This document discusses EU state aid law and its application to two cases: Ryanair receiving aid for operations at Girona airport, and the proposed "Eurovegas" casino project. Regarding Ryanair, the Commission would likely find the aid compatible with EU law as it aims to develop an underutilized regional airport. However, Ryanair's strong bargaining position raises questions. Eurovegas differs in that it involves large subsidies contingent on job creation, raising competition concerns. To address these issues, the document proposes alternative solutions that do not distort the market or encourage rent-seeking behavior from firms.

1.
EU
STATE
AID
AND
RYANAIR
&
EUROVEGAS
AS
SPECIAL
CASES
Laura
Batlle
Martín
Economy,
University
of
Girona
Tutor:
Modes
Fluvià
Font

2. 2
CONTENTS
INTRODUCTION
..............................................................................................................................................
3
ACKNOWLEDGE
..............................................................................................................................................
3
1.
STATE
AID
CONCEPT
..................................................................................................................................
4
1.1.
THE
EC
STATE
AID
REGIME
.....................................................................................................................
4
1.1.1.
The
economics
of
the
compatibility
of
State
aid
..........................................................................
4
1.1.2.
Procedural
regulation
...................................................................................................................
8
1.2.
EU
case
law
............................................................................................................................................
9
2.
CASE
DESCRIPTIONS
................................................................................................................................
11
2.1.
RYANAIR
IN
GIRONA
.............................................................................................................................
11
2.1.1.
Ryanair’s
history
..........................................................................................................................
11
2.1.2.
Policy
of
Ryanair
..........................................................................................................................
12
2.1.3.
Ryanair
in
Girona
airport
............................................................................................................
12
2.1.4.
Highlights
of
the
aid
measure
.....................................................................................................
14
2.2.
EUROVEGAS
.........................................................................................................................................
14
2.2.1.
Description
of
the
project
...........................................................................................................
14
2.2.2.
Prior
negotiations
.......................................................................................................................
15
2.2.3.
Las
Vegas
Sands
requirements
to
invest
in
Spain
.......................................................................
16
2.2.4.
Highlights
of
the
aid
measure
.....................................................................................................
16
3.
ASSESSMENT
OF
THE
STATE
AID
LEGISLATION
.........................................................................................
17
3.1.
RYANAIR
CASE
IN
GIRONA
....................................................................................................................
17
3.1.1.
How
the
Commission
would
act
.................................................................................................
17
3.1.2.
Is
it
an
adequate
argumentation?
...............................................................................................
17
3.2.
EUROVEGAS
CASE
................................................................................................................................
18
3.2.1.
Has
Eurovegas
the
same
elements
as
Ryanair
case?
..................................................................
18
3.2.2.
Possible
solution
to
overcome
the
Prisoners’
Dilemma
.............................................................
19
REFERENCES
.................................................................................................................................................
20

3. 3
INTRODUCTION
In
the
current
economic
downturn,
public
budget
cuts
are
increasing,
hence,
the
importance
of
an
efficient
management
of
public
resources.
However,
in
economic
expansions
where
public
investment
is
abundant,
it
is
then
also
important
that
the
economic
policy
assures
a
good
functioning
of
the
markets
and
maintains
competition
among
Member
States.
Not
only
in
a
European
view,
if
not
in
a
regional
view.
State
aid
is
essential
to
increase
the
social
welfare
of
a
country,
although
a
wrong
decision
could
destabilise
markets.
The
present
research
outlines
the
protocol
of
the
European
Union
when
granting
state
aid.
In
order
that
state
aid
does
not
mean
a
destabilisation
of
the
common
internal
market,
the
protocol
defines
when
granted
state
aid
is
susceptible
to
distort
competition
within
European
Economic
Union.
In
moments
like
now,
where
the
Euro
zone
stability
is
in
danger
due
to
the
supposed
Greece
exit
or
the
Spanish
banking
system,
unified
EU
protocols
should
be
a
tool
in
order
to
stabilise
the
EU
market
and
reduce
uncertainty
of
the
Euro.
In
these
situations,
Member
States
and
the
EU
Commission
face
a
trade-­‐off
between
granting
state
aid
in
order
to
create
jobs
and
overcome
the
current
economic
crisis,
or
to
follow
the
strict
rules
of
the
competition
within
the
European
market.
A
further
problem
is
the
capacity
of
some
companies
to
act
as
a
monopolist
and
put
in
competition
governments
in
order
to
receive
public
aid.
The
reason
is
that
firms
may
engage
in
rent-­‐
seeking
to
obtain
state
aid.
Following
this
introduction,
the
research
is
structured
in
three
sections.
Section
1
poses
and
develops
what
EU
Commission
considers
to
be
state
aid
and
in
which
protocol
the
Commission
relies
on
in
granting
state
aid
-­‐the
balancing
test
is
the
most
important
part-­‐.
In
addition,
Section
1
explained
the
case
law
focus
in
two
real
cases.
Section
2
describes
two
Spanish
recent
cases
of
potential
state
aid
–Ryanair
in
Girona’s
airport
and
Eurovegas
case-­‐.
Two
problematic
cases
of
current
interest,
one
due
to
its
monopoly
power
in
the
market
of
European
secondary
airports,
and
the
second
one
due
to
the
kind
of
requirements
they
ask
for
building
its
European
base
in
Spain.
The
research
ends
with
the
application
of
the
EU
law
in
terms
of
state
aid
in
the
two
described
cases
of
Section
2.
First,
it
is
analysed
how
the
European
Commission
would
act
in
front
of
the
state
aid
that
Ryanair
receive
in
Girona.
Here,
the
problem
could
be
more
related
with
the
politics
behind
it
than
with
the
state
aid
itself.
Lastly,
Eurovegas
economic
elements
are
explained
in
order
to
show
the
difference
with
Ryanair
case.
As
a
result,
it
develops
a
different
solution
which
may
induce
further
studies
in
the
topic.
ACKNOWLEDGE
It
was
a
pleasure
for
me
to
study
Economy
in
the
Faculty
of
Economics
and
Business
of
Girona.
First
of
all,
I
would
like
to
thank
Modest
Fluvià
for
being
a
great
tutor.
His
ideas
and
his
support
had
a
major
influence
on
this
research.
He
spent
a
lot
of
time
helping
me
writing
the
current
research.
I
learned
a
lot
during
this
time
and
I
am
convinced
that
this
knowledge
will
help
me
in
the
future.
My
thanks
to
all
my
fellows
at
the
college
for
the
great
time
I
spend
studying
Economics
in
our
Faculty.
I
enjoyed
the
atmosphere,
their
friendship
and
their
support.
Special
thanks
to
all
professors
I
had
during
my
bachelor’s
degree.
It
was
a
pleasure
to
be
a
student
of
all
them.
I
would
like
to
thank
Anna
Jimenez
and
her
husband
Nick
for
reviewing
my
research.
I
am
happy
to
have
such
an
English
teacher.
My
thanks
for
my
family
who
have
always
supported
me,
Anna
and
Cristina
as
well
as
Susanna
and
Albert
for
real
friendship,
and
most
of
all
Carles
for
enjoying
life
together
with
me.

