Dª. Arancha González Laya Ministra De Asuntos Exteriores, Unión Europea Y Cooperación Sede Palacio De Santa Cruz Plaza De La Provincia, 1 E- 28012 Madrid

EUROPEAN COMMISSION

Brussels, 17.2.2020 C(2020) 800 final

In the published version of this decision, PUBLIC VERSION some information has been omitted, pursuant to articles 30 and 31 of Council This document is made available for Regulation (EU) 2015/1589 of 13 July 2015 information purposes only. laying down detailed rules for the

application of Article 108 of the Treaty on the Functioning of the European Union, concerning non-disclosure of information covered by professional secrecy. The omissions are shown thus […]

Subject: State Aid SA. 33909 (2013/C, ex 2013/NN, ex 2011/CP) – Spain Alleged aid to Ryanair and other airlines and possible aid to Girona and Reus Airports

Excellency,

The Commission wishes to inform Spain that, having examined the information supplied by your authorities on the measures referred to above, it has decided to extend the formal investigation procedure laid down in Article 108(2) of the Treaty on the Functioning of the European Union (“TFEU”).

1. THE PROCEDURE

(1) By email of 18 November 2011, the Commission received a complaint alleging that unlawful State aid had been provided by Spain at Girona-Costa Brava airport (hereinafter “Girona airport”) and Reus airport in favour of Ryanair. This complaint was registered under the State aid case number SA.33909 (2011/CP).

(2) By letter of 23 May 2012, the Commission received a second complaint from a competitor airline user of Barcelona-El Prat airport (hereinafter “Barcelona airport”), also alleging unlawful State aid provided by Spain at Girona and Reus airports in favour of Ryanair in the form of marketing and promotion agreements.

Dª. Arancha González Laya Ministra de Asuntos Exteriores, Unión Europea y Cooperación Sede Palacio de Santa Cruz Plaza de la Provincia, 1 E- 28012 Madrid

Commission européenne/Europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel. +32 22991111

(3) After having examined the information provided by Spain, on 16 October 2013, the Commission decided to open the investigation procedure laid down in Article 108 (2) TFEU in relation the measures referred above. The decision to open the formal investigation procedure (“the opening decision”) was transmitted to Spain on 16 October 2013, and was published in the Official Journal of the European Union on 23 April 2014.1

(4) After the opening decision, several interested parties provided their observations on the opening decision and additional information was requested from interested parties, who transmitted their comments in several communications.

2. DESCRIPTION OF THE FACTS RELEVANT FOR THE EXTENSION OF THE FORMAL INVESTIGATION PROCEDURE

2.1 The opening decision

(5) The opening decision was based on the information at the disposal of the Commission at the moment of its adoption. For the general description of the facts regarding the Girona and Reus airports and the entities involved, also relevant for this decision, reference is made to Sections 2.2 and 2.3 of the opening decision.

(6) In the opening decision, the Commission took the preliminary view that the marketing support granted to Ryanair and other airlines may constitute State aid within the meaning of Article 107(1) TFEU to the airlines concerned and to the operator of the two airports.

(7) With regard to an assessment of economic advantage, the Commission considered that there were two possible assessment frameworks:

- First, the Commission assessed the configuration where the airport operator and the public entities, which concluded the marketing agreements, are regarded as a single entity, in particular in charge of the operation of the airports. Under this first assessment framework, the Market Economy Operator (MEO) test is applied to the combined entity, which should seek to obtain a financial benefit from its relationship with the airlines if it behaved like a private operator. The Commission considered that the marketing agreements relating to the operation of airlines at both Girona and Reus airports may have conferred an advantage on the airlines that they would not have obtained under normal market conditions. In particular, the Commission observed that the marketing agreements may generate an advantage for those airlines by lowering the costs that they would normally have to bear in order to fly to or from a given destination.

- Second, the Commission assessed the configuration where the behaviour of the airport operator and that of the public entities cannot be assessed together. Under this second assessment framework, the Commission also considered that the marketing agreements relating to the operation of airlines at both

1 OJ C 120, 23.4.2014, p. 24.

Girona and Reus airports may have conferred an advantage on the airlines. In addition, the Commission considered that the marketing agreements may have conferred an advantage to the airport operator of Girona and Reus, as they allowed that operator to develop the activity of those airports, without bearing the costs that it would normally have to bear to achieve such development.

