Montpellier Méditerranée airport (‘Montpellier airport’) lies approximately 7 km from the centre of Montpellier, which is the capital of the department of Hérault, in the Region of Occitania in France. The airport is open to domestic and international commercial traffic.

Aside from these scheduled flights, other commercial movements at Montpellier airport during the 2010-2018 period mainly involved flying club and business flights.

Ryanair served Montpellier airport between March 2002 and April 2019.

As apparent from Table 2, from 2010 onwards, the total number of Ryanair passengers flying to and from Montpellier airport accounted for only a relatively small share of the airport’s passenger traffic (less than [10-15] %), i.e. between […] and […] passengers between 2010 and 2017.

Montpellier airport lies 57 km from Nîmes-Alés-Camargue-Cévennes airport and 70 km from Béziers-Cap d’Agde airport, which both handle international scheduled and charter flights.

In April 2019, Ryanair launched a route to Brussels-Charleroi from Béziers-Cap d’Agde airport. Ryanair has been operating a route between Nîmes and Charleroi since April 2006.

The State owns the airport infrastructure and delegates its management and operation to AMM through a concession.

AMM and Ryanair concluded the following agreements: […].

The nature of these marketing agreements will be analysed in more depth in recitals 152 et seq. and recitals 189 et seq.

It is therefore clear from the minutes of the APFTE’s General Meeting that the association was regarded as ‘the structure best suited to meeting the legal requirements, and would boost the area’s development through this “low-cost” momentum’.

According to the APFTE’s constitution, the General Meeting approves the accounts for the previous financial year, votes on the budget for the next financial year, debates and votes on all items placed on the agenda, and where necessary renews the members of the Board. The General Meeting comprises the paid-up members of the association and meets at least once a year. All its decisions are taken by a simple majority of the votes cast, except where they involve any contractual obligation with a value of more than EUR 10 000. In such cases, the General Meeting must decide by a two-thirds majority. This is the case, for example, with any marketing agreement with a value of more than EUR 10 000.

The constitution also provides for the APFTE to be administered by a Board consisting of at least nine members and at most twenty-five members appointed by the General Meeting. From among its members, the Board appoints an Executive Committee consisting of a president, one or more vice-presidents, a secretary and a treasurer, in accordance with the rules of procedure decided by the Board. The Board meets at the invitation of its president at least twice a year, at the request of half of its members provided that one third of its members are present. Decisions are taken by a majority of the votes cast for routine decisions and by a two-thirds majority for the signature of any commitment exceeding one year and with a value of more than EUR 10 000.

1. (a)

   The first President of the APFTE was a full member of the CCIM in 2010 and between 2016 and 2019, and a technical adviser within the CCIM from 2013 to 2015. This person was President of the APFTE from June 2010 to March 2011 and then again from December 2012 to at least 2018, and also Vice-President of the APFTE (with the capacity to act on behalf of the President of the APFTE) from October to December 2012.

2. (b)
   The President of the APFTE between April 2011 and February 2012 also acted as a technical adviser within the CCIM between 2011 and 201228.
3. (c)

   His successor (President from February 2012 to December 2012) was at the same time President of the Regional Economic, Social and Environmental Council of Languedoc-Roussillon (Conseil économique, social, et environnemental régional du Languedoc-Roussillon) and thus president of an institution of one of the local authorities belonging to the APFTE.

1. (a)
   The Governance Committee was intended to ‘bring together the local authorities, as funders of the [APFTE]’. Its objective was to ‘guide and confirm the strategic choices made in the development of routes and the associated budget. The Governance Committee meeting [was] preceded, where necessary, by a preparatory meeting with all the local authority technicians’29. This committee was formed at the request of the local authorities30, which wanted to ensure that the choice of marketing agreements to be funded was not determined solely by the new airport operator, AMM31. The records of the committee, as provided to the Commission, show that it consisted of representatives of the local authorities (Region, Department, Pays de l’Or, Agglomération de Montpellier, City of Montpellier), the CCIM and the Executive Committee of the APFTE. The records also refer to the presence of an AMM representative who proposed strategic choices to the funding members of the APFTE32.
2. (b)

   In addition, documents relating to the workings of the APFTE show that the Governance Committee was subsequently called the ‘Funders Committee’ from at least 2012, but involved the same institutions. The French authorities have confirmed that, according to the APFTE, the ‘Funders Committee’ is the same body as the ‘Governance Committee’, which had different names at different times.