4. 4
1. STATE
AID
CONCEPT
1.1.THE
EC
STATE
AID
REGIME
The
concept
of
the
State
aid
starts
from
the
articles
87,
88
and
89
of
the
EC
Treaty.
There
does
not
exist
a
legally
defined
notion
of
State
aid
at
EU
level,
nevertheless,
Article
87(1)
of
the
EC
Treaty
sets
out
the
characteristics
of
State
aid.
It
provides
that:
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,
insofar
as
it
affects
trade
between
Member
States,
be
incompatible
with
the
internal
market.
Article
87(1)
EU
Treaty
contains
four
cumulative
conditions
which
a
measure
must
satisfy
in
order
to
be
classified
as
State
aid.
-­‐ Aid
must
confer
an
economic
advantage
for
beneficiaries
that
carry
out
an
economic
activity
-­‐ Aid
must
be
granted
by
States
or
through
State
resources
-­‐ Aid
must
favour
certain
undertakings
and
thus
be
selective
-­‐ Aid
must
be
large
enough
to
distort
competition
and
affect
trade
between
Member
States.
Once
state
aid
is
recognised,
the
compatibility
of
it
with
the
EU
internal
market
should
be
analysed.
Article
87(2)
EU
Treaty
recognises
automatically
the
compatibility
of
that
aid
such
as
the
ones
having
a
social
character,
granted
to
individual
consumers,
and
provided
that
is
awarded
without
discrimination.
Moreover,
aid
to
compensate
the
damage
caused
by
natural
disasters
or
exceptional
occurrences,
is
compatible
with
the
internal
market
too.
Furthermore,
in
the
third
point
of
this
article,
it
is
also
considered
compatible
with
the
internal
market
aid
to
promote
the
economic
development
of
the
area
where
the
standard
of
living
is
usually
low;
aid
to
promote
the
execution
of
an
important
project
of
common
European
interest
or
to
remedy
a
serious
disturbance
in
the
economy
of
a
Member
State;
and
aid
to
promote
culture
or
heritage
conservation.
Such
other
categories
of
aid
may
be
determined
by
European
Commission.
1.1.1. The
economics
of
the
compatibility
of
State
aid
The
European
Commission
considers
compatible
with
the
common
market
that
state
aid
which
contributes
to
well-­‐
defined
objectives
of
common
European
interest
without
distorting
inappropriately
competition
between
undertakings
and
trade
between
Member
States.
Therefore,
Article
87(3)
EU
Treaty
was
passed
to
assess
the
compatibility
of
aid
with
the
internal
market.
The
Commission
evaluates
a
wide
range
of
granted
aid
by
Member
States
for
objectives
of
economic
and
social
common
interest.
This
evaluation
should
be
focused
on
the
application
of
some
economic
principles.

5. 5
The
State
Aid
Action
Plan1
in
2005,
which
motto
was
‘Less
and
better
targeted
aid’,
was
conducted
for
the
Commission
in
order
to
provide
more
details
and
clarification
on
the
economic
approach
used
to
strengthen
the
compatibility
analysis.
In
the
Action
Plan
2005,
the
EU
Commission
endeavours
to
give
an
economic
and
refined
perspective
on
the
analysis
of
the
state
aid.
In
the
19th
paragraph
of
the
Plan,
it
says
as
follows:
Economic
and
legal
analyses
are
used
to
fulfil
the
Commission’s
obligations
under
the
Treaty,
in
some
cases
to
determine
when
a
measure
is
state
aid
(e.g.
application
of
the
market
investor
principle
or
evaluation
of
the
justification
of
certain
measures
by
the
nature
or
general
scheme
of
the
fiscal
system)
and
in
particular
to
determine
when
state
aid
can
be
declared
compatible
with
the
Treaty.
In
assessing
whether
an
aid
measure
can
be
deemed
compatible
with
the
common
market,
the
Commission
balances
the
positive
impact
of
the
aid
measure
(reaching
and
objective
of
common
interest)
against
its
potentially
negative
side
effects
(distortions
of
trade
and
competition).
It
is
for
Member
States
to
provide
the
necessary
evidence
in
this
respect,
prior
to
any
implementation
of
the
envisaged
measure.
The
core
component
of
this
refined
economic
approach
was
the
introduction
of
the
balancing
test.
It
measures
the
economic
effects
of
the
state
aid
in
the
markets,
balancing
the
negative
effects
on
trade
and
competition
with
its
positive
effects
in
terms
of
a
contribution
to
the
achievement
of
well-­‐defined
objectives
of
common
interest.
This
final
test
could
be
contemplated
as
a
cost
benefit
analysis,
where
both
economic
and
social
costs
are
taken
into
account.
Once
the
Commission
decided
that
the
measure
is
considered
state
aid,
the
balancing
test
must
decide
whether
this
state
aid
is
compatible
or
not
with
the
EU
internal
market.
To
decide
if
a
measure
constitutes
state
aid
and
hence,
fulfils
the
four
cumulative
conditions,
the
market
investor
principle
can
be
applied.
Market
economy
investor
principle
This
principle
has
the
objective
of
appraising
if
transfers
of
state
aid
resources
constitute
an
economic
advantage
for
its
recipients.
It
evaluates,
by
analysing
its
profitability,
whether
a
determined
financial
agreement
between
the
State
and
a
third
party,
could
have
been
acceptable
for
a
private
investor2
.
If
the
requirements
of
the
agreement
would
not
have
been
accepted
by
a
private
investor,
it
is
believed
as
to
be
an
economic
advantage
for
the
recipient,
and
consequently,
a
possible
state
aid.
According
to
this
principle,
the
EU
Commission
decided
to
open
a
formal
investigation
in
the
case
of
‘Ciudad
de
la
luz’3
in
Valencia,
Spain.
The
Commission
thought
that
the
expected
rate
of
return
of
the
project
was
not
appropriately
calculated.
The
financial
cost
and
the
disposal
value
were
extremely
low,
so
after
that
the
expected
1
See
the
full
text
‘State
Aid
Action
Plan
2005.
Less
and
better
targeted
state
aid:
a
roadmap
for
state
aid
reform
2005-­‐2006’
in
http://eur-­‐lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2005:0107:FIN:EN:PDF
2
Evaluating
this
principle
requires
the
calculation
of
the
expected
rate
of
returns
of
the
public
investment,
either
through
the
Net
Present
Value
(NET)
or
the
Intern
Rate
of
Return
(IRR).
3
Case
8/2008
(ex
NN
4/2008)
‘Ciudad
de
la
luz’
Studios,
Valencia,
Spain.

