Wizz Air loses legal battle over state aid given to TAROM during the pandemic

Hungarian company Wizz Air, a major air carrier in Romania, recently lost the legal battle in which it contested an aid package of EUR 36.66 million granted by the Romanian government to the TAROM airline four years ago.

The European Commission approved billions of euros in state aid for European airlines during the COVID-19 pandemic, with many of these approvals subsequently being challenged in court by rivals. Romania provided a loan to finance TAROM's liquidity needs, which was repayable after six months, according to News.ro.

The Court of Justice of the European Union, based in Luxembourg, declared that the EU competition watchdog was correct in approving the aid. "The Court dismisses Wizz Air's appeal regarding the rescue aid granted by Romania to TAROM. This aid, amounting to EUR 36,660,000, is compatible with European Union law," stated the judges.

The Court reasoned that “the relatively limited size of the market at issue does not prevent a service provided on that market from being classified as important so that its disruption could give rise to serious social hardship or constitute market failure. This would be the case if TAROM were to cease operations: it would be detrimental to the connectivity of the regions in Romania exclusively served by that airline and to the economic situation of those regions,” according to the official press release.

The European Commission has had a mixed record in defending its decisions in court. Last month, a lower court rejected the approval it granted in 2020 for EUR 7 billion in state aid to Air France.

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