Executive Summary:
- To determine whether a measure is selective in the meaning of Article 107(1) TFEU, its objective must be disregarded. What matters is whether its effects differentiate between undertakings which are in a similar situation.
- Quantity discounts based on objective criteria are a normal business practice. If they apply to any undertaking, such discounts are not selective.
- However, discounts based on objective criteria can be selective when in practice they benefit only certain undertakings on account of their specific characteristics so that their effects are not random consequences.
- A competitor of the aid recipient cannot challenge a Commission decision simply on the grounds that it operates in the same market. It must show that there is a causal link between the aid and the harm it claims it suffers and that the harm is significant.
Table of Contents:
- Introduction
- Did Carpatair have legal standing?
- Did the agreements between the airport and Wizz Air confer a selective advantage?
- Conclusions
Apparently Objective Criteria Can Still Be Selective
Introduction
Selectivity in the meaning of Article 107(1) TFEU is a tricky concept. As the General Court ruled on 13 May 2026, in case T-522/20 RENV, Carpatair v Commission, measures based on apparently objective criteria can still be selective if, in practice, they favour only certain undertakings.[1] Whether such discriminatory or differential treatment occurs in practice depends on the actual facts of each case. Therefore, it requires empirical market analysis, rather than blind application of criteria that appear to be objective in the sense that they do not formally exclude any undertaking.
In this case, Carpatair, a Romanian regional airline with a hub at Timișoara airport, sought annulment of Commission decision 2021/1428 on state aid measure SA.31662 that was implemented by Romania for Timișoara airport. In that decision the Commission concluded that certain aspects of the measure did not constitute state aid within the meaning of Article 107(1) TFEU.
The state-owned operator of that airport, abbreviated as AITTV in the judgment, had received public funding for the expansion of its air-side and land-side infrastructure and improvement of its security equipment. The operator also entered into agreements with low-cost airlines, such as Hungary’s Wizz Air.
In September 2010, Carpatair submitted a complaint to the Commission alleging that unlawful state aid had been provided by Romania, via the airport operator, in favour of Wizz Air. In May 2011, the Commission initiated the formal investigation procedure and nine years later, in February 2020, the Commission adopted the contested decision, 2021/1428. The fact that it takes the Commission a long time to conclude its investigation does not mean that the case is forgotten or that the Commission implicitly allows the aid. The Commission decision was reviewed here on 21 September 2021.
The Commission found that several agreements between the airport and Wizz Air conformed with the MEIOP and, therefore, were free of state aid. Part of the public funding granted to the airport was not state aid because it either supported security measures that were non-economic in nature or it too conformed with the MEOP [e.g. the construction and operation of a parking garage]. The remaining public funding for the airport was state aid but was compatible with the internal market.
Carpatair contested the Commission decision before the General Court which in February 2023 [case T-522/20, Carpatair v Commission] annulled that decision on the grounds that the Commission misapplied the criteria of advantage and selectivity. The judgment of the General Court was reviewed here on 21 February 2023.
Then the Commission appealed against the judgment of the General Court and in February 2025, the Court of Justice of the EU, in case C-244/23 P, Commission v Carpatair, set aside the judgment of the General Court and sent the case back to the General Court. According to the CJEU, the General Court erred in finding that Carpatair had legal standing to challenge the Commission decision. The CJEU did not examine the substantive part of the judgment of the General Court on advantage and selectivity.
The General Court revisited basically two issues: whether Carpatair had legal standing to challenge the Commission decision and whether the agreements between the airport and Wizz Air constituted selective measures.
Did Carpatair have legal standing?
The General Court examined whether the Carpatair could bring proceedings against the Commission under Article 263 TFEU.
First, the General Court recalled that “(40) the admissibility of an action brought by a natural or legal person against an act which is not addressed to that person … arises in two situations. First, … the act is of direct and individual concern to that person. Second, such persons may bring proceedings against a regulatory act not entailing implementing measures if that act is of direct concern to them”.
For the purpose of examining the legal standing of Carpatair, the General Court divided the various agreements between Timisoara airport and airlines in two categories.
With respect to the first category of agreements – those concluded in 2008 & 2010 – the General Court pointed out that the applicant was not the beneficiary of the measures resulting from the 2008 and 2010 agreements.