6. 6
rate
of
return
was
too
low
to
be
acceptable
for
a
private
investor.
Moreover,
the
credit
reimbursement
conditions
were
too
much
favourable
to
the
borrower.
For
this
reason,
the
Commission
said
that
a
private
investor
would
accept
neither
the
reimbursement
conditions
nor
the
calculated
expected
rate
of
return
of
the
project.
Balancing
test
It
consists
of
three
crucial
points.
1. Identification
of
the
objective
of
general
economic
interest
Member
States
wishing
to
grant
aid
should
define
the
objective
of
their
intervention,
and
explain
whether
the
objective
rather
aims
at
increasing
market
efficiency
or
at
addressing
equity
problems.
It
is
important
to
distinguish
between
these
two
purposes
due
to
their
different
characteristic
and
need
for
public
intervention.
Efficient
objectives
Sometimes
markets
fail
to
deliver
an
efficient
outcome,
for
instance
in
terms
of
socially
profitable
investment
not
being
tackled,
in
terms
of
some
activities
being
excessively
provided
or
not
provided
at
lowest
costs.
In
these
situations
where
the
mechanism
of
prices
fails
to
provide
the
proper
signals
to
consumers
and
producers,
there
exists
scope
for
economic
policy
to
improve
the
market
inefficiency.
Where
market
forces
alone
would
not
be
able
to
reach
an
efficient
outcome,
it
may
be
necessary
the
intervention
of
the
state
to
limit
the
inefficiency.
State
aid
to
promote
research
and
development
or
to
protect
the
environment
are
good
examples
of
this
kind
of
aid
focused
in
efficiency
objectives.
Equity
objectives
Efficiency
is
a
necessary
condition,
even
though
not
sufficient.
In
addition
to
market
failure,
governments
may
consider
inequalities
unacceptable
and
choose
to
intervene
and
transfer
wealth
between
individuals
in
order
to
reduce
social
or
regional
inequalities.
With
this
aim,
regional
aid
to
promote
economic,
social
and
territorial
cohesion
within
the
Member
States
and
the
European
Union
were
allowed.
2. Justification
of
the
aid
as
an
economic
instrument
At
this
point,
questions
about
the
appropriateness
of
the
policy
instrument;
or
the
incentive
effect
to
change
the
behaviour
of
the
aid
recipient;
or
the
volume
of
the
aid
might
be
debated.
Appropriate
instrument
It
consists
in
ruling
out
that
other
possible
measures
could
be
more
effective
and
less
costly
in
order
to
achieve
the
objective
of
general
economic
interest.

7. 7
If
the
state
aid
turns
out
to
be
inappropriate,
it
might
create
distortions
of
competition
and
trade
that
could
be
avoided
or
limited
by
a
better
policy
tool.
The
Commission
will
consider
an
appropriate
state
aid
instrument
when
the
Member
State
has
considered
other
policy
options
and
has
demonstrated
advantages
of
using
it.
An
example
of
this
point
is
the
case
N377/20064
,
in
which
the
Commission
decided
that
the
instruments
used
were
the
most
convenient,
according
to
the
economic
data
and
the
additional
cost
provided
by
Spanish
authorities.
Incentive
effect
over
the
beneficiary
The
State
aid
measure
must
have
a
real
incentive
effect
and
change
the
behaviour
of
a
beneficiary
that
leads
to
the
achievement
of
the
targeted
policy
objective
pursued.
Concerning
efficiency
objectives,
the
Member
State
must
demonstrate
the
incentive
effect
by
showing
that
the
beneficiary
undertaking
has
changed
its
level
of
activity,
and
consequently
corrected
the
market
failure
and
improved
the
market
outcome.
It
must
demonstrate
that
the
beneficiary
would
not
undertake
the
targeted
activity
without
aid.
With
regard
to
equity
objectives,
it
must
be
demonstrated
that
carrying
out
the
targeted
activity
entails
additional
costs
coming
from
social
or
regional
handicaps,
which
are
compensated
for
by
the
aid.
For
instance,
in
the
case
N405/2007
Bioterials
(Netherlands),
the
Commission
stated
that
without
the
state
aid
granted
to
the
R&D
project
of
new
biological
products,
beneficiaries
would
not
have
undertaken
the
project.
Moreover,
thanks
to
the
aid
beneficiaries
could
initiate
new
activities
and
produce
new
products.
For
these
reasons,
an
incentive
effect
existed.
Minimum
use
of
the
public
resources
This
minimum
use
is
related
to
the
efficacy
and
the
proportionality
of
the
aid
measure.
It
consists
in
analysing
whether
the
aid
measure
constitutes
the
minimum
necessary
cost
to
tackle
the
targeted
objective.
Aid
is
considered
to
be
proportionate
only
if
the
same
result
could
not
be
reached
with
less
aid
and
less
distortion.
The
amount
and
the
intensity
of
the
aid
must
be
limited
to
the
minimum
needed
for
the
aided
activity
to
take
place.
To
evaluate
the
proportionality
of
the
aid,
the
Commission
used
the
same
information
as
for
the
incentive
effect
analysis.
However,
at
this
point
a
different
appreciation
is
needed
as
regards
the
extent
to
which
the
aid
exceeds
what
is
necessary
to
produce
the
change
of
behaviour.
An
example
of
the
minimum
use
of
public
resources
tool
is
the
state
guarantee5
of
900
millions
EUR
granted
to
BAWAG-­‐PSK
Bank
in
Austria.
Commission
decided
that
the
total
amount
granted
to
BAWAG-­‐PSK
represented
only
1’6%
of
the
total
bank’s
balance,
and
this
contribution
meets
the
minimum
necessary
public
resources.
4
Case
N377/2006
Economic
and
Fiscal
Regime
in
Canarias,
Spain
5
Case
50/2006
(ex
N
68/2006,
CP
102/2006)
BAWAG
in
Austria.

8. 8
3. Damages
of
the
aid
in
terms
of
competence
and
its
weighting
to
its
benefits
It
is
important
first
to
identify
what
is
the
damage
done
to
the
competition
and
then,
balance
the
damage
and
the
benefits
of
the
aid
in
economic
terms.
Once
taking
into
account
the
positive
effects,
the
balancing
test
wants
to
know
whether
the
distortions
of
competition
and
the
effect
on
trade
limited
by
the
state
aid
are
overall
positive.
Distortion
of
competition
According
to
the
Commission
there
exist
three
kinds
of
distortion
of
the
competition
produced
by
state
aid.
First,
the
fact
that
state
aid
may
have
a
long
term
effects
on
the
incentive
to
invest
and
innovate
for
both
the
beneficiary
and
competitors.
These
dynamic
incentives
lead
in
the
long
run
to
lower
quality
or
higher
prices
for
consumers.
Second,
a
crowding
out
effect
on
competitors
is
expected.
The
change
of
behaviour
of
the
aid
recipient
will
affect
competitors
by
reducing
their
own
sales
and
investment
plans,
too.
Furthermore,
if
the
beneficiary
of
the
aid
has
market
power,
the
aid
measure
may
reinforce
its
dominance.
Third,
state
aid
can
affect
the
input
markets
if
it
favours
the
use
of
particular
inputs
or
a
particular
location.
The
Commission
focuses
its
attention
on
the
magnitude
of
the
distortions
arising
across
and
within
Member
States.
The
effect
that
the
change
of
behaviour
of
the
recipient
has
on
competitors
and
input
suppliers
is
the
first
priority
at
this
point.
Then,
it
also
considers
the
effect
on
consumers.
Despite
its
distortive
effects
on
competition,
it
has
to
be
acknowledged
that
some
State
aid,
when
granted
digressively
and
limited
in
time,
can
contribute
to
stimulating
certain
activities
or
ease
structural
changes
in
the
economy.
For
instance,
the
Commission
stated
that
the
state
aid
granted
to
the
acquisition
of
digital
decoders
and
the
antenna’s
adaptation6
in
Soria
(Spain)
guaranteed
the
neutrality
principle
of
technology
and
thus,
the
aid
was
not
in
favour
of
a
particular
platform
but
of
all
platforms.
Furthermore,
subsidies
given
to
the
production
of
digital
equipment
were
available
for
all
the
producers;
hence,
they
do
not
distort
the
competition
of
the
market.
1.1.2. Procedural
regulation
It
is
the
European
Commission
which
is
entrusted
with
the
state
aid
monitoring
function.
Article
88
EU
Treaty
sets
out
the
procedure
for
the
examination
of
state
aid
measure
by
the
Commission.
The
necessity
of
the
European
Commission
to
optimize
the
available
monitoring
resources
to
maintain
the
effective
competition
has
brought
about
delimitation
of
aid
exempted
from
compulsory
notification
covered
by
the
‘General
block
exemption
Regulations7
’
and
the
‘Regulation
of
de
minimis
aid8
’.
6
Case
N
103/2007
Acquisition
of
decoders
and
adaptation
of
the
antennas
in
Soria,
Spain.
7
For
the
full
regulation
see
http://ec.europa.eu/competition/state_aid/reform/gber_final_en.pdf
8
For
the
full
text
see
http://eur-­‐lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2006:379:0005:0010:EN:PDF

