Brussels, 13 July 2012

Consultation Paper

STATE AID MODERNISATION: REFORM OF STATE AID PROCEDURES

The purpose of the present consultation is to invite both Member States and stakeholders to

provide comments on the handling of State aid complaints and the methods of the

Commission to gather information in State aid investigations, the two aspects of the State

aid procedural framework which the State Aid Modernisation (SAM) initiative launched on 8

May 2012 proposes to reform.

The Commission invites Member States and stakeholders to submit their comments to DG

Competition by 5 October 2012.

1. INTRODUCTION

On 8 May 2012, the Commission adopted the Communication on "EU State aid

modernisation (SAM)"1 which officially launches a comprehensive reform of the State aid

framework. It will ensure that State aid policy contributes both to the implementation of the

Europe 2020 agenda2, which is Europe's growth strategy for this decade, and to budget

consolidation by pursuing the following objectives:

– Foster growth in a strengthened, dynamic and competitive internal market;

– Focus enforcement on cases with the biggest impact on the internal market;

– Streamlined rules and faster decisions.

The planned revision of Council Regulation (EC) No 659/1999 of 22 March 1999 laying

down detailed rules of procedure to deal with State aid cases ("the Procedural Regulation") is

one of the building blocks of the State aid modernisation package.

State aid procedures, as foreseen by Article 108 TFEU and further detailed by the Procedural

Regulation, are built around three main axes:

– Prior notification by Member States of all planned aid measures is compulsory, except

in cases covered by a block exemption regulation, and the Member State concerned

1 Communication from the Commission to the European Parliament, the Council, the European

Economic and Social Committee and the Committee of the Regions, EU State Aid Modernisation

(SAM), 8.05.2012, COM(2012) 209 final. 2 Communication from the Commission, Europe 2020: A strategy for smart, sustainable and inclusive

growth, 3.3.2010, COM(2010) 2020 final.

EUROPEAN COMMISSION DG Competition State aid: Cohesion, R&D&I and Enforcement Enforcement and Procedural Reform

may not put the measure into effect until a Commission authorisation decision; to that

end, following an essentially bilateral (Member State/Commission) preliminary

investigation, limited in principle to two months, the Commission may either approve

the aid or open a formal investigation, subject to a best endeavour deadline of 18

months, with a view to thereafter approving (if need be, subject to certain conditions)

or prohibiting the aid;

– The Commission is also bound to examine any information, from whatever source,

concerning alleged unlawful (non-notified) aid. In particular, the Commission is

required to conduct a diligent and impartial examination of the complaints lodged

before it, and take a decision without undue delay. Where the Commission takes a

decision finding that no State aid as alleged by a complainant exists, the Commission

must at least provide the complainant with an adequate explanation of the reasons for

which the facts and points of law put forward in the complaint have failed to

demonstrate the existence of State aid;

– Finally, the Commission shall keep under constant review all existing aid systems in

Member States and may propose to them any appropriate measures required by the

progressive development of the functioning of the internal market.

While reforming the Procedural Regulation should primarily allow the Commission to take

decisions faster, it will also help the Commission focus on cases with the highest impact at the

EU level. Also, the objective to promote growth can only be achieved if the Commission has

the powers to prioritize its work. In that context, the SAM Communication announced that the

Commission will initiate:

"A modernisation of the State aid Procedural Regulation with regards to complaint-

handling and market information tools, in order to enable the Commission to better focus

its action on cases which are most relevant for internal market. It requires enabling the

Commission to set priorities for complaints handling, in order to prioritise allegations of

potential aid with a large impact on competition and trade in internal market. In parallel,

in order for the Commission to be able to effectively investigate cases of aid with

significant impact, it should be endowed with more efficient tools to obtain all the

necessary information from market participants and in good time so as to deliver

decisions within business relevant timelines. Such modernisation of procedures would also

allow the Commission to undertake more ex officio investigations into significant

distortions of competition hampering internal market. It should also permit a quick

verification of market effects of aid measures which would enable quicker decision-

taking."

The present consultation will therefore mainly aim at collecting the views of the Member

States and stakeholders on two aspects of the State aid Procedural framework: improving the

handling of complaints and ensuring that the Commission obtains complete and correct

information.

2. How to contribute to the consultation

Member States and other interested parties are invited to respond to the questionnaire

hereunder. Replies can be submitted in all official EU languages3.

While some of the questions are specifically aimed at public authorities, others are aimed at

both public authorities and other interested parties (stakeholders). For your convenience, the

questions are sorted by their principal target audience. If you do not feel concerned by a

particular question please reply "not applicable".

Questions referring to "your Member State" or "your authorities" and the like may be read by

international entities with no particular Member State affiliation as referring to "Member

States" and "Member State authorities".

