in cases involving groups of companies.

On December 20, 2023, the General Court rendered judgments annulling two separate Commission decisions due to insufficient examination of links between related companies. The cases, brought by Ryanair and Air Malta against the Commission, contested State aid granted to Air France as part of France’s COVID-19 relief measures. The first case, T-216/21, focused on a state guarantee for a bank loan and a subordinated state loan, while the second case, T-494/21, pertained to the recapitalization of Air France.

This article primarily examines the first case challenging Commission decision SA.57082, while also providing an overview of the key aspects of the second case concerning Commission decision SA.59913.

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