9. 9
According
to
the
obligation
of
the
Member
State
to
notify
state
aid
measures
to
the
EU
Commission,
there
exists
three
kind
of
state
aid.
1. Aid
to
be
previously
notified:
it
fulfils
the
four
cumulative
conditions,
and
this
kind
of
aid
is
not
included
in
the
‘General
block
exemption
Regulations’.
The
notification
must
be
prior
to
its
application.
2. Aid
exempt
of
prior
notification:
even
it
fulfils
the
four
cumulative
conditions,
it
is
included
in
one
exemption
category
to
be
previously
notified.
However,
this
kind
of
aid
must
be
notified
a
posteriori
to
the
Commission.
3. Aid
of
minimum
importance
or
de
minimis:
due
to
its
low
amount
it
is
not
considered
to
distort
the
competition
of
the
common
internal
market.
In
general
terms,
aid
granted
to
a
firm
which
does
not
exceed
200.000€
in
three
fiscal
years
is
contemplated
as
minimis
aid
and,
therefore,
is
exempt
from
both
prior
and
posterior
notification.
It
is,
accordingly,
critical
that
Member
States
correctly
identify
in
advance
which
kind
of
aid
measure
they
are
carrying
out,
and
thus,
to
proceed
with
the
prior
or
posterior
notification
to
the
EU
Commission.
In
contrary,
if
the
aid
measure
is
considered
minimis
aid,
Member
States
are
exempted
to
notify
it.
In
Spain,
the
‘Comisión
Nacional
de
la
Competencia’
(CNN)
is
the
institution
responsible
to
analyse
the
aforementioned
criteria
for
awarding
state
aid
and
properly
notify
them
to
the
EU
Commission.
They
should
issue
reports
on
the
system
of
aid
and
individual
aid,
and
address
to
the
Public
Administration
proposals
in
order
to
maintain
competition
within
Spain.
1.2.EU
case
law
To
examine
how
the
mentioned
state
aid
legislation
is
applied,
two
different
European
cases
are
analysed
based
on
the
final
EU
Commission
decision.
These
two
cases
are
named
by
the
European
Commission
as
follows;
1. N63/2010_Spain_State
guarantee
for
the
construction
of
Murcia
International
Airport.
2. C76/2002
(ex
NN
122/2002)_Advantages
granted
by
the
Walloon
Region
and
Brussels
South
Charleroi
Airport
to
the
airline
Ryanair
in
connection
with
its
installation
at
Charleroi
In
the
first
case,
the
EU
Commission
decided
that
the
State
aid
measure
was
compatible
with
the
EU
internal
market;
meanwhile
in
the
second
one
they
determined
it
was
not
compatible.
The
protocol
that
the
Commission
uses
is
as
follows;
first
of
all,
describes
the
temporal
procedure;
second,
a
description
of
the
measures;
third,
the
assessment
of
the
measures;
and
finally,
the
decision.

10. 10
1. N63/2010_Spain_State
guarantee
for
the
construction
of
Murcia
International
Airport9
The
European
Commission
decided
not
to
raise
any
objections
to
the
100%
State
guarantee
for
an
outstanding
loan
with
duration
of
5
years
amounting
up
to
EUR
200
million
granted
by
the
Region
Murcia
in
favour
of
the
SCAM
(Concessionary
Society
of
the
Murcia
Airport
formed
by
private
entities).
After
evaluating
the
investment
project
and
its
financing,
the
Commission
regarded
the
SCAM
as
an
undertaking
that
had
received
State
resources
that
constitute
an
economic
advantage.
The
reason
is
that
in
normal
market
conditions,
SCAM
would
not
have
found
a
guarantee
with
the
same
low
interest
rate.
Another
point
taken
into
account
in
the
compatibility
evaluation
is
that
it
was
a
selective
measure
only
provided
to
SCAM.
Moreover,
the
economic
advantage
which
SCAM
received
from
the
guarantee,
was
thought
to
distort
or
threaten
to
distort
the
competition
and
affect
trade
between
the
Member
States.
For
all
these
reasons,
the
EU
Commission
decided
that
the
100%
guarantee
provided
by
Region
of
Murcia
involved
State
aid.
Once
the
State
aid
is
recognised,
the
compatibility
evaluation
must
show
whether
this
aid
measure
is
compatible
with
the
internal
market.
The
Commission
carried
out
a
balancing
test
according
to
the
Airport
Guidelines.
The
first
point
taken
into
account
was
whether
the
construction
and
operation
of
the
infrastructure
meet
a
clearly
defined
objective
of
general
interest.
After
approving
the
common
objective,
the
necessity
and
the
proportionality
of
the
infrastructure
were
accepted.
Thirdly,
the
non-­‐discriminatory
manner
of
the
measure
and
the
fact
that
all
potential
users
of
the
infrastructure
had
access
to
it,
showed
no
distortion
on
competition
and
thus
development
of
trade
was
not
affected
to
an
extent
contrary
to
the
common
interest.
Furthermore,
the
intensity
and
the
proportionality
of
the
investment
were
included
in
analysing
the
balancing
test.
As
a
result,
the
Commission
decided
that
the
State
guarantee
was
compatible
with
the
internal
market
under
Article
87(3)
of
the
Treaty.
2. State
aid
C76/2002
(ex
NN
122/2002)_Advantages
granted
by
the
Walloon
Region
and
Brussels
South
Charleroi
Airport
to
the
airline
Ryanair
in
connection
with
its
installation
at
Charleroi10
The
European
Commission
doubted
that
the
advantages
granted
by
the
Walloon
Region
and
by
BSCA
(Brussels
South
Charleroi
Airport)
to
Ryanair,
which
constitutes
state
aid
within
the
meaning
of
Article
87(1)
of
the
Treaty,
could
be
compatible
with
the
common
internal
market.
The
aid
measure
consisted
of
an
agreement
with
Ryanair
under
which
Ryanair
could
pay
a
landing
fee
which
was
some
50%
less
than
that
set
by
the
Walloon
Region.
Moreover,
the
Government
undertook
to
indemnify
Ryanair
9
Case
N63/2010
-­‐Spain-­‐
State
guarantee
for
the
construction
of
Murcia
International
Airport.
10
State
aid
C76/2002
(ex
NN
122/2002)
-­‐
Advantages
granted
by
the
Walloon
Region
and
Brussels
South
Charleroi
Airport
to
the
airline
Ryanair
in
connection
with
its
installation
at
Charleroi.