The deadline for the replies is 5 October 2012. Replies should be sent to the European

Commission, DG COMP, State aid registry, 1049 Brussels, reference "HT 2664", preferably

via e-mail to Stateaidgreffe@ec.europa.eu.

The Commission services plan to make the replies to this questionnaire accessible on their

website http://ec.europa.eu/competition/consultations/open.html.

Therefore, if respondents do not wish their identity or parts of their responses to be disclosed,

that fact should be clearly indicated and a non-confidential version should be submitted at the

same time. In the absence of any indication of confidential elements, DG COMP will assume

that the response contains none and that it can be published in its entirety.

3 Given the possible delays in translating replies in certain languages, an English working translation

would be welcome.

ABOUT YOU

Specific privacy statement: All contributions received, together with the identity of the

contributor, will be published on the Internet, unless the contributor objects to the publication

of personal data on the grounds that such publication would harm its legitimate interests. In

that case the contribution may be published in anonymous form.

For rules on data protection on the EUROPA website, please see:

http://ec.europa.eu/geninfo/legal_notices_en.htm#personaldata

1. Do you object to the disclosure of your identity?

Yes No

2. Do any of the exceptions foreseen in Article 4 of Regulation 1049/2001 of the European

Parliament and of the Council of 30 May 2001 regarding public access to European

Parliament, Council and Commission documents4

apply to your response? If so, please

indicate clearly which parts should not be disclosed, justify the need for such confidential

treatment and provide a non-confidential version of your response for publication on the

Commission website.

Please provide your contact details below.

Name Juliusz Komorek

Organisation represented Ryanair

Main business activities Scheduled passenger air travel

Location (country) Ireland (Head Office)

E-mail address: komorekj@ryanair.com

NOTE: You are requested to follow the order of the questions, even though you are not required to

reply to all questions. You can also submit additional information that you consider relevant and

which does not fit any specific question.

4 OJ L 145, 31 May 2001, p. 43.

SECTION 1: HANDLING OF STATE AID COMPLAINTS

Complaints are a very useful source of information to direct Commission investigations

towards those economic sectors where unlawful State aid hampers competition at the EU

level.

Currently, the Commission has to investigate every alleged infringement of State aid rules

received from whatever source, since no specific formal requirement is attached to the

lodging of a State aid complaint. To close the examination of complaints, the Commission

must issue a decision stating either that the measure complained of (i) is not an aid or (ii) is a

compatible aid, or (iii) opening the formal investigation because there are doubts on the

compatibility of the aid.

The Commission receives on average more than 300 complaints per year. The Commission is

entitled to give different degrees of priority to the complaints brought before it, depending for

instance on the scope of the alleged infringement, the size of the beneficiary, the economic

sector concerned or the existence of similar complaints. In the light of its workload and its

right to set the priorities for investigations, it can thus postpone dealing with a measure which

is not a priority. Most complaints are therefore not given priority treatment and the duration of

those cases thus tends to increase.

First attempts to tackle those issues were made in the 2009 Simplification Package, and in

particular in the Best Practices Code which introduced a staged procedure for dealing with

complaints. Based on priority assigned to the relevant complaint, the Commission

endeavoured to send, within two months from the receipt of a complaint, a letter to the

complainant informing it about the priority status given to its complaint. Within one year, the

Commission then endeavoured to close the investigation of priority complaints by formal

decision and send a preliminary assessment letter for non-priority complaints.

To achieve the objectives of the State aid modernisation, a reform in that area should "enable

the Commission to better focus its action on cases which are most relevant for internal

market. It requires enabling the Commission to set priorities for complaints handling, in

order to prioritise allegations of potential aid with a large impact on competition and trade in

internal market".

To prepare such a proposal, the present questionnaire aims at collecting the views of the

Member States and other stakeholders on the State aid complaints handling policy and getting

your feedback on your experience as granting authority, complainant, aid recipient etc... in

State aid complaint cases.

SECTION 1.A. GENERAL QUESTIONS - FACTUAL INFORMATION

Questions aimed at Member States

1. On how many complaints are you consulted on average every year?

2. On average, what are the resources and time needed to reply to requests for information

from the Commission concerning a complaint? How does it compare to, for example,

notifications?

Questions aimed at other interested parties

3. Have you ever lodged a State aid complaint with the Commission?

Yes

4. If yes, how did you lodge your complaint(s) (paper, e-mail, web-based)?

By post, fax and email

5. Have you lodged more than one complaint with the Commission on State aid matters?

Yes

6. If yes, how many complaints have you lodged over the past five years?

We estimate six complaints in the past five years, and also five actions against the

Commission for failure to act regarding State aid complaints made by Ryanair over

five years ago.