(8) The Commission also expressed doubts as to whether the measures in question were compatible with the internal market.

(9) By the opening decision, the Commission requested Spain to submit its comments and to provide all such information necessary to assess the measures in question.

2.2 Grounds for the extension of the investigation procedure

(10) The Commission has decided to extend the opening decision in order (i) to include, under the ongoing investigation, additional marketing agreements relevant to the case that had not been considered previously in the opening decision, and (ii) to refine the preliminary view provided in the opening, based on the results of the investigation so far, taking also into account the experience acquired in similar cases since the opening decision.

Additional marketing agreements

(11) The answers of the Spanish authorities mentioned several marketing agreements concluded with Ryanair, Airport Marketing Services (hereinafter, “AMS”2) and airlines operating at the Girona and Reus airports, and public entities (e.g. GMS, AGI, APC3). As the Commission was not aware of any agreement concluded with AMS, it invited Spain to clarify whether such agreements existed and whether these were different agreements from those previously signed, already subject to the formal investigation procedure.

(12) Spain confirmed the existence of these additional marketing agreements with AMS as well as with several airlines operating at the Girona and Reus airports (“the additional marketing agreements”), so far unknown to the Commission.

(13) The Commission thus considers it necessary, for a full analysis of all the agreements signed between a public entity related to operations in Girona and Reus airports and certain airlines operating at those airports, to extend the scope of the investigation procedure to (i) the agreements listed in the tables below as well as (ii) any other agreements not mentioned in the table below that were concluded between the airlines and public signatories mentioned in the tables below from 2003 until the date of the present decision.

Table 1 – Additional marketing agreements concluded with airlines operating at Girona airport

2 AMS is a 100% subsidiary of Ryanair. AMS will be referred to as an airline in the present decision. 3 GMS stands for Gestió de Marqueting i Serveis de les Comarques Gironines; AGI stands for Associació per a la Promoció i el Desenvolupament de les Comarques Gironines; APC stands for Aeroports Públics de Catalunya.

Airline Signatory Period of Key conditions contained Payment to be Airline Obligations validity in contract made

AMS AGI 2006 - 2010 Marketing services: web […] (*) EUR Aircrafts at base. banner, external advertising, use of Catalan, etc. Operation of routes/traffic.

AMS GMS 01.04.2007 - Marketing services: banner […] EUR Aircrafts at base. 31.12.2007 on Ryanair website, external advertising on aircrafts, use Operation of Automatically of Catalan, etc. routes/traffic. renewed for 1 year

AMS GMS 01.01.2009 - The provision of Internet […] EUR Cancellation linked 31.12.2011 marketing and advertising to traffic change. services and activities by AMS to GMS

AMS GMS 2012 - 2017 Marketing services […] EUR Cancellation linked to traffic change. Initial period of 3 years starting on 25.03.2012 Automatically extended for 2 years until 24.03.2017

Side letter n° 1 Reduce the level of […] EUR Main contract. on 19.11.2013 marketing services April 2013 - March 2014

Side letter n° 2 […] EUR Main contract. on 09.02.2015 April 2015 - March 2017

Ryanair4 GMS 25.03.2012- (a) Advertising on overhead […] EUR Cancellation linked 24.03.2015 lockers on 20 planes for 8 to traffic change. months each year With automatic two year (b) The placement of extension: external advertising on 8 planes all year round. 25.03.2015- 24.03.2017 (c) Placement of articles in in-flight magazine (d) Use of the Catalan language for Ryanair website and cabin announcements.

Side letter n° 1 Placement of 8 decals on the […] EUR Main contract. on 12.03.2014 back of the fuselage of the aircrafts all year, magazines, April 2014 - Catalan, etc March 2015

Side letter n° 2 Placement of 8 decals on the […] EUR Main contract. on 09.02.2015 back of the fuselage of the aircrafts all year April 2015 -

* Confidential information

4 This marketing agreement was already listed in the opening decision, but not some of its side letters. For the sake of clarity, it is also included in the Table.