11. 11
losses
which
the
company
might
suffer
due
to
change
in
the
level
of
airport
taxes
or
airport
opening
hours
in
the
next
15
years.
Furthermore,
BSCA
wanted
to
grant
Ryanair
a
‘contribution’
towards
the
expenses
associated
with
the
opening
of
Ryanair’s
base
at
Charleroi.
Ryanair
and
BSCA
wanted
to
set
up
a
joint
promotion
and
an
advertising
enterprise
which
finance
the
advertising
and
marketing
of
Ryanair’s
services
to
and
from
Charleroi.
The
Commissions
considered
that
the
granting
by
the
Region
of
a
reduction
in
airport
‘taxes’
to
a
single
airline,
constituted
a
fiscal
derogation
granted
to
a
company.
It
places
the
company
in
a
more
advantageous
situation
than
its
competitors
operating
from
Charleroi.
This
advantage
is
financed
by
state
resources,
and
they
are
liable
to
distort
competition
and
intra-­‐Community
trade.
For
these
reasons
it
constitutes
state
aid.
Furthermore,
the
fact
that
the
airport
management
company
(BSCA)
covers
certain
costs
of
operating
air
services,
places
Ryanair
in
a
more
advantageous
situation
than
its
competitors,
and
this
advantage
do
constitute
aid
within
the
meaning
of
Article
87(1).
Commission
cannot
authorise
it
due
to
its
discriminatory
treatment.
For
this
reason,
the
Commission
declared
without
conducting
the
balancing
test
that
this
state
aid
was
unlawful
aid
and
thus,
should
be
paid
back
from
Ryanair.
In
2008,
the
EU
First
Instance
Court
reversed
the
Commission’s
decision,
claiming
that
the
latter
failed
in
the
application
of
the
market
investor
principle.
2. CASE
DESCRIPTIONS
2.1.RYANAIR
IN
GIRONA
2.1.1. Ryanair’s
history
Ryanair
was
established
by
Tony
Ryan
in
1985
with
a
share
capital
of
£1
and
25
employees,
using
a
fifteen-­‐seater
aircraft.
Ten
years
later
Ryanair’s
fleet
reached
11
aircraft,
all
of
them
Boeing
737s.
Ryanair
experienced
continued
growth,
reaching
1262
employees
and
over
7
million
passengers
carried
in
a
year
at
the
end
of
2000.
In
2002,
the
airline
carries
over
13
million
passengers,
at
the
same
time
announcing
the
largest
aircraft
order
by
an
Irish
airline
ever;
$6
billion
placed
for
new
Boeing
aircraft,
and
choosing
Brussels
Charleroi
Airport
as
its
first
Continental
European
base.
The
rapid
expansion
continues,
and
Ryanair
broke
the
30
million
passenger
barrier
in
a
year
at
the
end
of
2005,
carrying
more
passengers
in
August
than
British
Airways.
In
early
September,
2009,
Ryanair’s
fleet
reached
200
aircraft
for
the
first
time,
and
it
is
expected
that
they
will
operate
a
fleet
almost
300
aircraft
by
2012.
Nowadays,
Ryanair
is
the
most
important
European
low
cost
airline,
operating
on
more
than
1100
routes
which
connect
150
airports
around
the
world
and
carry
over
76
millions
of
passengers
per
year.

12. 12
2.1.2. Policy
of
Ryanair
Its
aggressive
commercial
policy
has
been
questioned
by
other
airlines
that
accuse
Ryanair
of
unfair
competition.
To
have
these
low
prices
Ryanair
has
been
carrying
out
a
controversial
enterprise
policy,
for
instance,
its
commercial
and
marketing
policy.
Concerning
the
commercial
policy,
it
was
the
first
company
to
abolish
the
airport
check-­‐in.
Since
March
2009,
passengers
need
to
print
out
their
boarding
pass
before
they
get
to
the
airport,
if
fliers
fail
in
printing
their
boarding
pass
before
a
flight
they
face
a
penalty
of
40€.
Although
the
Spanish
courts
ruled
out
in
January
2011
that
to
charge
fliers
for
not
printing
their
own
boarding
passes
was
illegal,
Ryanair
continue
with
this
policy.
The
most
controversial
aspect
of
Ryanair’s
commercial
policy
is
related
to
the
special
treatment
they
ask
of
public
authorities
when
operating
in
a
particular
airport.
These
special
conditions
are
classified
as
state
aid
according
to
the
EU
Commission.
Ryanair
enjoys
reduced
airport
taxes
and
fees
during
a
long
period
of
time,
like
landing
charges.
Moreover,
Ryanair
has
achieved
in
all
the
places
it
operates,
several
other
financial
supports,
frequently
called
one-­‐shot
incentives.
In
return,
Ryanair
commits
itself
in
the
agreement
of
transfer
a
certain
amount
of
passengers
to
and
from
the
airport.
Regarding
marketing
policy,
Ryanair’s
success
in
launching
new
routes
in
secondary
airports
has
been
sometime
criticised.
The
airline
is
often
accused
of
receiving
subsidies
from
regional
and
local
Administrations
which
they
use
to
cover
the
marketing
costs
of
being
in
a
secondary
airport,
reducing
its
risks
of
failure.
Once
the
low
cost
airline
is
the
principal
operator
of
these
airports,
sometimes
almost
the
only
one,
they
ask
for
more
subsidies
threatening
to
leave
operations
in
this
specific
airport.
It
could
be
considered
that
the
firm,
acting
as
a
monopoly,
engages
in
rent
seeking.
This
rent
seeking
might
involve
lobbying
activities
to
obtain
government
regulations
that
make
entry
by
potential
competitors
more
difficult.
Ryanair’s
price
strategy
has
been
focused
in
low
fares
for
its
passengers,
adding
costs
for
luggage,
payment
by
card,
purchase
by
phone
or
as
said
before
for
not
printing
boarding
pass
before
flight.
However,
passengers
perceive
Ryanair
as
a
low
cost
carrier
thanks
to
extensive
advertising
and
effective
use
of
public
relations.
2.1.3. Ryanair
in
Girona
airport
Girona
airport
was
opened
in
1965
in
a
plot
of
land
10
km
to
the
south
of
Girona.
In
2004,
the
airport
had
a
landing
strip
of
2400m,
a
platform
with
17
airplane
parking
and
10
for
general
air
force,
and
a
terminal
of
27.274m2
.
For
decades,
the
airport
activity
was
basically
based
on
seasonal
tourism
in
summer,
with
huge
differences
between
summer
and
winter.
Ryanair
arrived
in
Girona
airport
in
2002,
starting
an
exponential
growth
with
one
million
passengers
at
the
end
of
the
year.
One
year
later,
Ryanair
established
its
south
European
base
in
Girona
airport,
consolidating
it
as
the
second
airport
in
Catalonia
thanks
to
3
million
Euros
of
public
aid.