7. If you have already lodged State aid complaints, could you specify the type of measures,

the beneficiaries and the amount of alleged aid you complained about and the economic

sector concerned?

1. Alitalia

a. Sale of debt-free Alitalia to private investors, CAI, in 2008. This resulted

in the Italian Government retaining between €1.2-2 billion of Alitalia debt.

b. €300m rescue loan

2. KLM - Dutch Environmental tax on passengers, exempting transfer and cargo

traffic (estimated between €100-500 million)

3. Aer Arann and Aer Lingus - Irish Air Travel Tax, with a lower per passenger

rate for flights landing less than 300km from Dublin airport. Ryanair notes that

on foot of this complaint, the Commission found on 25 July that Aer Lingus, Aer

Arann and Ryanair itself benefited from State aid as a result of the two-tier

nature of this tax.

4. Lufthansa - Purchase of a stake in Austrian Airlines in 2008, whereby

Lufthansa were effectively paid €500m by the Austrian Government to take a

non-controlling stake in Austrian Airlines (a precursor to a complete takeover in

2009) for a nominal fee.

5. LOT - In April 2009, we complained about differentiated airport charges at

Polish airports between 2004 and 2005 which provided for a reduced rate for

domestic traffic, favouring LOT. The aid was estimated at approximately $14

million (around €11.5 million).

8. As a complainant, what were the resources and the time needed to provide the

Commission with the necessary information to reply to its requests for information to

clarify the content of your complaint(s)?

We have always endeavoured to provide all the information possible to the

Commission to aid in its investigations, and we do not find their requests unduly

burdensome.

9. Have you ever consulted the dedicated webpage on State aid complaints of DG

Competition (http://ec.europa.eu/competition/forms/intro_en.html)? Is the information

available helpful to understand the purpose of complaints handling for State aid control?

Ryanair has used the structure of the complaint form previously, and, in the case of

other complaints, has not. As the Commission knows, the General Court found that

use of the State aid complaint form provided by the Commission is no bar to the

submission of a valid complaint requiring Commission consideration (Case T-442/07

Ryanair v Commission). The page does not particularly enlighten potential

complainants as to “the purpose of complaints handling for State aid control”. The

Commission could provide an explanation on this page as to its deadlines for

handling of a complaint, and explain the purpose of the deadlines. It may be helpful

for complainants to know the Commission timelines for action prior to submission of

a complaint.

10. As a recipient of an alleged illegal/incompatible aid, what were the resources and the time

needed to provide the national authorities with the necessary information to reply to

requests for information from the Commission concerning a complaint?

The Commission will be aware of the plethora of complaints against Ryanair in

regard to our arrangements at European airports. In very few of these cases has

Ryanair been consulted by Member State authorities in requests for information by

the Commission. The inconsistency of approach of Member States in involving

Ryanair in investigations demonstrates the inherent unfairness in classifying the

alleged recipient of aid as an “interested party” in State aid investigations, with no

rights extending beyond the rights granted to other interested parties under the

Procedural Regulation. While some Member State replies to requests for

information may have the benefit of input from the alleged recipient, others may not,

therefore the treatment of different cases involving the same recipient by the

Commission will naturally be inconsistent.

Ryanair has been consulted directly by the Commission on some, but not all, of the

State aid investigations in which we are alleged aid recipients. We welcomed the

opportunity to contribute to the investigations, but we believe that a more structured

and formal approach is needed to ensure that the Commission has all relevant

information to hand before it opens a formal investigation under Article 108(2)

TFEU/Article 4(4) of the Procedural Regulation and/or takes a final decision under

Article 108(2) TFEU/Article 7 of the Procedural Regulation.

Please see our answers in Section 1.D., 2.A., 2.B. and 2.C. for further details.

11. Have you used other means of action before or at the same time or after lodging a

complaint? Which means of action did you use? What was the outcome? What was in the

end the most effective instrument?

As mentioned in our answer to question six above, Ryanair initiated five actions against

the Commission for failure to act on our State aid complaints in November 2007. These

five actions related to complaints made about State aid to Air France (Case T-404/07),

Alitalia (Case T-442/07), Lufthansa (Case T-423/07), Olympic (Case T-433/07) and

Volare (Case T-441/07).

Ryanair discontinued the cases regarding Air France, Olympic and Volare, but the

General Court ruled in the case of Lufthansa that the Commission did not fail to act

under Article 232 EC, and in the case involving aid to Alitalia that the Commission did

fail to act with regard to a number of our complaints.

If the Commission had dealt with our original complaints in a timely manner, we would

not have had to initiate failure to act proceedings. A more expedited and structured

approach to complaints of unlawful State aid would be far more business-friendly and

provide certainty to complainants.