Therefore, “(50) where an applicant calls into question the merits of a decision appraising the aid taken on the basis of Article 108(3) TFEU or after the formal investigation procedure, it must show that that decision affects it by reason of certain attributes which are peculiar to it or by reason of circumstances in which it is differentiated from all other persons and, by virtue of those factors, distinguishes it individually just as in the case of the person addressed by such a decision. That applies in particular where the applicant’s position on the market concerned is substantially affected by the aid to which the decision at issue relates”.
In cases brought against Commission decisions by competitors of (alleged) aid recipients, the most important issue is whether the aid harms them to a substantial extent. Proof of this requires, first, that there is a likely causal link between the aid and the harm and, second, that the harm can be significant.
Also, as the General Court explained, “(51) the demonstration by the applicant of a substantial adverse effect on its position on the market concerned does not entail a definitive ruling on the competitive relationship between that applicant and the undertakings benefiting from the measure at issue, but requires only that the applicant adduce pertinent reasons to show that the Commission’s decision may harm its legitimate interests by substantially adversely affecting its position on that market. The substantial adverse effect on the applicant’s competitive position on that market results not from a detailed analysis of the various competitive relationships on that market, allowing the extent of the adverse effect on its competitive position to be established specifically, but, in principle, from a prima facie finding that the grant of the measure covered by the Commission’s decision leads to a substantial adverse effect on that position”.
“(52) On the other hand, the mere fact that the measure which the applicant seeks to have annulled may exercise an influence on the competitive relationships existing in the market concerned and that it is in a competitive relationship with the beneficiary of that measure cannot suffice for it to be regarded as being individually concerned by that measure. In other words, an undertaking cannot simply rely on its status as a competitor of the undertaking benefiting from the measure which it seeks to have annulled”.
“(53) In addition, demonstrating a substantial adverse effect on a competitor’s position on the market cannot simply be a matter of the existence of certain factors indicating a decline in the applicant’s commercial or financial performance, such as a significant decline in turnover, appreciable financial losses or a significant reduction in market share following the grant of the aid in question. The grant of State aid can also have an adverse effect on the competitive situation of an operator in other ways, in particular by causing the loss of an opportunity to make a profit or a less favourable development than would have been the case without such aid”.
“(54) Lastly, … it is not necessary to provide information relating to the size, structure and competitors present in order to define the market or markets in the light of which the condition relating to a substantial adverse effect on the competitive position should be assessed”.
“(57) However, the applicant cannot rely on the fact that it actively participated in the administrative procedure before the Commission in order to demonstrate that it is individually concerned. Indeed, it cannot be inferred from the mere participation of the applicant in the administrative procedure that it is individually concerned by the contested decision, …, even where, as in the present case, it has played an important part in that administrative procedure, inter alia by lodging the complaint which led to the contested decision.”
In this case, Carpatair claimed “(56) that it satisfies the condition relating to individual concern, in so far as it was in direct and indirect competition with Wizz Air on 10 routes from the airport and had a particular status.”
With respect to whether there was direct competition between Carpatair and Wizz Air, the General Court noted that “(62) for the purposes of examining admissibility, it is sufficient to find that the applicant was a competitor of the beneficiary of the State aid measures complained of, in so far as those two undertakings directly or indirectly operated regular passenger air transport services to and from airports which are situated in close proximity”.
“(64) In the present case, in so far as the applicant and Wizz Air operated routes serving the same airports or airports situated less than 100 km apart, potential customers could choose between the services offered by each of them. Furthermore, competition does not mean offering identical goods or services, but rather means meeting equivalent needs, that is to say, in the present case, enabling customers to reach a specific destination.”
“(73) Accordingly, it must be held that Wizz Air and the applicant were in direct competition on five routes serving the same airports or airports situated less than 100 km apart, namely, as regards Germany, the route serving Düsseldorf and, as regards Italy, the routes serving Venice, Bergamo-Milan, Bologna and Rome.”
However, the General Court, after examining the evolution of market shares on different routes, found that “(128) the applicant has not sufficiently demonstrated that its competitive position was substantially affected by the competition from Wizz Air, which benefited from the 2008 and 2010 agreements.”
