EU Competition Regulators Reopen Inquiry into SAS Recapitalisation Following Court’s Rejection

The European Union (EU) competition regulators have announced the reopening of an investigation into the 1-billion-euro ($1.1 billion) recapitalization of Swedish airline SAS by Denmark and Sweden. This decision comes after an EU court annulled the regulators’ previous ruling on the matter in 2020. In a statement released on Tuesday, the European Commission confirmed that it would conduct a more comprehensive inquiry to further assess the recapitalisation measure. The EU executive aims to reach a final decision on the case in the coming months.

EU Commission

According to the European Commission, the preliminary view is that the recapitalisation measure complied with EU regulations, “with the exception of the absence of a step-up mechanism (or an alternative mechanism with the same effect as a step-up mechanism).” This indicates that while the aid provided to SAS during the pandemic aligned with most EU airlines‘ receipt of state aid, there is a specific aspect of the recapitalisation that requires further scrutiny.

The recapitalization measure in question was granted to SAS in an effort to support the airline during the unprecedented challenges posed by the COVID-19 pandemic. The airline industry has been severely impacted by travel restrictions, lockdowns, and reduced passenger demand. Many national governments across the EU provided financial assistance to their respective airlines to ensure their survival and maintain essential air connectivity.

In light of the annulment by the EU court, the European Commission now seeks to thoroughly investigate the details of the SAS recapitalisation. This decision highlights the Commission’s commitment to upholding fair competition within the EU’s single market. By conducting a more in-depth analysis, the Commission aims to ensure that the recapitalisation measure is also in line with the principles of the EU’s state aid rules and does not distort competition in the aviation sector.

Therefore, as the investigation progresses, it will be important to monitor the developments and the potential implications for SAS and the aviation industry as a whole. The final decision reached by the European Commission will carry significant weight and may set a precedent for future recapitalization cases in the airline sector and beyond.

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