SECTION 1.B. STATE AID COMPLAINTS HANDLING POLICY

Questions aimed at all respondents

12. In your experience, do you consider that a complaint to the European Commission is an

adequate way of protecting business and consumer interests?

13. If not, please describe the main shortcomings of the handling of State aid complaints and

explain which redress mechanisms would be more adequate in your view, and why.

The manner in which State aid complaints are handled by the Commission can be

counter-intuitive, in that the most egregious and blatant cases of unlawful aid are

dealt with in a slow manner, and some of the more spurious complaints appear to be

dealt with at much the same speed or even quicker. The Commission should have

some kind of fast-track mechanism whereby the most blatantly unlawful, valuable

and potentially anti-competitive cases could be prioritised immediately. Some

tinkering of the Commission’s right to prioritise cases could be carried out to ensure

that these cases are dealt with using some kind of “fast-track” mechanism.

Importantly, complaints are investigated and acted upon (in terms of formal

investigations being opened) without any input from the alleged recipient of aid. As

stated in the letter of 29 May 2012 by our counsel, Covington & Burling, on our

behalf, and addressed to Mr Alain Alexis, Ryanair (and for the purposes of these

comments, all alleged recipients) should be informed in advance of the Commission’s

intention to open a formal investigation and should be allowed to present its views to

the Commission in this regard.

One of the objectives of the Commission’s State aid Modernisation Initiative is to

ensure that the procedure for investigations allows the Commission “to obtain all the

necessary information from market participants…in good time so as to deliver

decisions within business-relevant timelines.”5 It is difficult to square this laudable

objective with the manner in which alleged recipients can be excluded from the

procedure, both before and after a formal investigation is opened. The early

participation of the alleged recipient can only enhance the Commission’s ability to

gather the necessary information and come to an informed decision within

“business-relevant timelines”.

14. In your opinion, does the current complaints-handling procedure in State aid help detect

those measures which produce the most distortive effect on competition and trade in the

internal market? Please substantiate your reply.

15. If not, based on your experience, how could the focus of State aid complaints handling be

better targeted at measures with a large impact on trade and competition in the internal

market?

The Commission needs to come up with some kind of mechanism to exclude cases

which will, if State aid is even found to exist at the end of the formal investigation,

have only a minimal effect on trade between Member States. Some balance has to be

found between the resources expended by the Commission, the Member State and

interested parties on cases with minimal impact (and the opportunity cost of

examining such cases) and the benefits of the Commission examining such cases. An

amended Procedural Regulation could be used to address this drain on Commission

resources, whereby a swift decision could be taken by the Commission to exclude

cases that are clearly of so little import that they do not warrant further

investigation.

SECTION 1.C. LODGING STATE AID COMPLAINTS

Questions aimed at Member States

16. Do you consider that the non-confidential version of a complaint transmitted by the

Commission to your authorities allowed you to properly assess the problem identified? If

not, what was the nature of the missing information? Which impact did that missing

information have on your ability to properly answer the Commission’s information

request? Please substantiate your reply with concrete examples.

17. Based on your experience, do you consider that use of the complaint form by

complainants makes it easier for your authorities to comment on complaints?

5 Commission Communication COM (2012) 209, ‘EU State Aid Modernisation’, 8 May 2012, paragraph 23(b)

18. Based on your experience, how could the Commission best ensure that its investigations

of complaints prioritize complainants truly affected by the alleged illegal State aid?

Questions aimed at other interested parties

19. Based on your experience, have you encountered difficulties to lodge a complaint with the

Commission? If yes, could you indicate the most serious and/or the most frequent

problems encountered (e.g. access to evidence, gathering the relevant information…) ?

Gathering evidence can be an issue, as clearly a complainant will sometimes have

access to only a limited amount of information about a measure, but we will always

endeavour to supply the Commission with as much information as is possible to

allow them to examine the complaint “without delay”, as required by Article 10(1) of

the Procedural Regulation. Given this natural lack of information from the

complainant, the logical thing to do for the Commission would be to request

information from the alleged beneficiary in a structured, formal manner, with

deadlines, and even penalties for non-provision of information. An amended

Procedural Regulation should provide for this structure, which would put alleged

beneficiaries in a position above that of “interested party”, and allow it proper rights

of defence. As well as complying with the principle of good administration (which

applies to the Commission under Article 41(2) of the Charter of Fundamental Rights

of the European Union), it would allow the Commission to examine a complaint with

full visibility of the facts and aid it in taking an informed decision within “business-

relevant timelines”.

20. Have you ever used the complaint form available on DG Competition's website

(http://ec.europa.eu/competition/forms/intro_en.html)?