13. 13
Between
2002
and
2008
the
number
of
passengers
increased
from
one
million
to
reach
a
historic
maximum
of
5’5
millions.
This
huge
increase
had
a
big
impact
in
the
growth
of
the
area’s
facilities;
a
new
6-­‐floor
parking
building;
technical
block;
expanding
the
terminal;
and
implementation
of
one
anti-­‐fog
system
and
one
custom
service
point.
In
2006,
negotiations
between
Catalan
authorities
and
Ryanair
were
strengthened
and
focused
on
widening
the
connection
of
the
airport
to
the
High
Speed
Train
and
regular
trains.
In
2010,
the
low
cost
airline
started
operations
in
Barcelona
airport
(El
Prat
de
LLobregat)
and
Girona
airport
reduced
its
passengers
between
34
and
40%
compared
to
the
previous
year.
In
Girona,
the
routes
that
were
also
offered
in
Barcelona
faced
a
decrease
in
the
number
of
passengers
of
200%.
At
the
same
year,
the
Spanish
government
transferred
Girona
airport
management
to
the
Catalan
government.
It
was
at
that
time
when
the
company
committed
itself
to
have
10
airplanes
in
summer
in
Girona’s
base
and
six
during
winter,
and
to
offer
64
routes
and
maintain
4
millions
of
passengers
annually.
On
the
other
hand,
Ryanair
ask
to
the
Catalan
authorities
to
increase
public
aid
from
8
to
11’5
million
Euros
during
2012-­‐2016.
In
2011,
all
the
negotiations
were
stopped
and
Ryanair
cancelled
18
of
the
64
routes
and
reduced
to
6
the
airplanes
in
Girona.
The
company
estimated
losses
for
Girona
from
1’7
million
of
passengers
and
between
2000
and
4000
jobs.
Ryanair
threatened
to
leave
Girona
airport
if
Catalan
government
did
not
collaborate.
Figure
2:
Evolution
of
Passengers
in
Girona
Airport
Source:
Own
elaboration
based
in
AENA
database
(http://www.aena.es/csee/Satellite/Home/es/)
In
January
2012,
Catalan
government
and
Ryanair
achieved
an
agreement
and
the
airline
continued
its
operations
in
Girona.
The
airline
committed
to
carry
3
million
passengers
per
year
and
to
increase
the
flights
and
the
routes.
On
the
other
hand,
Ryanair
will
receive
a
total
amount
of
5’8
million
Euros
per
year
from
the
Catalan
government
(regional
and
local
authorities).
Besides,
a
plot
of
land
to
build
a
hotel
and
a
hangar
near
the
airport
might
be
transfer
to
the
company
without
charge.
0
2.000.000
4.000.000
6.000.000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Nº
of
Passengers
Years
Evolubon
of
Passengers
in
Girona
Airport

14. 14
2.1.4. Highlights
of
the
aid
measure
The
crucial
elements
of
the
Ryanair’s
policy
to
take
into
account
for
an
economic
approach
are
the
following
ones:
-­‐ abolishion
of
check-­‐in
and
the
introduction
of
40€
penalty
-­‐ reduced
airport
taxes
and
fees
during
long
time
-­‐ other
financial
support
(one-­‐shot
incentives)
-­‐ subsidies
to
cover
marketing
cost
of
being
in
a
secondary
airport
and
launching
new
routes
-­‐ the
Ryanair’s
price
strategy
(low
fares
adding
costs
for
extra
services)
Often
the
reduced
airport
taxes
and
other
financial
support,
for
instance
landing
taxes
or
operational
aid,
have
been
criticised
by
the
EU
Commission.
According
to
the
Commission,
no
private
operator
would
grant
the
same
reduced
airport
taxes
that
Ryanair
received
in
Charleroi.
Furthermore,
operational
aid
distorts
the
competition
among
airlines.
In
Girona,
Ryanair
has
received
3
millions
EUR
to
cover
marketing
costs
of
launching
new
routes.
However,
it
is
important
to
mention
that
Ryanair
do
not
enjoy
reduced
airport
taxes
in
Girona.
It
should
be
explained
that
benefits
of
Girona’s
airport
exists
and
are
positive
for
the
Girona’s
society.
Since
Ryanair
is
in
Girona,
the
number
of
tourists
and
the
number
of
goods
traded
in
the
airport
has
more
than
tripled.
Their
impact
to
Girona’s
region
has
a
positive
effect
on
Girona’s
GDP.
This
substantial
impact
could
be
explained
in
both
direct
and
indirect
economic
activities
that
the
airport
brings
to
Girona’s
region.
2.2.EUROVEGAS
2.2.1. Description
of
the
project
The
North
American
company
‘Las
Vegas
Sands’
is
planning
to
build
the
first
“Las
Vegas”
style
resort
with
hotels,
restaurants,
casinos
and
shopping
centres
in
Europe.
Las
Vegas
Sands
has
tourism
resorts
and
casinos
in
Las
Vegas
(USA),
Macao
(China)
and
Singapore,
and
since
some
years
ago
they
are
analysing
the
possibility
to
enter
in
the
European
market.
In
2009,
Mr.
Adelson11
had
some
meetings
in
Spain,
Greece
and
Italy.
However,
the
economic
crisis
was
decisive
in
stopping
negotiations.
Adelson
started
to
face
some
financing
problems
due
to
his
ambitious
strategy
in
Macau.
With
capital
easy
to
come
by,
the
company
could
negotiate
the
lowest
rates
and
expedite
construction
rather
than
wait
of
each
property
to
open
and
make
money
first
before
beginning
the
next
project.
With
the
11
The
company
owner,
Sheldon
Adelson,
is
the
14
th
richest
person
of
the
world
with
24.900
millions
of
US
dollars
according
to
north-­‐american
list
of
multimillionaires
Forbes
(3
April
2012).
List
of
billionaires
in
the
world
Forbes
(03/04/2012);
http://www.forbes.com/billionaires/list/