Airline Signatory Period of Key conditions contained Payment to be Airline Obligations validity in contract made March 2016

Side letter n° 3 Reconfirmation of the […] EUR Main contract. on 08.02.2016 agreement after change of GMS to APC

Side letter n° 4 Extension of the agreement […] EUR Main contract. on 14.03.2016 for 1 year until 25.03.2017 April 2016 - March 2017

Jet2 APC 3 years as of Not readable document […] EUR Cancellation linked 01.01.2016 to minimum traffic.

Side letter n° 1 Increase the level of […] EUR Cancellation linked marketing services in 2017 to minimum traffic. on 02.01.2017 and 2018

Side letter n° 2 Increase the level of […] EUR Cancellation linked marketing services 2018 to minimum traffic. on 01.12.2017

TUI APC 01.05.2018 - Provision of Internet […] EUR Cancellation linked 31.12.2018 marketing and advertising to minimum traffic. services and activities performed by TUI to APC

Pobeda APC 3 years as of Provision of Internet […] EUR Cancellation linked Airlines 01.05.2017 marketing and advertising to minimum traffic. LLC services and activities performed by Pobeda to APC

Side letter n° 1 Increase the level of […] EUR Operation of marketing services in 2017 routes/traffic. on 01.12.2017 and 2018 2017 and 2018

Side letter n° 2 Increase the level of […] EUR Operation of marketing services 2018 routes/traffic. on 01.06.2018 2018

(14) The marketing agreements listed above are predicated upon the activity of the airlines at Girona airport through (i) commitments to base aircrafts at the airport, (ii) commitments to operate new flights/routes from/to Girona airport, (iii) cancellation clauses linked to a minimum airline activity specified by an indicative reference on flights per week (routes and frequencies), or (iv) cancellation clauses that depend on air traffic change.

Table 2 – Additional marketing agreements concluded with airlines operating at Reus airport

Airline Signatory Period of Key conditions contained in Payment to be Airline Obligations validity contract made

AMS APC Initial term of 3 The package of marketing […] EUR Operation of years starting on services includes: routes/traffic. 25 March 2012 - Link to promotional Automatically website on Ryanair's website extended for 2 for 19 days/year (value: years until 24 […] EUR)

Airline Signatory Period of Key conditions contained in Payment to be Airline Obligations validity contract made March 2017 - Featured destination page on Ryanair's website for 3 Subsequent weeks/year (value: renewal have to […] EUR) be negotiated - Graphic Banner Button on Ryanair's website for 6 weeks/year (value: […] EUR) - Presence in promotional email twice/year (value: […] EUR) - Presence in promotional email twice/year (value: […] EUR)

Side letter n° 1 New list of marketing […] EUR Main contract. on 24.01.2013 services February 2013 to April 2013

Side letter n° 2 New list of marketing […] EUR Main contract. on 22.03.2013 services 31.03.2013 - 29.03.2014

Side letter n° 3 New list of marketing […] EUR Main contract. on 30.08.2013 services 31.03.2013 - 29.03.2014

Side letter n° 4 New list of marketing […] EUR Main contract. on 30.04.2014 services 01.05.2014 - 28.03.2015

Side letter n° 5 New list of marketing […] EUR Main contract. on 18.02.2015 services 01.04.2015 - 31.10.2015

Side letter n° 6 New list of marketing […] EUR Main contract. on 25.06.2015 services 01.11.2015 - 31.03.2016

Side letter n° 7 New list of marketing […] EUR Main contract. on 01.04.2016 services 01.04.2016 - 24.03.2017

Jet2 APC 3 months from Contribution to a TV […] EUR Operation of date of contract campaign routes/traffic. signature as of 02.01.2012

Jet2 APC 1 year from date To create a framework […] EUR Operation of of contract cooperation, to develop routes/traffic. signature as of marketing and publicity 23.03.2012 actions. Specifically, Jet2 provides APC with specific marketing services

Airline Signatory Period of Key conditions contained in Payment to be Airline Obligations validity contract made

Jet2 APC 23.03.2013 - Provision of marketing […] EUR Operation of 22.03.2014 services routes/traffic.