• Proposals on geographical areas to be targeted by tourist marketing services are submitted to the Board, which gives an opinion on them.

• The proposals are then submitted for approval by the General Meeting.

• If the General Meeting approves the proposals (by a two-thirds majority for any marketing agreement with a value of more than EUR 10 000), a public procurement procedure is launched.

• The results of the analysis of the tenders received are presented to the Board, which gives an opinion.

• The results are then submitted to the General Meeting, which may authorise the President to sign the contracts (by a two-thirds majority for any marketing agreement with a value of more than EUR 10 000; the decision is recorded in the minutes of the General Meeting).

• Depending on the applicable procedure, any rejection letters are written and sent.

• Depending on the applicable procedure, notification letters signed by the President and accompanied by the tender document and price schedule, both also signed by the President, are also written and sent to each of the successful tenders.

Although the information just cited does not say so, in practice, when proposals were put forward for geographical areas to be targeted by tourist marketing services, before the deliberations of the Board and General Meeting other parties played a part in making the budget choices and determining the policy of the APFTE (i.e. the marketing agreements to be concluded).

1. (a)
   The 2010 marketing agreement with AMS (valid from 1 July 2010 to 31 December 2011) was approved by the General Meeting on 16 September 2010 and signed on the same day by the APFTE. The funding agreements with the local authorities for the 2010 budget year that have been provided to the Commission were not signed until 2011, and those for the 2011 budget year were signed only between June and November 201146.
2. (b)
   The amendment to the 2010 marketing agreement with AMS regarding the Birmingham route was approved by the General Meeting on 20 April 2011 and signed on 11 April 2011 by the APFTE. The funding agreements with the local authorities for the 2011 budget year provided to the Commission were signed only between June and November 201147.
3. (c)
   The extension of the 2010 marketing agreement with AMS for 2012 was decided by the Governance Committee on 23 September 2011, and the General Meeting of 19 October 2011 was so informed48 (the minutes of that meeting do not indicate that the General Meeting actually voted on the matter). The extension letter sent to AMS was signed by the President of the APFTE on 29 September 2011. The funding agreements with the local authorities for the 2012 budget year provided to the Commission were signed only between April and October 201249.
4. (d)
   The extension of the 2010 marketing agreement with AMS for 2013 was signed on 23 February 2013 by the APFTE. The 2013 budget and the marketing action programme including payments to Ryanair on the basis of that agreement were decided by the APFTE’s General Meeting on 4 July 201350. The funding agreements with the local authorities for the 2013 budget year that have been provided to the Commission were signed only between April and November 201351.
5. (e)
   On 27 January 2014, the General Meeting authorised the President of the APFTE to sign new marketing agreements with Ryanair for 2014, following the 2013 invitation to tender. These agreements had already been concluded by the President of the APFTE on 22 November 2013. The funding agreements with the local authorities for the 2014 budget year that have been provided to the Commission were signed only between February and October 201452.
6. (f)
   The extension of the 2013 marketing agreements with Ryanair for 2015 was approved by the General Meeting on 11 December 2014 and signed by the APFTE on 19 December 2014. The funding agreements with the local authorities for the 2015 budget year that have been provided to the Commission were signed only between June and December 201553.
7. (g)
   The extension of the 2013 marketing agreement with Ryanair for 2016 was approved by the General Meeting on 30 May 2016 and signed by the APFTE on 22 April 2016. The funding agreements with the local authorities for the 2016 budget year that have been provided to the Commission were signed only between July and December 201654.
8. (h)
   The new 2017 marketing agreements with Ryanair were concluded by the APFTE on 19 May 2017 and approved by the APFTE’s General Meeting on 25 April 2017. The funding agreements with the local authorities for the 2017 budget year that have been provided to the Commission were signed only between June and September 201755.
9. (i)
   For 2018, the Commission does not have any information on the date of extension of the 2017 marketing agreement with Ryanair. However, the sole budget allocation agreement provided to the Commission, namely the agreement concluded between the APFTE and the Communauté d’agglomération du Pays de l’Or in March 2018, refers to the promotion of Montpellier in Wallonia, Rhineland-Palatinate and Yorkshire, which were destinations of Ryanair flights56. It seems that, for the final time, the budget for 2018 was approved by the APFTE’s General Meeting on 20 December 2017 in order to honour the APFTE’s existing commitments – including its commitments to Ryanair – before the contractual relations between the CCIM, local authorities and airlines were legally restructured57.