15. 15
economic
downturn,
Sands
executives
had
difficulties
raising
money
to
complete
the
Macau
projects.
To
fend
off
Sands’
creditors,
Adelson
and
his
family
injected
$
1
billion
of
their
fortune
into
the
company.
Negotiations
of
“Eurovegas”
were
taken
up
again
in
2011.
Nowadays,
the
location
of
the
resort
–well-­‐known
as
Eurovegas-­‐
is
bound
to
be
either
in
Madrid
or
in
Barcelona;
despite
at
the
beginning
Andalusia
and
Valencia
were
also
on
the
table.
It
was
anticipated
that
15.500
millions
of
Euros
will
be
invested
over
15
years
to
erect
Eurovegas:
an
array
of
6
big
casinos
with
1065
tables
and
18.000
gambling
machines;
12
hotels
featuring
36.000
rooms;
restaurants
with
a
capacity
of
50.000
places;
a
theatre;
three
golf
courses;
a
stadium;
a
convention
centre;
gyms;
spas;
and
swimming
pools.
The
site
covers
an
area
approximately
of
200
hectares.
A
first
round
of
6.000
millions
of
Euros
is
foreseen
to
be
invested
at
2016
with
4
hotels
featuring
12.000
beds,
a
casino
and
a
shopping
centre.
A
second
round
will
be
feasible
if
the
first
investment
works
well.
Las
Vegas
Sands
calculated
that
the
resort
would
generate
40
millions
of
visits
per
day
and
would
create
between
100.000
and
270.000
direct
and
indirect
jobs
during
15
years.
That
would
mean
the
half
of
the
unemployed
people
of
the
Community
of
Madrid12
or
the
third
unemployed
people
of
Catalonia13
.
However,
it
is
important
to
mention
that
a
project
called
“Gran
Scala”
with
similar
characteristics
as
Eurovegas
project
was
prompted
to
be
built
in
Monegros
(Aragon,
Spain),
but
the
project
failed
due
to
lack
of
funding
that
managers
faced.
2.2.2. Prior
negotiations
Madrid
authorities
Las
Vegas
Sands
intensified
negotiations
with
Madrid
in
the
middle
of
June
2011,
with
the
intention
to
locate
the
resort
in
the
neighbourhood
of
Valdecarros,
10
kilometres
from
Madrid
centre
and
from
Barajas
airport
(Madrid’s
airport),
or
in
the
north-­‐district
of
Alcorcon,
south-­‐west
of
Madrid.
Esperanza
Aguirre,
the
president
of
Madrid
Community,
praised
the
project
because
of
its
creation
of
jobs;
nevertheless,
she
acknowledged
that
the
company
ask
for
difficult
changes
in
law,
for
instance,
anti-­‐tobacco
law
and
casino
accessibility
for
under-­‐18s
law.
Barcelona
authorities
Catalan
government
started
negotiations
with
Sheldon
Adelson
in
November
2011,
when
the
Catalan
Economy
Minister
Andreu
Mas-­‐Collell
travelled
to
Las
Vegas.
Mas-­‐Collell
stated
that
Eurovegas
investment
was
really
necessary
in
this
context
of
economic
crisis.
In
contrast,
Mas-­‐Collell
said
that
Catalan
government
must
revise
whether
Eurovegas
project
was
viable
and
of
interest
for
the
Catalan
economy.
At
first,
Catalan
government
did
not
make
public
which
zones
near
Barcelona
could
be
destined
to
construct
the
resort,
now
it
is
deemed
to
be
near
the
Barcelona
airport,
in
Llobregat’s
basin.
12
On
February
526.374
people
in
Madrid
Community
were
unemployed,
according
to
“La
Consejería
de
Educación
y
Empleo”
of
Madrid
Community.
http://www.madrid.org/cs/Satellite?cid=1142679691821&language=es&pageid=1162899198656&pagename=Empleo%2FCM_
Actualidad_FA%2FEMPL_actualidad
13
On
March
2012
641.900
people
in
Catalonia
were
unemployed,
according
to
IDESCAT.
http://www.idescat.cat/economia/inec?tc=3&id=0607&dt=201202&x=8&y=5

16. 16
2.2.3. Las
Vegas
Sands
requirements
to
invest
in
Spain
To
invest
in
Spain,
Sheldon
Adelson
requires
from
the
Spanish
Government
a
relaxation
of
different
legal
issues
for
his
company.
A
lower
tax
system,
anti-­‐tobacco
law
and
accessibility
for
under-­‐18s
inside
casinos,
are
some
of
the
examples
of
the
high
level
of
compromise
that
Mr.
Adelson
asks
from
the
Spanish
Government
in
order
to
invest
in
Spain.
Although
a
written
project
of
Eurovegas
has
not
been
published
yet,
neither
for
the
company
nor
for
governments
(Madrid
or
Barcelona),
the
media
have
announced
the
requirements
that
Mr.
Adelson
demands.
These
conditions
can
be
classified
in
five
categories:
labour,
incentives,
regulatory
framework,
and
taxation
issues.
Concerning
labour,
he
requires
important
legal
modifications
in
the
Statute
of
Labourers,
in
the
Procedures
Law,
and
in
the
Immigration
Law,
in
order
to
have
a
special
treatment
in
his
business.
Exemption
of
Social
Security
payments
might
be
possible
for
his
company.
In
terms
of
incentives,
he
demands
also
a
modification
in
the
EU
law
that
guides
state
aid,
in
order
to
receive
public
funds
from
the
Spanish
government
coming
from
the
European
Central
Bank.
It
is
also
required
by
him
to
have
free
trainings
for
his
workers
and
to
receive
subsidies
for
having
created
indirect
employment.
According
to
him,
a
regulatory
framework
that
declares
exclusivity
for
Eurovegas
have
to
be
approved.
He
asks
for
authorization
of
licences
and
changes
in
the
limitations
in
foreign
investment
in
casinos.
Changes
in
the
legal
entrance
in
casinos,
in
the
prevention
law
for
money
laundering,
in
the
opening
hours,
and
smoking
permissiveness
inside
buildings
are
some
of
the
regulatory
requirements
that
have
to
be
changed
for
Eurovegas.
As
for
taxation
concerns,
he
seeks
for
a
monthly
refund
of
VAT
payments;
eliminations
of
the
import
tariffs;
changes
in
the
Corporate
Tax
Law;
10
years
of
fiscal
holidays;
and
50%
discount
in
the
tax
of
economic
activities
among
other.
2.2.4. Highlights
of
the
aid
measure
It
is
important
to
differentiate
the
aforementioned
requirements
into
two
categories.
The
first
category
would
include
all
the
law
modifications
that
Las
Vegas
Sands
Corporation
asks
for.
This
kind
of
requirements
must
be
approved
through
the
normal
procedure
of
the
law
within
the
limits
of
the
Spanish
Constitution.
There
is
only
one
law
requirement
that
should
be
approved
separately
to
this
law
modifications
and
that
is
the
modification
in
EU
law
that
guides
this
project.
There
exists
a
crucial
question
about
how
the
Commission
would
consider
the
change
in
law
to
adapt
to
the
Eurovegas
project.
It
is
an
open
question
which
the
EU
law
that
guides
state
aid
does
not
take
into
account.
In
the
second
category
are
economic
measures
which
can
be
quantified
and
analysed
to
determine,
in
case
of
state
aid,
whether
they
are
compatible
with
the
common
internal
market.