Hence, it “(129) concluded that the condition that the applicant be individually concerned as regards the 2008 and 2010 agreements has not been satisfied, with the result that, since the conditions for according standing to bring proceedings are cumulative, …, the action must be dismissed as inadmissible, in so far as it seeks annulment of the contested decision to the extent that that decision relates to the 2008 and 2010 agreements, without it being necessary to examine whether that part of the contested decision is of direct concern to the applicant.”
Then the General Court turned its attention to a third agreement between the airport and Wizz Air, the so-called 2010 AIP.
After the General Court reiterating the conditions for being directly concerned under Article 263 TFEU [i.e. the applicant’s legal rights must be affected and the contested act must be implemented without intermediate measures], it noted that “(132) the condition of direct concern requires the contested measure to produce effects directly on the applicant’s legal situation, the Courts of the European Union must ascertain whether the applicant has adequately explained the reasons why the Commission’s decision is liable to place it in an unfavourable competitive position and thus to produce effects on its legal situation”.
“(133) As regards the first criterion [of affectation of legal rights], it must be noted that the applicant has claimed before the Court, with supporting documents, that it carried out activities similar to those of Wizz Air and was active on the same services market and on the same geographical market as Wizz Air. In addition, on account of the rules set out in the 2010 AIP and in particular those laid down in point 7.3 thereof, Wizz Air was subject to a lower contribution than that to which the applicant may have been subject.”
“(147) In relation to the second criterion [of no intermediate measures], the contested decision regarding the 2010 AIP produces legal effects purely automatically by virtue of EU rules alone and without the application of other intermediate rules. The action therefore satisfies the second of the two criteria set out in paragraph 130 above.”
“(148) Accordingly, the applicant is entitled to challenge the merits of the contested decision in so far as it relates to the 2010 AIP.”
Did the agreements between the airport and Wizz Air confer a selective advantage?
Carpatair alleged that the Commission had made an error of law by finding that there was absence of selectivity in the 2010 AIP. The Commission had found that the criteria on which the airport operator granted discounts to airlines were objective and applicable to all airlines.
The General Court began its analysis by recalling that the finding of selectivity “(163) requires a determination as to whether, under a particular legal regime, a national measure is such as to favour ‘certain undertakings or the production of certain goods’ over others which, in the light of the objective pursued by that regime, are in a comparable factual and legal situation. [But] the concept of ‘State aid’ does not refer to State measures which differentiate between undertakings and which are, therefore, prima facie selective where that differentiation arises from the nature or the overall structure of the system of which they form part”.
“(164) In addition, Article 107(1) TFEU does not distinguish between the causes or the objectives of State aid measures, but defines them in relation to their effects”.
“(165) Accordingly, whilst it cannot be ruled out that a measure by which a public undertaking lays down the conditions for the use of its goods or services is selective despite applying to all the undertakings using those goods or services, it is necessary, in order to determine whether that is the case, to have regard not to the nature of that measure but to its effects, by examining whether the advantage which it is supposed to procure in fact benefits only some of those undertakings as opposed to others, although, in the light of the objective pursued by the regime concerned, all of the undertakings are in a comparable factual and legal situation”.
“(167) That examination therefore in principle requires prior definition of the reference framework within which the measure concerned fits”.
Then the General Court noted the main features of the measure in question. “(168) Points 1 to 4 of the 2010 AIP set out the rates of the various airport charges (namely landing, lighting, parking and passenger services, including security). The charges actually invoiced could be subject to various types of reductions. Points 7.1, 7.2 and 7.3 of the 2010 AIP provided, respectively, for three non-cumulative types of reductions:
– first, rebates of 10% to 70% depending on the number of landings performed in the previous year at the airport with respect to international flights;
– second, a discount of 50% for a period of 12 months for new air carriers at the airport performing at least 3 flights per week with an aircraft having a capacity of at least 70 seats. For each new destination served, the discount applied was 50% for a period of six months. In addition to those discounts, AITTV also granted a reimbursement of 10% to 30% of revenue from the embarkment charge, depending on the number of embarked passengers per year;
– third, discounts of 72% to 85% for aircraft above 70 tonnes MTOW with more than 10000 embarked passengers per month.”
Carpatair argued that the fact that all airlines operating at the airport could benefit from the relevant discounts did not preclude the discounts from being designed to favour Wizz Air. The Commission counter-argued that the objective of the discounts was to attract larger aircraft to the airport and to increase its operating revenue.