1. (a)

   The agreements concluded with the Region gave the latter the right to demand repayment of the subsidy if the APFTE did not use this for the agreed purposes. They also included a right to terminate the agreement.

2. (b)

   The agreements concluded with the Department provided for a right of repayment of the subsidy to the Department if the APFTE used this for purposes other than those set out in the agreement. The description of the purposes of the 2010, 2011 and 2012 agreements explicitly included the conclusion of agreements with AMS. Moreover, the agreements contained a clause allowing the Department to terminate the agreement if the APFTE failed to meet its contractual obligations.

3. (c)

   The agreements concluded with the Communauté d’agglomération de Montpellier provided for the subsidy to be paid in proportion to the number of months that the actions of the destination programme were carried out, and on presentation of the corresponding invoices. In addition, the agreements subjected the body’s funding commitment to compliance by the APFTE with its contractual obligations, and included the right to terminate the agreement.

4. (d)

   The agreements concluded with the Communauté d’agglomération du Pays de l’Or subjected that authority’s commitment to compliance by the APFTE with its contractual obligations (the agreements concluded with Ryanair/AMS expressly refer to this) and entitled the authority to demand repayment of the subsidy and to terminate the agreement if the APFTE failed to meet its contractual obligations.

5. (e)

   The agreements concluded with the City of Montpellier required the APFTE to submit an activity report to that authority in order to demonstrate the progress made in the actions proposed by the APFTE on submission of the subsidy application. The French authorities have not provided these subsidy applications, but the Commission concludes from the circumstances of the case that they contain the promotional programme for the budget year in question. Moreover, the authority reserved the right to terminate the agreement if the APFTE failed to meet its contractual undertakings.

The measures that formed the subject of the formal investigation are the marketing agreements concluded between the APFTE and Ryanair or its subsidiary AMS. Between 2010 and 2018, Ryanair/AMS and the APFTE concluded three sets of marketing agreements.

On 16 September 2010, less than three months after its creation, the APFTE concluded an agreement with AMS (‘the 2010 agreement’), signed by the President of the APFTE without any prior invitation to tender.

The agreement was concluded for an initial term from 1 July 2010 to 31 December 2011.

• with a route between Frankfurt-Hahn and Montpellier offering four flights per week in summer and at least two flights per week in winter,

• with a route between Brussels South-Charleroi and Montpellier offering at least three flights per week throughout the year,

• with a route between Leeds-Bradford and Montpellier offering at least two flights per week in summer’59.

1. (a)

   For 2010, this offer includes five paragraphs of 150 words each to be selected by the APFTE and placed under the heading ‘Top Five Things to Do’ on the ‘Destination Montpellier’ page of Ryanair’s website; the presence of two links to a website selected by the APFTE, placed under the heading ‘Top Five Things to Do’ on the aforementioned ‘Destination Montpellier’ page; and the presence of one link to the website selected by the APFTE on the home pages of the British, German, Dutch and Belgian (French and Dutch) websites of www.ryanair.com for 55 days. The price of these services was EUR […].

2. (b)

   For 2011, the offer includes all the services provided in 2010, plus a ‘graphic banner link-button (200x110px)’ to be selected by the APFTE and placed on the ‘Discover Europe’ page of Ryanair’s website for 12 months, and a presence as ‘Destination of the Day (text, image and link selected by the APFTE)’ on the home pages of the British, German, Dutch and Belgian (French and Dutch) websites of www.ryanair.com for a total period of two weeks. The price of these services was EUR […].