Automatically renewed for two periods of 1 year

Amendment n° Provision of marketing […] EUR Operation of 1 on 17.01.2013 services routes/traffic.

Jet2 APC 4 years as of Provision of marketing […] EUR Cancellation linked to 01.01.2016 services minimum traffic.

Amendment n° No change […] EUR Main contract. 1 on 02.11.2016

TUI APC 20.04.2012 - Marketing services […] EUR Cancellation linked to 19.04.2013 minimum traffic.

TUI APC One year since Framework for cooperation […] EUR Cancellation linked to its signature as (marketing and publicity) minimum traffic. of 15.11.2012

Side letter Additional marketing […] EUR Operation of signed on services routes/traffic. 24.01.2013 1 month (February 2013)

TUI APC One year since Marketing services […] EUR Cancellation linked to its signature as minimum traffic. of 01.12.2015

(15) The marketing agreements listed above are predicated upon the activity of the airlines at Reus airport through (i) commitments to operate new flights/routes from/to Reus airport, or (ii) cancellation clauses linked to a minimum airline activity specified by an indicative reference on flights per week (routes and frequencies).

Refining the preliminary view set out in the opening decision

(16) In the opening decision, the Commission raised the question whether the operator of the airports and the public entities had to be regarded as a single entity when assessing the existence of an advantage. For each airport, it considered both alternatives.

(17) As explained in greater detail below, on the basis of the investigation so far, the Commission takes the preliminary view that the operator of the airports and the public entities cannot be considered as a single entity and that, consequently, the marketing agreements should be assessed separately.

(18) Under these circumstances, the Commission considers it appropriate to provide a more detailed assessment that applies to both (i) the agreements listed in Tables 1 and 2 above and (ii) the agreements listed in Tables 3, 4 and 8 of the opening decision.

3. ASSESSMENT OF THE MEASURES

(19) By virtue of Article 107(1) TFEU "any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market."

(20) The criteria laid down in Article 107 (1) TFEU are cumulative. Therefore, in order to determine whether the notified measures constitute State aid within the meaning of Article 107 (1) TFEU, all of the following conditions need to be fulfilled. Namely, the financial support should

- be granted by the State or through State resources,

- favour certain undertakings or the production of certain goods,

- distort or threatens to distort competition, and

- affect trade between Member States.

3.1 State resources and imputability to the State

(21) The marketing agreements have been concluded between airlines using Girona and Reus airports, on the one hand, and several public entities: Catalan government, Tarragona Provincial Council, Reus Town Council, Reus Chamber of Commerce, Tarragona Chamber of Commerce, GiCL, GMS, AGI and APC, on the other hand.

(22) Reference is made to the assessment on State resources and imputability of the opening decision (points 73 to 87, and 130 to 132), which applies mutatis mutandis to the additional marketing agreements between airlines and the following public entities: Catalan government, Tarragona Provincial Council, Reus Town Council, Reus Chamber of Commerce, Tarragona Chamber of Commerce, GiCL, GMS, AGI.

(23) Regarding APC, the Commission notes that it is a public company 100% owned and controlled by the Government of Catalonia. APC is therefore a public undertaking according to Article 2(b) of Commission Directive 2006/111/EC5. APC is attached to the territory and sustainability department of the Generalitat of Catalonia (Departamento de Territorio y Sostenibilidad).

(24) APC’s mission is to “connect Catalonia to the world and develop the aviation to maximize its economic impact and contribute to the prosperity of the country”6. APC’s activities include airport marketing and route development. Those tasks

5 Commission Directive 2006/111/EC, of 16 November 2006, on the transparency of financial relations between Member States and public undertakings as well as on financial transparency within certain undertakings (OJ L 318, 17.11.2006, p. 17). Article 2(b) of this Directive states that “public undertakings' means any undertaking over which the public authorities may exercise directly or indirectly a dominant influence by virtue of their ownership of it, their financial participation therein, or the rules which govern it”. 6 See http://aeroports.gencat.cat/en/empresa/qui/ (24 October 2019).

are normally carried out by public authorities in the context of their general responsibility to promote the economic development of the local communities that they represent. It would appear therefore that APC is an instrument that the local public authorities have set up to carry out some of their general responsibilities.

