Feeds

France Telecom must return state aid

€1bn pay-back

  • alert
  • submit to reddit

Build a business case: developing custom apps

The European Commission has ruled that France Telecom did receive "illicit aid" from the French government and ordered the telco to pay the money back.

The investigation centred on the tax that the telco paid between 1994 and 2002. The EC believes the French government gave France Telecom an illegal tax break of between €800m and €1.1bn. The Commission will work out exactly how much is owed, plus interest, during the recovery process.

Mario Monti, the Competition Commissioner, said: "This decision shows that to be effective and fair the monitoring of state aid must cover all the different – and in some cases highly imaginative – arrangements used by states to support firms by providing aid that is incompatible with the European competition rules.” France Telecom is taking the case to the Luxembourg Court of First Instance to have the decision annulled.

In an almost poetic statement France Telcom said: "The Commission appears to have made its decision without precision, in a climate of confusion fuelled by many leaks, rumours and public announcements that have been premature to say the least."

Monti also ruled that positive statements by the government between July and December 2002 amounted to illegal state help for the telco. The French government effectively said it would not allow France Telecom to fail and a €9bn credit line would be open to them. The credit line was never used but helped maintain investor confidence.

The statement says: "The statements created expectations and confidence on the financial markets and helped maintain France Télécom’s investment rating. If the statements had not been made, no reasonable investor would have offered a shareholder’s advance in these circumstances and assumed alone a very large financial risk."

But France Telecom will not be liable for payments for this dubious practise because it is the first time the Commission has investigated this kind of state aid.

But the Commission rejected a complaint by Bouygues Telecom that the auction process for 3G licences was unfair. ®

Related stories

France Telecom faces payback time
EC rules against illegal 'subsidy' of France Telecom
France Telecom cleared to buy back Wanadoo

The essential guide to IT transformation

More from The Register

next story
6 Obvious Reasons Why Facebook Will Ban This Article (Thank God)
Clampdown on clickbait ... and El Reg is OK with this
So, Apple won't sell cheap kit? Prepare the iOS garden wall WRECKING BALL
It can throw the low cost race if it looks to the cloud
EE accused of silencing customer gripes on social media pages
Hello. HELLO. Can EVERYTHING EVERYWHERE HEAR ME?!
Time Warner Cable customers SQUEAL as US network goes offline
A rude awakening: North Americans greeted with outage drama
Shoot-em-up: Sony Online Entertainment hit by 'large scale DDoS attack'
Games disrupted as firm struggles to control network
BT customers face broadband and landline price hikes
Poor punters won't be affected, telecoms giant claims
Netflix swallows yet another bitter pill, inks peering deal with TWC
Net neutrality crusader once again pays up for priority access
prev story

Whitepapers

Top 10 endpoint backup mistakes
Avoid the ten endpoint backup mistakes to ensure that your critical corporate data is protected and end user productivity is improved.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Backing up distributed data
Eliminating the redundant use of bandwidth and storage capacity and application consolidation in the modern data center.
The essential guide to IT transformation
ServiceNow discusses three IT transformations that can help CIOs automate IT services to transform IT and the enterprise
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.