The agreement of 16 September 2010 was altered by an amendment of 20 April 2011, which added a new Birmingham route to the three routes already mentioned in the agreement.

• The presence of a link to a website selected by the APFTE, placed under the heading ‘Airports and tourism’ on the home page of the British website of www.ryanair.com for 14 days per year.

• A presence as ‘Destination of the Day’ (text, image and link selected by the APFTE) on the home page of the British website of www.ryanair.com for a total of one week per year.

The price of these services was EUR […]. It was stipulated that the APFTE would pay this sum in monthly instalments of EUR […], on receipt of the AMS invoices, for each of the months of April to October of each year during the period of application of this amendment.

The APFTE sent a letter of undertaking to renew the 2010 agreement to AMS on 29 September 2011. The purpose of the letter was to renew the 2010 agreement for an additional period of one year, starting on 1 January 2012 and ending on 31 December 2012. According to its own wording, the APFTE undertook to renew the 2010 agreement on the basis of the following routes operated by Ryanair: Brussels-Charleroi, Frankfurt-Hahn and Leeds-Bradford.

On 2 October 2013, the APFTE therefore organised an invitation to tender for the purchase of marketing services intended to promote tourist and economic flows to Montpellier for 2014.

The invitation to tender indicated that tenderers should offer ‘to promote tourist and economic flows to Montpellier through all available media on the market’. The following media examples were listed: ‘radio campaigns; TV campaigns; communication on social networks (Facebook, Twitter, YouTube, etc.); participation in trade fairs; sponsorship of well-known events and visibility for Montpellier as a destination; training trips for professionals, press trips with journalists’, and digital communication. According to the invitation to tender, ‘In all cases, tenderers must include a link to the APFTE’s website (go to Montpellier) on their own website’. This was the only imperative criterion to be met by the marketing service provider.

The invitation to tender also divided the contract into five ‘lots’, namely ‘Brussels-Charleroi’, ‘Frankfurt-Hahn’, ‘Leeds’, ‘Birmingham’ and ‘[…]’. For each of them, the invitation to tender indicates the criteria to be met in terms of air transport to be offered: a minimum annual offer of seats available for sale, a minimum annual volume of incoming passengers, the seasonality recommended for the contract (annual or seasonal route), a minimum number of flights per week, and a start date for the route.

The evident aim of the invitation to tender was therefore to select not just any online marketing services providers, but rather airlines offering such services in addition to their air transport activities and also undertaking to operate air transport services between Montpellier airport and the destinations indicated by the various ‘lots’, under the conditions detailed by the invitation to tender in terms of seasonality, flight frequencies, minimum number of incoming passengers, and start date of the routes.

The lots entitled ‘Brussels-Charleroi’, ‘Frankfurt-Hahn’, ‘Leeds’ and ‘Birmingham’ and the minimum flight frequencies indicated for these in the invitation to tender precisely corresponded to the four destinations already operated from Montpellier by Ryanair at the time when the invitation to tender was launched.

Ryanair was the only airline to submit a bid for the ‘Brussels-Charleroi’, ‘Frankfurt-Hahn’, ‘Leeds’ and ‘Birmingham’ lots.

Following the invitation to tender, four lots were awarded to Ryanair, which concluded agreements with the APFTE on 22 November 2013 (‘the 2013 agreements’) for the first three lots, with a total value of approximately EUR […] for one year (‘Brussels-Charleroi’ for a fixed amount of EUR […], ‘Frankfurt-Hahn’ for a lump sum of EUR […]; and ‘Leeds-Bradford’ for a lump sum of EUR […]).

• On 19 December 2014, in three letters signed by the President of the APFTE, the APFTE renewed with Ryanair, for 2015, the promotional services for each of the three destinations Brussels-Charleroi, Frankfurt-Hahn and Leeds-Bradford, for a price of EUR […] for Brussels-Charleroi, EUR […] for Frankfurt-Hahn and EUR […] for Leeds-Bradford.