(25) APC’s board of Directors is composed of members of the Spanish public administration7. In addition, APC is classified within the perimeter of Public Administrations by Banco de España8.

(26) At this stage, the Commission takes the preliminary view that all marketing agreements (the agreements covered by the opening decision as well as the additional agreements) are imputable to the State and involve State resources. The Commission invites Spain and interested parties to comment this point further, in particular with regards to the organisational and decisional structure of APC, the degree of control which the Generalitat of Catalonia enjoys over APC (appointment of board of directors and management board), its financing and any other element regarding the decision making process of APC with regards to the signature of the marketing agreements with airlines using Girona or Reus airport.

3.2 Economic advantage

Joint assessment of AMS and Ryanair

(27) It is necessary to determine whether Ryanair and AMS should be assessed as a single beneficiary of the measures concerned.

(28) The Commission notes that AMS is a wholly-owned subsidiary of Ryanair and its managers are senior Ryanair executives. AMS acts under Ryanair’s control, and AMS’s profits go to Ryanair in the form of dividends or increased company value. The Commission also notes that AMS was created with the sole purpose of offering marketing services on Ryanair’s website and does not conduct other activities9.

(29) In view of the above, the Commission considers that for the purpose of the application of State aid rules, AMS and Ryanair are considered to be a single undertaking.

The public entities and the airport operator cannot be considered as a single entity

(30) In the opening decision, the Commission raised the question whether the operator of the airports and the public entities had to be regarded as a single entity when assessing the existence of an advantage.

7 http://aeroports.gencat.cat/en/empresa/transparencia/index.html 8 https://app.bde.es/sew_www/faces/sew_wwwias/jsp/prod/Comunes/HistoriaUnidad.jsp 9 See Commission Decision of 23 July 2014 in State aid case SA.33961 (2012/C) (ex 2012/ NN) – Aéroport de Nîmes (OJ L 113, 27.4.2016, p. 32), points 314-315.

(31) Based on the information provided by Spain, the Commission considers that there is no direct or indirect link between the operator of the airports and the public entities that signed the marketing agreements10:

- Girona and Reus airports are operated and fully owned by Aena SME, S.A (“Aena”). Aena manages nearly all general interest airports and heliports in Spain. Its shares are owned 51% by ENAIRE – a public corporate entity attached to the Ministry for Public Works (central government administration) – and 49% free float listed on the stock exchange since 11 February 2015. Before that date, the company was fully owned by the Spanish State. Aena’s shareholders do not include any of the public entities that signed the marketing agreements covered by this investigation.

- Aena is not the shareholder or member of any of the public entities that signed the marketing agreements.

- Aena and the different public entities that signed the marketing agreements do not have any shareholder/member in common.

(32) On the basis of the investigation so far, the Commission therefore takes the preliminary view that the public entities and the airport operator cannot be considered as a single entity. Therefore, the marketing agreements will be assessed independently from the airport services agreements.

The marketing agreements appear to confer an advantage to the airlines

(33) The payments made under the marketing agreements to the concerned airlines may constitute an advantage to those airlines, insofar as they received payments that they would not have received under normal market conditions.

(34) In this respect, the question arises whether the market economy operator test is applicable to the conclusion of the marketing agreements. The Commission notes that the Spanish authorities indicated that when concluding those agreements, the public entities acted as public authorities pursuing objectives of regional economic development, and therefore did not act as a market operator seeking a commercial profit from the purchase of marketing services. As further explained below, the evidence in this case also shows that the public entities were not procuring marketing services for which they had a genuine need, but instead entered into the marketing agreements with a view to subsidizing flights to Girona airport and Reus airport. Under those circumstances, the market economy operator test seems inapplicable.11 The evidence obtained so far also suggests that the prices paid for the marketing services are not in line with market conditions.

10 Catalan government, Tarragona Provincial Council, Reus Town Council, Reus Chamber of Commerce, Tarragona Chamber of Commerce, GiCL, GMS, AGI, APC.

