Ryanair has to return €8.5m illegal state aid

France must recover €8.5m of illegal state aid made to Ryanair, the EU Commission said last week, as regional marketing agreements at the airport of Montpellier are illegal under EU state aid rules.

The Commission's investigation showed certain payments by the French local authorities in favour of Ryanair to promote Montpellier airport and gave Ryanair "an unfair and selective advantage over its competitors and caused harm to other regions and other regional airports", according to Competition Commissioner Margrethe Vestager: "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.

Following a complaint by one of Ryanair's competitors, the Commission opened in July 2018 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 €8.5m in exchange for promoting Montpellier and the surrounding area as a touristic 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 EU executive has 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.

EU state aid rules require that incompatible state aid be recovered in order to remove the distortion of competition created by the aid. There are no fines under EU state aid rules and recovery does not penalise the company in question. What it does is to simply restore equal treatment with other companies.

France now has to recover the illegal state aid amounting to around €8.5m from Ryanair.