• On 22 April 2016, in three letters signed by the President of the APFTE, the APFTE again renewed with Ryanair, for 2016, the promotional services for each of the three destinations, for a price of EUR […] for Brussels-Charleroi, EUR […] for Frankfurt-Hahn and EUR […] for Leeds-Bradford.

On 13 March 2017, the APFTE launched a new invitation to tender for the purchase of marketing services, for one year with options to extend, in order to encourage ‘tourist and business flows’ to Montpellier. The tender specifications divided the contract into various ‘lots’, each covering a European region. The lots covered those regions whose inhabitants were to be targeted by the marketing services in question.

The invitation to tender stated that the selection criteria would be weighted as follows: price of services 40 %, and technical value 60 %.

• ‘Wallonia’ lot: Ryanair […] euro, […] […] euro;

• ‘Rhineland-Palatinate’ lot: Ryanair […] euro, […] […] euro;

• ‘Yorkshire’ lot: Ryanair […] euro, […] […] euro

All three lots were awarded to Ryanair, whose bid for each lot was exactly EUR […] cheaper than the bid submitted by […]. The French authorities have not provided any information showing that the APFTE queried this consistent price difference between the two competing bids.

On 19 May 2017 the APFTE concluded agreements with Ryanair for an indicative amount of EUR […] (for the Wallonia, Rhineland-Palatinate and Yorkshire agreements, respectively EUR […] excluding taxes, EUR […] excluding taxes and EUR […] excluding taxes).

In accordance with the tender specifications, these were agreements under which the marketing services would be provided and paid for only on the issue of purchase orders by the APFTE. The order forms issued by the APFTE show that the payments per target region (Wallonia, Rhineland-Palatinate, Yorkshire) were made in two stages: a payment for the ‘spring/summer period’ and another payment for the ‘autumn/winter’ period. The Commission notes that these periods correspond to the two seasons of the civil aviation calendar (April to September and October to March) defined by the International Air Transport Association (IATA).

1. (a)

   For the […] and […] lots, the successful tenderer was […], which beat […] (identical bid in terms of price, but different in terms of marketing services). The agreement concluded between the APFTE and […] was also based on purchase orders. The bid amounted to EUR […] for both lots combined. However, it is apparent from the information received from the French authorities that the APFTE never issued any purchase orders under this agreement.

2. (b)

   For the […] and […] lots, only […] submitted a bid (EUR […] in total). For these lots the APFTE judged the invitation to tender to have been unsuccessful, because […]’s bid was declared inadmissible on the grounds that the bid documents did not include the schedule of unit prices.

According to the French authorities, the APFTE did not pay Ryanair for marketing services beyond April 2019.

The Commission initiated the formal investigation on 4 July 2018 because it could not rule out the possibility that the measures described in recitals 52 et seq. constituted State aid to Ryanair and its subsidiary AMS.

The complainant stands by the arguments set out in its complaint, namely that the APFTE was a vehicle for transferring State aid to Ryanair/AMS.

In the alternative, Ryanair contests the Commission’s conclusions as regards the applicability of the market economy operator principle to the case, the determination of the aid beneficiary, the selectivity of the aid, and its imputability to the State.

AMS did not submit any comments.

The APFTE denies having granted any advantage to Ryanair. It describes the contested sums as market-price remuneration for a service provided. The APFTE states that it acted as a public purchaser of services and that the promotional actions carried out formed part of a comprehensive marketing strategy for Montpellier and its surrounding area.

The APFTE points out that the regions targeted by the invitations to tender were the subject of discussions and strategic choices of the General Meeting and the Board. It submits that the decisions taken by the association cannot be imputable to the State, and refers to the APFTE’s method of working, as described in its constitution.

In the further alternative, even supposing that the Commission were to conclude that Ryanair and AMS had received State aid, the APFTE considers that Ryanair and AMS should repay only the difference between the price paid in remuneration for these services and the market price, given that, in its opinion, the services fell within the APFTE’s public policy tasks and the association clearly profited from them.