Yes

21. If yes, does the scope and the content of the complaint form facilitate the lodging of

complaints? If not, please specify for each of the following criteria the problems that you

may have faced:

a. existence of the complaint form:

b. accessibility of the complaint form on the Commission website:

c. complexity of the complaint form:

d. length of the complaint form:

e. possibility to attach additional information to the complaint form:

f. confidentiality of the identity of the complainant:

g. confidentiality of the information submitted to the Commission:

h. acknowledgement that the form has been registered by the Commission:

i. response of the Commission services:

No comment on this.

SECTION 1.D. COMPLAINTS HANDLING PROCEDURES

Questions aimed at all respondents

22. In your experience, do you consider that the Commission has kept you sufficiently

informed of the different steps involved in the processing of a complaint? If not, could

you indicate the most serious and/or the most frequent problems encountered?

As mentioned in our answers to questions 6 and 11, Ryanair launched five actions

against the Commission for failure to act on our State aid complaints in November

2007. These actions were borne out of frustration in the Commission’s lack of action

on our complaints. Sufficient information and timely action may have prevented the

initiation of these actions.

23. Did you contact the Commission services to get guidance on how to respond to the

Commission's request for information? Were they able to provide the technical guidance

you needed to prepare the answer?

N/A

24. In your experience, did the Commission conclude the investigation of complaint in good

time? If not, why not?

See answers to Q 11 and Q 22.

25. Were you satisfied with the way in which the Commission informed you of the outcome

of the investigation of your complaint(s)? If not, why not? What could the Commission

services have done better? Please be as specific as possible in your reply.

See answers to Q 11 and Q 22.

26. Based on your experience, do you consider that the 2009 Notice on the enforcement of

EU State aid law by national Courts has raised the awareness of your national courts as

regards State aid issues? If not, could you explain how this cooperation could be

reinforced? In particular, do you consider that a more pro-active stance of the Commission

in national State aid litigation could have been of assistance to the courts concerned?

If there is a perceived lack of action at national court level regards State aid, it may

be because litigants are unaware of their rights rather than any lack of awareness of

national courts. The Commission should ensure that it respects the boundaries of its

own procedures, and how its actions may affect proceedings at national level. For

example, it should not let its opening of a formal investigation be the basis for a final

decision by a national court as to whether a measure be considered State aid or not

(and therefore whether the standstill obligation should be applied and recovery of

the “aid” sought). The Commission will be aware of the pending Court of Justice

preliminary reference from the Oberlandesgericht Koblenz (Case C- 284/12), where

the national court has asked the Court of Justice whether a Commission decision to

open a formal investigation into alleged unlawful aid binds the national court in its

assessment of whether State aid exists. This would be an unacceptable extension of

the Commission’s jurisdiction into national proceedings and would serve to actually

undermine national courts’ abilities to assess whether measures constitute State aid.

In a system of State aid control whereby competences are decentralised to national

courts, these courts should not be bound by what is a preliminary assessment by the

Commission of the nature of a measure. A decision to open a formal investigation is

merely a precursor to a more detailed examination of the measure, and should not be

used to bind national courts both as a matter of respect for national courts’

jurisdictions, and due to the adverse consequences for an alleged recipient of

unlawful aid.

SECTION 1.E. MISCELLANEOUS

27. Do you have any additional comments on State aid complaints handling, other than those

covered in the previous questions?

Ryanair is concerned about the length of time it takes the Commission to examine

complaints alleging the implementation of unlawful aid. At present the Commission is

under no deadline to examine the complaint and come to a decision (Articles 4(5), 7(6)

and 7(7) of the Procedural Regulation do not apply to cases of possible unlawful aid),

and such unlimited discretion leads to the Commission taking an unreasonable amount

of time to come to decisions in such cases.

Ryanair appreciates that the same deadlines may not be suitable for cases of potential

unlawful aid as for cases of notified aid, but structured deadlines of some kind should be

worked into an amended Procedural Regulation alongside the obligation to consult

alleged beneficiaries. The current situation of almost absolute discretion for the

Commission in its examination of such cases is not working and is untenable.

28. Please provide copies of any documents or studies which may be relevant for assessing

the Commission's State aid complaints handling policy and practice.

N/A

SECTION 2: INFORMATION-GATHERING IN STATE AID INVESTIGATIONS

Over recent years, there has been a significant evolution in the compatibility assessment of

State aid measures, especially as regards large individual cases. The Commission has refined

an effects-based approach which seeks to balance the positive and negative effects of State aid

measures under assessment.

In the current procedural setup, Member States are the primary information source for that

assessment. They have to answer the Commission's information requests, which in turn may

imply commissioning market studies, exchanging information with the beneficiary, gathering

information from the market as well as preparing responses to complainants' arguments. The

Commission is therefore largely dependent on information provided by the Member State,

which can lead to delays when the information is not readily available to the national

authorities and may place a heavy burden on those authorities.