11 See on the applicability of the MEO test in general the judgment of the Court of Justice of 19 December 2019, Arriva Italia and Others, C-385/18, EU:C:2019:647, paragraph 48, and the judgment of the Court of Justice of 5 June 2012, Commission v EDF, C-124/10 P, EU:C:2012:318, paragraphs 82 and 84.

Thus, even if the market economy operator test were applicable, it would not be met.

(35) The Commission has doubts that the marketing agreements met an actual need of the public authorities and that they served other purposes than subsidizing the airlines concerned. These marketing payments seem similar to payments made to airlines to serve particular airports, and to reduce costs of airlines. The doubts of the Commission are mainly based on the following considerations:

(a) The purchase of marketing services seems to serve as a justification to subsidize airlines to operate at the airport since there is no element indicating that the public authorities actually intended to advertise the region. In addition, the marketing services provided by airlines under the marketing agreements do not seem to have any measurable impact on the promotion of tourism and there is no sign of interest by the public authorities on the success/impact of the marketing agreements.

(b) The payment of marketing services to airlines coincides with the operation of airlines at the airport. First, the marketing agreements were exclusively concluded with airlines (or their subsidiaries) and not with traditional marketing companies capable to launch marketing campaigns via a variety of channels (newspapers, TV, internet, etc.). There is actually no indication that traditional marketing companies were approached or even considered when the public authorities decided to purchase marketing services. Second, there is evidence, such as numerous press releases and public authorities’ declarations, showing that some airlines negotiated the continuation of their operations at the airports close to the time when the marketing agreements expired, and confirmed they would continue their operations at Girona and Reus airports only once the marketing agreements were renewed. Third, the marketing agreements contain some obligations for the airlines in terms of air transport operations. Those obligations include the following:

- obligations to base aircrafts at the airport (in 5 contracts),

- obligations to operate routes and/or to guarantee traffic (in 24 contracts),

- provisions foreseeing that a significant reduction in flight services operated by the airline could constitute a cause for termination of the agreement, and including a reference to the minimum level of flight activity to consider (in 13 contracts),

- a termination clause that triggers in case of a significant reduction in flight services operated by the airline (in 10 contracts).

The Commission considers that the inclusion of such obligations is a strong indication that the actual objective of the public authorities was to subsidize airlines to operate at the airport. Indeed, while the stated aim of such marketing agreements is the economic and 11

touristic development of the regions involved, their effect is to make operations from the airport in question more attractive to airlines.

(c) The marketing services on the website of airlines principally benefit those airlines, by reducing their need to reduce the price of flight tickets to fill their aircrafts (yield management). Indeed, the marketing services on the website of airlines may increase the demand on the airlines’ routes to Girona and thus lower the pressure that airlines have to reduce the price of flight tickets to fill their aircrafts.

(d) The Commission considers that the fact that certain private operators also purchased marketing services from airlines is irrelevant because such private operators are not in a comparable situation with the public entities that purchased the marketing services. Indeed, the benefit of these marketing services for the private operators is the possibility to sell their services to passengers having purchased or likely to purchase a flight ticket. For instance, car rental companies or hotel booking websites advertise their services on airline websites to sell their services to future travellers. By contrast, the Spanish authorities have not shown that marketing a region on an airline website contributes substantially to attracting travellers.

(36) In addition, the Commission considers that the prices paid to the airlines for the marketing services in any event do not appear to be in line with market conditions. The doubts of the Commission are mainly based on the following considerations:

(a) There is no indication that the price of the services purchased corresponds to market standards or that the public authorities conducted a cost/benefit analysis when signing a new agreement. In particular, the Commission considers that the comparison of the airlines’ price lists (rate cards) with the price lists of other marketing service providers is not relevant unless rebates are taken into account. Indeed, the Commission found out that the granting of substantial rebates (ranging 10-70%) on price lists is a widespread practice among companies offering marketing services.