The Region of Occitania argues that the complaint is unfounded, as the APFTE’s actions created tourist and economic benefits for all the local and regional stakeholders. It considers that the APFTE worked to develop a more international customer base and enabled undertakings in the sector to continue trading over a longer period.

It states that, within the APFTE, decisions to fund the marketing campaigns in order to develop the area’s attractiveness for tourists were taken mainly by the General Meeting, with each member having one vote, generally by a qualified majority of two thirds.

The Region of Occitania adds that the APFTE acted through invitations to tender for the provision of services aimed at increasing the area’s visibility and attractiveness. These invitations were open to all undertakings that could submit a bid complying with the tender specifications, including the complainant.

The CCI Hérault considers that the APFTE’s actions to promote the Montpellier area among the public in Belgium, the Netherlands, Germany, England and […] were economically important to the area given their economic benefits. It adds that by pooling its members’ interests the APFTE met the need for the economic and tourist development of the area, which was entirely within the APFTE’s sphere of responsibility and that of the CCI Hérault.

Montpellier Méditerranée Métropole considers that an aggressive strategy to increase the area’s attractiveness needs to be conducted in order to develop the area, support the economy and combat unemployment. It states that the APFTE is a non-profit association of public and private partners whose common objective is to take measures to promote and develop tourism, as tourism serves the interests of both public regional development and private business development.

Montpellier Méditerranée Métropole considers that the marketing services purchased by the APFTE were in line with its actual needs and purpose, and that those services were the subject of prior competitive tendering, so that there was no element of selectivity of any kind (Ryanair was successful in some of the invitations to tender organised by the APFTE). Moreover, Montpellier Méditerranée feels that those services cannot be classified as aid: firstly, no advantage was conferred, because the remuneration received by Ryanair did not exceed market prices; and secondly, the measures were not imputable to the State, because the APFTE’s decisions took account of private structures, which formed the vast majority of its members and had significant decision-making power.

The […], a member of the APFTE, considers that the association has provided a forum for discussions between private operators in various sectors of activity and representatives of local authorities. It adds that the decisions made within the association have been in the collective interest of all economic operators and inhabitants in the region. It submits that this pooling of effort by the public sector and the private sector has allowed the objectives of increasing the visibility and development of the city of Montpellier and its surrounding area to be achieved.

The Communauté d’agglomération du Pays de l’Or considers that the advertising measures carried out by the APFTE in order to promote the Montpellier area among the public in Belgium, the Netherlands, Germany and England were important for the area owing to the economic benefits they brought and were targeted at regions with significant economic and tourist potential for the Montpellier area.

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.

For a measure to be classed as State aid the following cumulative criteria therefore have to be met: 1) the beneficiary or beneficiaries must be undertakings within the meaning of Article 107(1) TFEU; 2) the measure must be granted through State resources and be imputable to the State; 3) the measure must confer an economic advantage on the beneficiary or beneficiaries; 4) the advantage must be selective; and 5) the measure must distort or threaten to distort competition and must be likely to affect trade between Member States.

France has not provided any analysis of compatibility with the internal market, because it considers that the payments in question do not constitute State aid. For its part the Commission does not have any information to show that the measures in question are compatible with the internal market. The only basis of compatibility that might possibly be considered is Article 107(3)(c) TFEU, as interpreted by the 2014 guidelines with regard to start-up aid to airlines (Section 5.2.).

However, in the present case, none of the marketing agreements in question satisfy these tests.

In the light of the above, the Commission concludes that the State aid involved in the agreements in question is incompatible with the internal market.

Article 108(3) TFEU states that ‘the Commission shall be informed, in sufficient time to enable it to submit its comments, of any plans to grant or alter aid […]. The Member State concerned shall not put its proposed measures into effect until this procedure has resulted in a final decision.’.

In the present case, it is plain that the agreements concerned were implemented before being notified to the Commission.

The Commission has not identified any legal basis exempting France from notifying the aid.

The Commission therefore considers that the payments made to Ryanair on the basis of the 2010, 2013 and 2017 marketing agreements and their amendments and renewals constitute aid granted in breach of Article 108(3) TFEU.