The Commission tried to tackle some of those issues in the Best Practices Code6. It was in

particular formalised that the Commission services can send, in the context of the formal

investigation procedure, a copy of the decision to initiate the formal investigation procedure

to interested parties and invite them to comment on specific aspects of the case.

To achieve the objectives of State aid modernisation, the current State aid procedures need to

be improved in order to be able to effectively investigate cases with significant impact. In that

respect, the Communication adopted on 8 May 2012 proposes that the Commission should be

endowed with more efficient tools to obtain all the necessary information directly from

market participants and in good time, to deliver decisions within business-relevant timelines.

To prepare such a proposal, the present questionnaire aims at collecting the views of the

Member States and other stakeholders on the possibility for the Commission to collect

information in the context of State aid investigations, and feedback on your experience as

granting authorities, aid recipient, interested parties or others on the gathering of information

in the context of State aid investigations.

SECTION 2.A. GENERAL QUESTIONS - FACTUAL INFORMATION

Questions aimed at Member States

29. How many information requests do you receive on average per year from the

Commission?

30. Based on your experience, could you specify the major difficulties you encountered in

replying to these information requests? In particular, could you specify the type of

information (business plan; market shares; pricing policy…) you found difficult to obtain?

31. In how many cases were responses difficult to obtain because the information requested

concerned market information not publicly available?

32. Based on your experience, how technical and/or long were the information requests sent

by the Commission, especially in case of State aid schemes?

33. In your experience, did you find it preferable to request the necessary data from

companies directly, or did you prefer to commission a study? In the latter case, did your

authorities have sufficient expertise to carry out the study, or did you have recourse to

external expertise? How much did it cost you to do so, both in monetary termsand in terms

of time and resources spent?

Questions aimed at other interested parties

6 Point 34, Communication from the Commission, Best Practices Code for the conduct of State aid

procedures, cited above footnote 9.

34. Were you aware that the Commission offers the possibility for interested parties to

comment on the decision to open a formal investigation regarding alleged incompatible

aid?

Yes

35. Have you ever provided comments to the Commission following the publication of a

decision to open the formal investigation in the Official Journal of the EU? If yes, please

specify:

a. the form of your comments sent to the Commission (letter, e-mail)

b. the type of information submitted (financial documents, business plans,

commercial information, etc.)

c. the time needed to prepare your comments

Yes, we have submitted such comments. The comments are usually by way of letter, with

annexes if needed. Depending on the case, we would submit financial information,

contracts, documents prepared by advisers as well as publicly available information. It

generally takes a number of weeks to prepare comments, so the one month deadline for

provision of comments should not be reduced.

36. Have you ever had informal contacts with the Commission in the course of a State aid

investigation during the preliminary examination phase? After the opening of the formal

investigation? What was the impact of those contacts on the overall course of the

investigation?

We have had informal contacts during the preliminary examination phase and during

the formal investigation. The impact of such contacts is impossible to tell for us. If there

was some impact, only the Commission could say.

Our point is that such ad hoc contacts are unsatisfactory in terms of a coherent and

predictable State aid examination procedure. There must exist a structure whereby, at

preliminary investigation stage, alleged beneficiaries are consulted by the Commission

on the complaint against them and given an opportunity to make comments before the

opening of a formal investigation. Such a structure would allow the Commission to hear

all sides of the story before taking a decision to open a formal investigation.

As stated in the letter of 29 May 2012 by Covington & Burling on our behalf, once a

formal investigation decision is taken, Ryanair (and other alleged beneficiaries of aid)

should have the following rights (in addition to being able to provide comments

following the publication of the decision in the Official Journal) before the adoption of

any final decision:

a. The Commission will inform the alleged beneficiary of the facts and

considerations upon which it intends to base its decision;

b. The Commission should grant the alleged beneficiary access to file, and

particularly the evidence on which the Commission bases its findings;

c. The Commission should allow the alleged beneficiary the opportunity to

present its views in writing, and, if the alleged beneficiary so wishes,

orally, within a reasonable period of time (e.g. two months) of the

notification to the alleged beneficiary of the evidence on which the

Commission bases its findings.

SECTION 2.B. INFORMATION-GATHERING POLICY

Questions aimed at all respondents

37. Based on your experience, to what extent do you consider that the information-gathering

tools at the Commission's disposal are sufficient to detect potential incompatible aid with

a large impact on competition and trade in the Internal market? If not, could you explain

why those tools are insufficient in your view?