However, according to the General Court, “(176) the objective pursued by those discounts cannot, by itself, suffice to rule out selectivity. Such an approach would be tantamount to excluding a priori any possibility of classifying as ‘selective advantages’ the advantages granted to airlines with aircraft above 70 tonnes MTOW and carrying more than 10000 passengers per month. It would thus be sufficient for public authorities to invoke the legitimacy of the objectives pursued by the adoption of an aid measure for the measure to be regarded as a general measure, outside the scope of Article 107(1) TFEU”.
In other words, a Member State may not design a narrow measure that seeks to achieve a particular objective and claim that it is general because non-beneficiaries are not in a position to contribute to the achievement of that objective [for example, support of research in the field of artificial intelligence is not a general measure just because chemical companies do not carry out research on artificial intelligence].
The General Court continued that “(179) the nature of the 2010 AIP, which took the form of the application of a ‘general’ regime based on objective criteria, does not preclude a finding that the reductions for which it provides are selective. The condition relating to selectivity has a broader scope, extending to measures which, by their effects, favour certain undertakings on account of the specific features characteristic of those undertakings. Similarly, it is apparent from the case-law that the fact that the aid is not aimed at one or more specific recipients defined in advance, but is subject to a series of objective criteria pursuant to which it may be granted to an indefinite number of beneficiaries who are not initially individually identified, cannot suffice to call into question the selective nature of the measure and, accordingly, its classification as State aid within the meaning of Article 107(1) TFEU. At the very most, such a fact means that the measure in question is not individual aid. It does not, however, preclude that public intervention from having to be regarded as an aid scheme constituting a selective, and therefore specific, measure if, owing to the criteria governing its application, it procures an advantage for certain undertakings or for the production of certain goods, to the exclusion of others”.
“(180) In the present case, it is true that the system of airport charges and the discounts and rebates in principle applied to all airlines using, or liable to use, the airport. However, the two cumulative criteria laid down in point 7.3 of the 2010 AIP, namely having aircraft above 70 tonnes MTOW and carrying more than 10000 passengers per month, were formulated in such a way that the circle of potential beneficiaries of the abovementioned discounts was necessarily limited.”
“(181) That finding is, moreover, confirmed by the fact that the Commission, Wizz Air and AITTV referred only to Tarom as another airline, apart from Wizz Air, that was capable of benefiting from those discounts.”
“(182) Therefore, the fact that a very limited number of airlines were capable of benefiting from the reductions provided for in point 7.3 of the 2010 AIP could not be considered by the Commission to be a random consequence of the regime at issue, but rather had to be regarded as the inevitable result of the fact that those reductions were specifically designed in such a way that only the few airlines with aircraft above 70 tonnes MTOW and able to carry more than 10000 passengers per month could obtain discounts of 72% to 85%, that is to say, reductions much higher than those provided for in points 7.1 and 7.2 of the 2010 AIP.”
Given that, contrary to the Commission’s assessment, the General Court found the discounts to be selective, it ruled that “(198) the action must be dismissed in part as inadmissible, in so far as it seeks annulment of the contested decision to the extent that that decision relates to the 2008 and 2010 agreements. By contrast, the action must be upheld in part in so far as it seeks annulment of the contested decision to the extent that that decision relates to the 2010 AIP.” It partly annulled Commission decision 2021/1428 in so far as it had concluded that the airport charges in the AIP of 2010 did not constitute state aid.
Conclusions
This judgment is important because of its interpretation of the concept of selectivity. The General Court ruled that apparently objective criteria that may apply to any undertaking or do not a priori exclude any undertaking may still be selective if they benefit only certain undertakings by virtue of their specific characteristics. In addition, criteria which are individually objective, may, when they apply in combination, benefit only certain undertakings.
Lastly, the General Court focused only on the third type of discounts. But the first type of discounts [number of landings with respect to international flights] was probably also selective in the context of the objective of raising the number of passengers and the amount of revenue, as the Commission had argued. This is because the international origin of the flights is irrelevant to that objective while its application excludes airlines that transport passengers from domestic airports.
Notes:
[1] The full text of the judgment can be accessed at:https://juris.curia.europa.eu/juris/document/document_print.jsf?mode=lst&pageIndex=0&docid=311268&part=1&doclang=EN&text=&dir=&occ=first&cid=63207