17. 17
To
make
a
deep
analysis
about
whether
Eurovegas
project
is
compatible
with
the
internal
market,
it
is
important
to
remark
that
the
most
important
issue
behind
this
project
is
the
administrations’
confrontation.
Both
governments,
Madrid
and
Catalonia,
are
trying
to
be
the
best
in
order
to
have
Eurovegas
in
their
regions.
3. ASSESSMENT
OF
THE
STATE
AID
LEGISLATION
3.1. RYANAIR
CASE
IN
GIRONA
3.1.1. How
the
Commission
would
act
Looking
back
to
the
EU
Commission
case
law,
subsidies
to
cover
the
marketing
cost
of
launching
new
routes
are
compatible
with
the
common
internal
market.
Because
of
the
Charleroi
case,
the
conclusion
in
Girona
airport
would
be
that
subsidising
Ryanair
in
Girona
is
considered
state
aid
as
well
as
compatible
with
the
common
internal
market.
Commission
would
state
that
first;
they
follow
the
market
investor
principle
because
of
the
characteristics
of
the
institution
granting
these
subsidies
–formed
by
private
and
public
operators-­‐.
For
this
reason,
they
constituted
state
aid.
Secondly,
when
applying
the
balancing
test,
these
subsidies
aim
to
an
economic
interest;
are
justified
as
an
appropriate
instrument,
because
of
its
incentive
effect
over
the
beneficiary;
and
do
not
distort
competition
within
the
internal
market,
due
to
the
fact
that
they
are
covering
marketing
costs
of
launching
new
routes
in
secondary
airports.
Furthermore,
for
the
Commission
it
would
be
incompatible
to
reduce
airport
taxes
like
landing
taxes,
or
to
subsidy
operational
costs.
These
aid
measures
would
distort
competition
among
airlines
within
the
common
internal
market.
3.1.2. Is
it
an
adequate
argumentation?
After
the
liberalisation
of
the
aviation
markets,
there
emerged
a
new
business
concept
of
airline
which
demands
little
airport
services:
the
low-­‐cost.
A
further
development
was
the
introduction
of
secondary
airports
which
introduced
a
new
attraction
for
low-­‐cost
airlines
due
to
its
different
airport
services
in
terms
of
price-­‐quality.
EU
Commission
welcomed
these
new
developments
because
the
general
prices
were
reduced,
nevertheless;
Commission
stated
that
competition
rules
between
airlines
must
be
preserved.
If
we
consider
airports
as
suppliers
and
airlines
as
customers
in
the
market
for
airport
services,
receiving
reduced
taxes
for
a
low-­‐cost
airline
could
be
seen
as
a
price
differentiation
strategy
for
the
airport.
Due
to
the
heterogeneity
in
the
demand
and
supply
side
after
the
liberalisation
of
the
aviation
markets,
it
could
be
argued
that
the
bargaining
process
has
led
airports
to
undertake
a
price
differentiation
strategy
between
airlines,
which
is
economically
claimed
as
a
fair
competition.

18. 18
That
would
mean
reducing
airport
charges
in
Girona
would
not
distort
competition
among
airlines
provided
that
they
are
available
for
all
airlines
operating
in
Girona.
Taking
all
the
aforementioned
characteristics
into
account,
I
would
rather
say
that
subsidising
Ryanair
in
Girona
does
not
fulfil
the
balancing
test
requirements.
Although
the
Commission
could
believe
that
Girona’s
subsidies
are
state
aid
granted
for
a
common
interest,
the
appropriateness
of
the
instrument
and
the
application
of
minimum
use
of
public
resources
could
place
these
subsidies
in
a
worse
place
than
reducing
taxes.
Reducing
taxes
would
mean
to
spend
less
public
resources
than
subsidising
3
million
EUR
to
cover
marketing
cost
of
launching
new
routes.
So,
I
would
argue
that
reducing
airport
taxes
for
Ryanair
in
Girona
would
be
a
better
economic
instrument
to
attach
the
general
economic
interest.
From
my
point
of
view,
if
the
balancing
test
is
applied,
reducing
taxes
is
compatible
with
the
common
internal
market.
It
is
an
appropriate
instrument
which
has
an
incentive
effect
over
the
beneficiary;
which
uses
the
minimum
public
resources;
and
which
does
not
distort
competition
among
airlines.
For
this
reason,
I
believe
it
is
economically
a
better
solution
for
Girona
airport
to
reduce
airport
taxes
for
Ryanair
than
to
subsidy
them
to
launch
new
routes.
The
politics
of
this
efficient
way
is
not
easy.
The
public
institution
which
manages
airports
is
completely
different
from
the
institution
which
is
subsidising
Ryanair
in
Girona
airport.
The
management
of
Spanish
airports
is
carried
out
by
AENA,
a
public
institution
located
in
Madrid.
Meanwhile,
it
is
the
Girona
region
–formed
by
public
and
private
operators-­‐
which
subsidies
Ryanair
in
Girona
airport.
If
we
consider
the
Spanish
airport
model
and
the
economic
approach
of
reducing
airport
taxes,
it
could
be
conclude
that
the
subsidies
that
Ryanair
receive
in
order
to
be
in
Girona
airport
means
a
simple
transfer
of
funds
from
Girona’s
region
to
AENA
institution.
AENA
should
reduce
the
airport
taxes
for
Ryanair
in
Girona,
due
to
the
fact
that
it
is
a
secondary
airport
and
Ryanair
is
a
low-­‐cost
airline.
That
would
mean
a
simple
price
differentiation
strategy
to
attract
customers
in
Girona’s
airport.
From
an
economic
point
of
view,
Girona’s
region
is
indirectly
paying
the
taxes
that
AENA
receive
in
Girona’s
airport
from
Ryanair.
3.2. EUROVEGAS
CASE
3.2.1. Has
Eurovegas
the
same
elements
as
Ryanair
case?
Eurovegas
case
is
comparable
to
the
Prisoner’s
Dilemma,
in
which
two
prisoners
face
a
dilemma
when
they
have
been
caught
and
separately
interrogated
by
the
police.
In
this
case,
the
two
governments
are
facing
a
prisoner’s
dilemma
when
competing
to
each
other
to
be
the
better
place
to
construct
the
Eurovegas
project.
As
a
result,
the
outcome
is
not
a
Pareto-­‐optimum.
It
is
not
an
efficient
solution
for
Spaniards
due
to
the
fact
that
a
private
firm
is
controlling
the
market
and
making
governments
compete
with
each
other
in
order
to
obtain
the
maximum

19. 19
benefit.
Las
Vegas
Sands
Corporation
is
acting
as
a
monopolist
catching
all
the
social
surpluses
from
Spaniards;
surpluses
that
governments
should
try
to
increase.
3.2.2. Possible
solution
to
overcome
the
Prisoners’
Dilemma
In
order
to
increase
the
social
welfare
of
Spaniards,
Madrid
and
Barcelona
governments
should
not
compete
with
each
other
and
should
not
play
along
with
Las
Vegas
Sands
Corporation.
The
best
solution
is
cooperation.
A
centralised
institution
should
be
the
only
contact
with
the
firm.
It
should
ask
for
each
project
Cost-­‐Benefit
Analysis
(Madrid
and
Barcelona)
then,
it
should
analyses
through
the
economic
approach
of
the
balancing
test
which
is
the
most
profitable
project
for
the
Spaniards,
according
to
the
social
welfare.
This
centralised
institution
should
be
neutral
and
should
choose
the
solution
according
the
balancing
test
protocol
explained
in
this
project,
monitoring
and
notifying
to
EU
Commission
possible
state
aid.
However,
the
politics
of
this
approach
is
not
free
of
other
problems.
The
public
debate
is
still
opened;
in
particular,
how
the
Commission
will
act
knowing
that
there
is
not
a
unified
EU
law
which
regulates
the
politics
of
the
Member
States.

20. 20
REFERENCES
Literature
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Anthony,
David
Greenberg,
Aidan
Vining,
and
David
Weimer
(1996),
Cost
Benefit
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Upper
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NJ,
Prentice-­‐Hall.
Emilio
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José
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Ignacio
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Transport
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71-­‐79.
Venables,
A.J.
y
Gasoriek,
M.
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European
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European
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