(b) The Spanish authorities explained that some of the marketing services purchased from airlines by GICL, AGI and GMS for the promotion of Girona were eventually resold to local private companies (a travel agency, a restaurant, an airport service operator and a financial entity), providing examples for a cumulated amount of EUR […] between 2004 and 2012, which represented 11% of marketing agreement expenditure for the promotion of Girona during the same period. The re-sell was conducted at the original purchase price or higher according to the Spanish authorities. The Spanish authorities argue that they have an intermediation function and that this demonstrates that the purchase of marketing services was at market terms since private operators would not have purchased them otherwise. However, the Commission doubts that these intermediation transactions can demonstrate that the purchase of the

marketing services by the public authorities were at market terms and corresponded to a real need:

– As explained in the precedent paragraph, public authorities and private operators are not in a comparable situation. While private operators may have an interest in promoting their services to passengers having purchased or likely to purchase a flight ticket, the Commission doubts that marketing a region on an airline website contributes substantially to attracting travellers.

– The number of private companies purchasing marketing services (only 4 companies) is very low and does not constitute a significant market reference. In addition, out of the 4 private companies, only the travel agency accounted for a relevant volume of total purchases by private operators (EUR […] out of EUR […]).

– The Spanish authorities did not provide sufficient information on the re-sell transactions. In particular, the Commission does not have information on (i) whether they all were marketing purchases or any other type of service agreement, (ii) the relationship between the private company and the Catalonian authorities, (iii) the purpose of the services sold and (iv) the existence of other potential interrelated transactions.

– According to the Spanish authorities, nearly 40% of total cumulated income of GMS from 2003 to 2012 came from those aforementioned private companies (EUR […] out of EUR […]). However, the Spanish authorities did not provide sufficient information on whether this 40% share of GMS income derived exclusively from re-sell transactions or from other types of transactions.

(37) Finally, the Commission notes that a State measure regarded as compensation for the services provided by the recipient undertakings in order to discharge public service obligations is not caught by Article 107(1) TFEU if those undertakings do not enjoy a real financial advantage and the measure thus does not have the effect of putting them in a more favourable competitive position than the undertakings competing with them12. In this case, however, Spain did not claim to use this framework and there is no indication whatsoever that the airlines have been entrusted with public service obligations.

(38) In view of the above, the Commission considers at this stage that the marketing agreements, including the additional marketing agreements, may confer an advantage to the airlines that they would not have obtained under normal market conditions.

12 See the judgment of the Court of Justice of 24 July 2003, Altmark Trans and Regierungspräsidium Magdeburg, C-280/00, EU:C:2003:415, paragraph 87, and judgment of the Court of Justice of 8 May 2013, Libert and Others, C-197/11 and C-203/11, EU:C:2013:288, paragraph 84.

3.3 Selectivity

(39) Article 107 (1) TFEU requires that a measure, in order to be defined as State aid, favours "certain undertakings or the production of certain goods". The Commission notes that the marketing agreements are individual measures. The terms of the marketing agreements reflect the result of individual negotiations between the public entities and the airlines. Moreover, not all airlines operating at Girona and Reus airports signed such agreements. Therefore, the measures appears to be selective within the meaning of Article 107(1) TFEU.

3.4 Distortion of competition and effect on trade

(40) Reference is made to the assessment on distortion of competition and effect on trade of the opening decision (points 122 to 128 and point 152), which applies mutatis mutandis also to the additional marketing agreements.

3.5 Conclusion – aid to airlines

(41) On the basis of the above, the Commission takes the preliminary view that the marketing support granted to Ryanair and other airlines may constitute State aid within the meaning of Article 107(1) TFEU to the airlines concerned.

3.6 Indirect aid to Aena

(42) In the opening decision, the Commission raised the question whether the marketing agreements constitute an aid to Aena, the operator of Girona airport and Reus airport, in so far as they relieve that company from the costs to develop its economic activity that it should normally bear from its own budget.

(43) In this respect, the Commission observes that Aena is not a party to the marketing agreements, which were signed by public entities unrelated to that company, and did not receive any of State resources that were transferred under those agreements.

(44) This does not exclude, however, the possibility that Anea is an indirect beneficiary of the marketing agreements. Such indirect advantages should be distinguished from mere secondary effects that are inherent in almost all State aid measures (from example through an increase in output). The Commission considers that, in general, the relevant criterion is whether the measure at stake is designed in such a way as to channel its secondary effects towards identifiable undertakings or groups of undertakings13.

