Global Trade Alert

On 2 February 2010, the Latvian authorities notified their intention to finance airport infrastructure in Riga to optimise the operation of the existing airport.
 
Riga International airport (RIX) is a growing large regional airport with nearly 4.1 million passengers served in 2009. RIX is operated as a legal entity under the Commercial Law of the Republic of Latvia and is 100% owned by the Government of Latvia.
 
The planned investment activities include improvement of the airport infrastructure to meet safety requirements allowing airplanes to land and take off in bad weather and emergency situations, to enhance the environmental performance of the airport as well as to improve the airside and landside capacity. In view of the forecasted traffic growth, the investments are also needed to increase the peak hour runway capacity. The overall costs of the investments amount 165 022 952 euros. The measures will normally be implemented in 2 phases, according to the importance they have for the functioning of the airport. The 1st phase will be implemented from 2007-2013 Cohesion Fund financing (the start of the works is planned in 2011) and the 2nd phase from 2014-2020 Cohesion Fund financing.
 
The maximum aid amount as notified by the Latvian authorities is 75% of the aforementioned costs and will mostly come from the Cohesion Fund financing.
 
The commission found that the measure constitutes State aid within the meaning of Article 107 (1) TFEU and gave the following assessment:
'When aid granted by a Member State strengthens the position of an undertaking compared with other undertakings competing in intra-Union trade the latter must be regarded as affected by that aid. The air-transport market in the EU is completely liberalised and so the beneficiary airport competes with airports in other EU Member States. In accordance with settled case law, for a measure to distort competition it is sufficient that the recipient of the aid competes with other undertakings on markets open to competition. Therefore, the Commission can conclude that the aid affects trade between Member States and distorts competition.' (par. 23-24 of the letter from the EC to Latvia - Brussels, 28.04.2010 C (2010) 2539)
 
The European Commission has decided not to raise any objections to the measure in question on the grounds that the aid is compatible with the internal market under Article 107(3)(c) TFEU.
 
A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.