Ryanair has won its bid to have the EU General Court overturn the European Commission's approval of Dutch coronavirus aid to KLM, due to possible spillover of French aid to KLM's sister company, Air France.
"The onus is on the commission to exercise particular vigilance in examining the links between the companies," a press release from the EU's lower court said.
The Dutch government gave KLM state loans and bank loan guarantees worth €3.4 billion ($3.7 billion) in 2020, to keep the airline solvent amid the restrictions imposed as a result of the coronavirus pandemic.
Following a legal challenge by Ryanair, in 2021 the court overturned the commission's initial approval of the aid, on the grounds that the EU executive had failed to demonstrate the aid previously granted to Air France would not benefit KLM.
However, the court decided to suspend the effects of its judgement in order to give the commission time to issue issue a new decision "due to the particularly damaging impact of the pandemic on the Netherlands' economy," a court press release said at the time.
Wednesday's ruling overturns the commission's subsequent attempt to approve the aid to KLM in terms that would satisfy the 2021 judgement. The commission can still appeal the General Court's decision in the European Court of Justice.
"The commission erred in defining the beneficiaries of the state aid granted, by excluding from those beneficiaries the Air France-KLM holding and Air France, two companies forming part of the Air France-KLM group," the court's press release said on Wednesday.