(45) In the present case, it seems this criterion is not met, as the evidence obtained so far suggests that the marketing agreements are designed to promote regional economic development, in particular tourism, and not to promote the economic activity of Aena, which seems to be of no interest to the public entities that entered into the marketing agreements. While the marketing agreements may

13 See points 115 and 116 of the Commission Notice on the notion of State aid as referred to in Article 107(1) of the Treaty on the Functioning of the European Union, 2016/C 262/01, OJ C 262, 19.7.2016, p. 1–50.

indeed increase Anea’s turnover, the same is true for other economic operators, in particular in the tourist industry.

(46) Consequently, at this stage the Commission takes the preliminary view that the marketing agreements do not involve direct or indirect aid to Aena, but it calls upon interested parties to state their views and provide all useful information in this respect.

3.7 Compatibility of aid

(47) The Spanish authorities do not consider that the financial arrangements (in particular the marketing agreements) with regard to the activity of airlines using Girona and Reus airports constitute State aid within the meaning of Article 107(1) TFEU. They have not brought forward any arguments or evidence demonstrating that such aid could be declared compatible with the internal market.

(48) According to the case-law of the Court, it is up to the Member State to invoke possible grounds of compatibility, and to demonstrate that the conditions for such compatibility are met14.

(49) The Commission doubts whether the aid granted under the marketing agreements can be considered compatible with the internal market pursuant to Article 107(3)(c) TFEU. The measures seem to involve operating aid that does not contribute to any objective of common interest. Neither do the measures under assessment appear to qualify for any other exception provided for by the Treaty.

(50) Neither the Spanish authorities nor the other interested parties claimed that the measures under assessment could be considered as compatible start up aid under the 2005 or 2014 Aviation Guidelines. The complainant claims that the marketing support cannot be considered to meet the compatibility criteria for "start-up aid" set out in the 2005 Aviation Guidelines. The Commission notes the conditions set out in the 2005 and 2014 Guidelines do not appear to be met.

(51) In addition, no block exemption regulation covers the measures at stake. As the activities cannot be considered as compensation to airlines or airports entrusted with a genuine SGEI, the Article 106(2) of the Treaty does not seem to apply in this case.

(52) Therefore, the Commission at this stage concludes that insofar as the marketing agreements involve State aid, such aid could not be declared compatible with the internal market.

4. CONCLUSION

(53) In view of the above, the Commission takes the preliminary view that the measures may constitute State aid which is incompatible with the internal market.

(54) Consequently, the Commission, acting under the procedure laid down in Article 108(2) of the Treaty on the Functioning of the European Union, requests Spain to submit its comments and to provide all such information as may help to

14 See Case C-364/90 Italy v Commission EU:C:1993:157, paragraph 20.

assess the aid/measure, within one month of the date of receipt of this letter. It requests your authorities to forward a copy of this letter to the potential recipients of the aid immediately.

(55) The Commission wishes to remind Spain that Article 108(3) of the Treaty on the Functioning of the European Union has suspensory effect, and would draw your attention to Article 16 of Council Regulation (EU) 2015/1589, which provides that all unlawful aid may be recovered from the recipient.

(56) The Commission warns Spain that it will inform interested parties and invite their comments by publishing this letter and a meaningful summary of it in the Official Journal of the European Union. It will also inform interested parties in the EFTA countries which are signatories to the EEA Agreement, by publication of a notice in the EEA Supplement to the Official Journal of the European Union and will inform the EFTA Surveillance Authority by sending a copy of this letter. All such interested parties will be invited to submit their comments within one month of the date of such publication.

If this letter contains confidential information which should not be published, please inform the Commission within fifteen working days of the date of receipt. If the Commission does not receive a reasoned request by that deadline, you will be deemed to agree to publication of the full text of this letter. Your request should be sent electronically to the following address:

European Commission, Directorate-General Competition State Aid Greffe B-1049 Brussels [email protected]

Yours faithfully,

For the Commission

Margrethe VESTAGER Executive Vice-President