Ryanair 2012 Annual Report Download - page 105

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on an equal basis and receives the same cost agreements from both. The guidelines have therefore had no impact
on Ryanair‘s business, although they have caused significant uncertainty in the industry in relation to what
public airports may or may not do in order to attract traffic.
Ryanair believes that the positive decision by the CFI in the Brussels (Charleroi) case has caused the
European Commission to rethink its policy in this area. Ryanair believes that the CFI‘s findings should be
addressed in the ongoing revision of the guidelines. However, adverse rulings in the above or similar cases
could be used as precedents by other competitors to challenge Ryanair‘s agreements with other publicly owned
airports and could cause Ryanair to strongly reconsider its growth strategy in relation to public or state-owned
airports across Europe. This could in turn lead to a scaling back of Ryanair‘s growth strategy due to the smaller
number of privately owned airports available for development. No assurance can be given as to the outcome of
these proceedings, nor as to whether any unfavorable outcomes may, individually or in the aggregate, have a
material adverse effect on the results of operations or financial condition of the Company.
In November 2007, Ryanair initiated proceedings in the CFI against the European Commission for its
failure to take action on a number of state aid complaints Ryanair had submitted against Air France, Lufthansa,
Alitalia, Volare and Olympic Airways. Following the European Commission‘s subsequent findings that illegal
state aid had been provided to Air France and Olympic Airways, Ryanair withdrew the two relevant
proceedings. The case related to Lufthansa concluded with the EU General Court‘s ruling in May 2011, in
which the Court found that while the European Commission has not failed to act, it has unreasonably delayed
the launch of the investigation, which justified Ryanair‘s action for failure to act. Consequently, the Court
ordered the European Commission to pay 50% of Ryanair‘s costs in the proceedings. Similarly, in October
2011, the General Court found that the European Commission has failed to act on Ryanair‘s 2005-2006
complaints against state aid to Alitalia. The European Commission has appealed that ruling.
In November 2008, Ryanair initiated proceedings in the CFI contesting the European Commission‘s
refusal to grant Ryanair access to documents relating to the European Commission‘s state aid investigations at
Hamburg (Lubeck), Tampere, Berlin (Schonefeld), Alghero, Pau, Aarhus, Bratislava and Frankfurt (Hahn)
airports. These cases were heard on July 7, 2010 and a judgment was issued in December 2010. The CFI found
that the European Commission had acted in line with applicable legislation, which highlighted the unfairness
inherent in state aid procedures in the EU, whereby alleged beneficiaries of aid have no right of access to the
European Commission‘s files and therefore cannot properly exercise their rights to defense and good
administration. The CFI ordered the European Commission to pay Ryanair‘s costs in three of the eight access to
documents cases.
In March 2009, Ryanair also appealed (to the CFI) two decisions issued by the European Commission
in November 2008 relating to the sale of Alitalia‘s assets to Compagnia Aerea Italiana (CAI) and to a €300
million rescue loan granted to Alitalia by the Italian government and subsequently converted into Alitalia‘s
capital. A hearing in this case took place in June 2011 and judgment rejecting Ryanair‘s appeal was issued in
March 2012. Ryanair appealed this ruling to the EU Court of Justice.
Matters Related to Investment in Aer Lingus. During the 2007 fiscal year, the Company acquired
25.2% of Aer Lingus. The Company increased its interest to 29.3% during the 2008 fiscal year, and to 29.8%
during the 2009 fiscal year at a total aggregate cost of €407.2 million. Following the acquisition of its initial
stake and upon the approval of the Company‘s shareholders, management proposed to effect a tender offer to
acquire the entire share capital of Aer Lingus. This 2006 offer was, however, prohibited by the European
Commission on competition grounds. Ryanair filed an appeal with the CFI, which was heard in July 2009. On
July 6, 2010 the Court upheld the European Commission‘s decision. (see also: ―Item 5. Operating and Financial
Review and Prospects—Business Overview‖).
The then EU Commissioner for Competition, Neelie Kroes, said on June 27, 2007 that, ―Since Ryanair
is not in a position to exert de jure or de facto control over Aer Lingus, the European Commission is not in a
position to require Ryanair to divest its minority shareholding, which is, by the way, not a controlling stake.‖ In
October 2007, the European Commission also reached a formal decision that it would not force Ryanair to sell
its shares in Aer Lingus. However, Aer Lingus appealed this decision before the CFI. In January 2008, the CFI
heard an application by Aer Lingus for interim measures limiting Ryanair‘s voting rights, pending a decision of
the CFI on Aer Lingus‘ appeal of the European Commission‘s decision not to force Ryanair to sell the Aer
Lingus shares. In March 2008, the court dismissed Aer Lingus‘ application for interim measures. Aer Lingus‘
main appeal was heard in July 2009. On July 6, 2010 the court rejected Aer Lingus‘ appeal and confirmed that