The procedure whereby alleged beneficiaries are not informed of the complaint until

the announcement of the formal investigation, unless the Commission makes

informal discretionary contact with them before this time, inevitably results in

decisions to open formal investigations being made without being in possession of the

full facts. The Commission has the ability to seek information from the beneficiary at

the preliminary stage, but this process needs to be formalised and standardised, with

deadlines, and even penalties for non-provision of information. As well as being fair

to the alleged recipient, it would also allow the Commission to take decisions after

getting all necessary information from market participants within set deadlines,

which will allow decisions to be taken within business-relevant timelines. It would

also allow the Commission to make an informed assessment of whether the case is

one with a large impact on competition and trade in the internal market.

As stated in our answer to Question 36, more involvement of the alleged beneficiary

should take place once the formal investigation procedure has opened and before a

final decision has been taken. Full access to file is crucial, given the information

asymmetry between the Commission and alleged recipients of aid. A right to be

heard lacks effectiveness without full access to file, so that the alleged beneficiary

knows exactly what allegations have been made and can respond in kind. Given the

extremely serious effects of a finding of illegal aid by the Commission, alleged

recipients must be given the right to see the allegations against them and the

evidence gathered by the Commission. Hiding behind the classification of the alleged

beneficiary as a mere “interested party” will not stand up to scrutiny under the

Charter of Fundamental Rights. The rights of defence of alleged beneficiaries

demand that enhanced rights be given to alleged beneficiaries in an amended

Procedural Regulation. This would ensure a full gathering of necessary information

by the Commission, while respecting the rights of defence of alleged beneficiaries.

38. Do you consider that the Commission has enough information on the functioning of the

various markets concerned by its investigation and the State aid granting system of the

Member States to effectively tackle illegal and incompatible State aid in a particular

economic sector across all Member States and thereby ensure equal treatment?

It is inevitable that there are information asymmetries between the Commission’s

understanding of the functioning of markets across Member States when there is no

formal, consistent and predictable manner by which the Commission collects

information on alleged aid granted. Such a structure, laid down in an amended

Procedural Regulation or at least in Guidelines, would ensure that complaints of

breaches of the standstill obligation are dealt with in a consistent manner across all

Member States in as much as possible. This information gathering exercise should

include a formal structure for alleged recipients to provide input to the Commission

before any decision to open a formal investigation, as well as the formal procedural

safeguards during the formal investigation (and prior to any final decision) set out in

our answer to question 36 above. Additional obligations to consult alleged

beneficiaries, set down in an amended Procedural Regulation and applicable to all

economic sectors in all Member States, would ensure that the Commission has full

information on the functioning of markets across all Member States.

39. In light of your experience, do you consider that the Commission should have other tools

to obtain the necessary information from market participants and in good time to deliver

decisions within more business-relevant timelines? Which tools would have been more

appropriate?

As set out in our answers to questions 13, 19, 36, 37 and 38, we believe that the

Commission should be given additional powers (and obligations) to consult alleged

beneficiaries of aid. A structure laid down in EU law that gives alleged beneficiaries

a status above that of mere “interested party”, with the rights set out in our letter of

29 May 2012 to Mr Alain Alexis, would have the double-benefit of ensuring that the

Commission gathers all necessary information from market participants in good

time and securing compliance with the Commission’s obligations under the Charter

of Fundamental Rights.

SECTION 2.C. DESIGN OF INFORMATION-GATHERING PROCEDURES

Questions aimed at Member States

40. Do you consider that the invitation to provide comments on the decision to open the

formal investigation published in the Official Journal of the EU is sufficient to collect

relevant information from third parties? If not, why not?

41. Based on your experience, do you consider that the information that the Commission

receives from third parties after the opening of formal investigations is relevant for the

investigation? Is it complete? Is it reliable?

Questions aimed at other interested parties

42. Do you consider that the invitation to provide comments on the decision to open the

formal investigation published in the Official Journal of the EU is sufficient to collect

relevant information from third parties? If not, why not?

As will be obvious from our answers above (in particular our answers to questions

13, 19 and 36 – 39), we do not believe that the current method of merely inviting

comments through publication in the Official Journal is sufficient to collect all

relevant information from third parties.

The main issue preventing the collection of all relevant information is the

classification of alleged beneficiaries as mere interested parties, which means that

alleged beneficiaries are in the same procedural position as any other individual who

wishes to submit comments to the Commission. This is clearly wrong for a number of

reasons. Firstly, the alleged beneficiary is likely to be in a unique position to provide

information to the Commission on the measure allegedly constituting State aid, and

elevating the alleged beneficiary to a status above that of interested party would

ensure an early gathering of information which would obviously be helpful for the

Commission’s decision-making (as well as ensuring that the fundamental rights of

the alleged beneficiary are respected). Secondly, the alleged beneficiary is clearly not

in the same position as any other third party in terms of the implications of any

findings of State aid. Decisions that illegal State aid has been granted requires a

Member State to recover the aid from the alleged beneficiary, which could have

catastrophic consequences for the alleged beneficiary. The present procedure

whereby alleged beneficiaries only have the right to provide comments following

publication in the Official Journal is clearly unsatisfactory as it does not even ensure

that alleged beneficiaries can address all the allegations made by a complainant. The

alleged beneficiary has one hand tied behind its back when making observations

following the publication of the decision in the Official Journal, as it does not possess

full information that allows it to address all the points made in a complaint. This

situation is untenable when one considers the consequences of a negative State aid

decision on an alleged beneficiary.

