The conditions relating to the location of the headquarters and the public service obligations imposed by the Portuguese Government when the airline TAP was reprivatised are in line with the freedom of establishment, the Court of Justice of the European Union ruled on Wednesday 27 February (Case C-563/17).
When the Portuguese Supreme Administrative Court referred a complaint to it by the Peço a Palavra association to the Portuguese Supreme Administrative Court, the Court was called upon to interpret the conformity with the principle of freedom of establishment (Article of the TFEU) of the following conditions attached to the reprivatisation of the holding company holding the capital of the TAP: - the obligation to retain in Portugal the company's headquarters and effective management; - the ability to fulfil public service obligations towards air routes to the Portuguese autonomous regions; - the commitment to develop the national hub.
On the basis of the Opinion of the Advocate General (see EUROPE 12142), the Court considers that the imposition of public service obligations is in accordance with EU law provided that the specifications comply with the Regulation (1008/2008) on the operation of air services.
The obligations to maintain the company's headquarters and management in Portugal and to develop the national operational centre must be assessed under primary law. According to the Court, these requirements do constitute restrictions on the principle of freedom of establishment. It remains to be seen whether they are justified.
For the Court, the requirement that TAP's headquarters and management remain in Portugal is proportionate in the light of the overriding reason of general interest to ensure regular air services to Portuguese-speaking third countries (Angola, Mozambique, Brazil).
This maintenance is essential to guarantee the air traffic rights resulting from the bilateral agreements concluded between Lisbon and the third countries mentioned. The transfer of the headquarters to another country could also result in the loss of the validity of the operating licence and air transport certificate issued to TAP by the competent Portuguese authority. Moreover, this requirement is proportionate, as it does not preclude TAP from setting up branches or subsidiaries outside Portugal.
On the other hand, the European judge considers that the requirement relating to the development of the national hub goes beyond what is necessary to achieve the connectivity of the Portuguese-speaking third countries concerned. (Original version in French by Mathieu Bion)