Under the Procedural Regulation, the ramifications for an alleged beneficiary can be

extremely severe, where the alleged beneficiary has no right to rebut allegations

made that a measure constitutes State aid and does not know what information is in

the Commission’s file. For example, Article 11 provides that the Commission can

order a suspension and recovery of any (potentially) unlawful aid. Any such

injunction may come out of the blue for an alleged beneficiary, which may have

made non-recoverable investments or entered into irrevocable commitments on the

basis of the alleged aid. The alleged aid may turn out not to be State aid at all, or

may be compatible aid, but the damage to the alleged beneficiary of such an

injunction may be irrevocable. The Procedural Regulation allows the Commission to

order such an injunction with no obligation to seek input from the alleged

beneficiary, which is a serious breach of the alleged beneficiary’s fundamental

rights.

We do not see any issue with real “interested parties” commenting following the

publication of a decision to open a formal investigation in the Official Journal, but

alleged beneficiaries must not be given the same status as these third parties when

they are clearly not in the same legal or factual situation.

43. Based on your experience, do you consider that you would have been in a better position

than the authorities of your Member State to provide the Commission with the information

needed for its investigation in State aid cases?

Both the Member State and the alleged beneficiary (which Ryanair frequently is

alleged to be) are generally in a good position to provide quality information to the

Commission in a State aid investigation. It is impossible to say one is in a better

position than another. Hence both should be treated equally in terms of information

gathering and access to file.

44. Based on your experience as an aid recipient, do you consider that direct contacts with the

Commission would have facilitated and accelerated the investigation?

As an alleged aid recipient, direct contacts have been useful for us (and we hope for

the Commission) in understanding the issues involved in the investigations. The key

point is that such direct contacts should be set down in an amended Procedural

Regulation (or at least in Guidelines) instead of being ad hoc, unpredictable and

completely at the Commission’s discretion. We believe that a formal structure in this

respect would help the Commission in gathering all relevant information at an early

stage, taking fully informed decisions within business-relevant timelines and

ensuring the rights of alleged beneficiaries are respected.

Given the extreme delays in dealing with some State aid investigations where no such

direct contact is made, we do not believe that any direct contact structure would

result in undue delays in the investigation.

45. Would you voluntarily be willing to reply to information requests from the Commission

on State aid granted to your competitors?

Yes

SECTION 2.D. MISCELLANEOUS

46. Do you have any additional comments on the gathering of information in the context of

State aid investigations, other than those covered in the previous questions?

The situation whereby the Commission, in cases of possible unlawful aid, is not

bound by any of the time-limits provided for in the Procedural Regulation for both

preliminary examination of a notification of a measure and the closing of a formal

investigation is untenable and in our experience leads to a lack of discipline on behalf

of the Commission in terms of information gathering. In this respect, and as stated

earlier in this submission, there should be formal timelines for examination of cases

of possible unlawful aid, with an obligation to consult alleged beneficiaries and grant

them access to file. Such a structure would allow for comprehensive information

gathering by the Commission within definitive timelines, with penalties for non-

provision of information. The current approach is inconsistent as between cases of

possible unlawful aid, which means that the Commission inevitably possesses more

information about some cases than others, as a result of its own incoherent approach

across the cases.

It is important to note that these cases are ones where unlawful aid is only possible,

i.e. it is generally contentious whether State aid exists in these cases (and therefore

whether the standstill obligation in Article 108(3) TFEU. The current lack of any

obligation on the Commission in terms of deadlines for examination of such cases

effectively presumes non-compliance with Article 108(3) and leads to open-ended

investigations, often lasting half a decade or more, where the Member State and the

alleged beneficiary acted in good faith in not notifying a measure where they firmly

believe that it does not constitute State aid.

47. Please provide copies of any documents or studies which may be relevant for assessing

the gathering of information in State aid cases.

The Commission already possesses Covington & Burling’s letters of 29 May 2012

and 20 July 2012 on behalf of Ryanair, which are directly relevant to the planned

revision of the Procedural Regulation.

48. Please indicate whether the Commission services may contact you for further details on

the information submitted, if required.

YES

THANK YOU FOR RESPONDING TO THIS QUESTIONNAIRE.