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            COMMISSION DECISION         

of 2 August 2004         

on the State aid implemented by France for France Télécom

(notified under document number C(2004) 3061)

(Only the French text is authentic)

(Text with EEA relevance)

(2005/709/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community, and in particular the first subparagraph of Article 88(2) thereof,

Having regard to the Agreement on the European Economic Area, and in particular Article 62(1)(a) thereof,

Having called on interested parties to submit their comments pursuant to the provisions cited above (1) and having regard to those comments,

Whereas:

I.   PROCEDURE

II.   DESCRIPTION

III.   COMMENTS FROM INTERESTED PARTIES

IV.   COMMENTS FROM THE FRENCH AUTHORITIES

V.   ASSESSMENT OF THE AID

1.   The years 1991 to 1993

2.   The years 1994 to 2003

VI.   NEW AID

VII.   PRESCRIPTION

VIII.   COMPATIBILITY OF THE AID

IX.   CONCLUSION

HAS ADOPTED THIS DECISION:

Article 1

The State aid granted illegally by France in infringement of Article 88(3) of the EC Treaty to France Télécom under the business tax scheme applicable to that company during the period 1 January 1994 to 31 December 2002 (provided for by Law No 90-568 (Article 18) and Article 1654 CGI) is incompatible with the common market.

Article 2

1.   France shall take all necessary measures to recover from France Télécom the aid referred to in Article 1.

2.   Recovery shall be effected without delay and in accordance with the procedures of national law provided that they allow the immediate and effective execution of this Decision.

3.   The aid to be recovered shall include interest from the date on which it was at the disposal of the recipient until the date of its recovery.

4.   The interest shall be calculated in conformity with the provisions laid down in Chapter V of Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council Regulation (EC) No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty (26).

Article 3

France shall inform the Commission, within two months of notification of this Decision, of the measures that it proposes to take and that it has already taken to comply with it. For that purpose, France shall use the questionnaire annexed to this Decision.

Article 4

This Decision is addressed to the French Republic.

Done at Brussels, 2 August 2004.

For the Commission

Frederik BOLKESTEIN            

Member of the Commission

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(1)OJ C 57, 12.3.2003, p. 5.

(2)  See paragraphs 1 to 8 of the opening decision, which are to be considered an integral part of this Decision.

(3)OJ C 57, 12.3.2003, p. 5, hereinafter called ‘decision to open the procedure’ or ‘opening decision’.

(4)  Party wishing that its identity be kept confidential.

(5)  To which a complaint lodged by the same companies dated 22.1.2003 was annexed.

(6)  LDCOM sent the Commission a corrigendum, which was forwarded to the French authorities on 16.6.2003.

(7)  See paragraphs 25 to 33 of the opening decision.

(8)  It had been subject, on the other hand, since 1988 to VAT; see the ‘Report to Parliament on the normalisation of the local taxation of France Télécom’, Directorate-General for Taxes, November 2001, p. 6.

(9)  Although Article 18 of Law No 90-568 laid down the principle of the subjection of La Poste and FT to ordinary duties and taxes, it provided that this application of the ordinary rules had to be effected ‘subject to the provisions of Articles 19, 20 and 21 of this Law’.

(10)  Article 19 of Law No 90-568 provided as follows: ‘Until 1 January 1994, La Poste and France Télécom shall be subject only to such duties and taxes as are actually borne by the State at the time of publication of this Law by reason of the activities transferred to the public operators. Until that same date, the contributions paid by France Télécom into the civil research and development budget and by way of the levy for the benefit of the general budget shall be fixed each year by the Finance Acts up to an annual amount calculated by applying to a basic amount, set for 1989 at 13 700 million francs, the consumer price index established by the National Statistical Institute and economic studies’.

(11)  The report submitted to Parliament by the Directorate-General for Taxes in November 2001 on the normalisation of the taxation of France Télécom states that ‘the immediate normalisation of the conditions of taxation of France Télécom in relation to business tax would involve, assuming that the rate remains unchanged [i.e. independently of decisions taken by local authorities], an overtaxation of almost 198 million euros for the company’; see the ‘Report to Parliament on the normalisation of the local taxation of France Télécom’, Directorate-General for Taxes, November 2001, p. 16.

(12)  Article 29 of the 2003 Finance Act completely normalised the arrangements for subjecting FT to business tax as from 1.1.2003. See in this connection the report submitted by Mr Gilles Carrez on behalf of the Committee on Finance, the General Economy and the Plan on the draft Finance Act, 2003, distributed at the National Assembly on 14.10.2002.

(13)  For more details see Chapter III of the opening decision.

(14)  The Court of Justice has held that a reduction in social charges pertaining to family allowances could not be ‘made good’ through an additional charge under unemployment insurance. See judgment of the Court of Justice of 2 July 1974, Case 173-73, Italian Republic v Commission of the European Communities, [1974] ECR 709, point 34: ‘The argument that the contested reduction is not a “state aid”, because the loss of revenue resulting from it is made good through funds accruing from contributions paid to the unemployment insurance fund, cannot be accepted’. See also the Commission Decision 2002/581/EC of 11 December 2001 on the tax measures for banks and banking foundations implemented by Italy, according to which ‘A selective measure might be justified by the specificity of the activity covered by it, but not by the presence of other selective measures.’ (OJ L 184, 13.7.2002, p. 27, recital (35)).

(15)  FT had to pay into the general budget an amount fixed each year by the Finance Acts ‘up to an annual amount calculated by applying to a base, fixed for 1989 at 13 700 million francs, the consumer price index established by the National Institute for Statistics and Economic Studies’ (Article 19 of Law No 90-568).

(16)  In view of the fact that the procedure was initiated in respect only of business tax and not of property tax and corporation tax, this Decision covers only business tax. In any event, for the period concerned, any other exemption from other taxes by the French State for FT's benefit would be time-barred on the date of this Decision within the meaning of Article 15 of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 93 of the EC Treaty (OJ L 83, 27.3.1999, p. 1).

(17)  Case 173-73, already cited.

(18)  Law No 90-568 provided, in the same chapter entitled ‘Taxation’ and in the same article, that FT did not have to pay any taxes other than those paid by the State and that it had to pay a levy for the benefit of the general budget, these two provisions being applicable during the same period.

(19)  Judgment of the Court of First Instance of 8 June 1995, Case T-459/93, Siemens SA v Commission of the European Communities [1995] ECR II-1675.

(20)  Judgment of the Court of First Instance of 15 June 2000, Joined Cases T-298/97, T-312/97, T-313/97, T-315/97, T-600/97 to 607/97, T-1/97, T-3/98 to T-6/98 and T-23/98 Alzetta Mauro and Others v Commission of the European Communities [2000] ECR II-2319, paragraphs 141 et seq.; Judgment of the Court of 9 August 1994, Case C-44/93, Namur-Les Assurances du Crédit SA v Office National du Ducroire and the Belgian State [1994] ECR I-3829.

(21)  Judgment of the Court of First Instance of 30 April 2002, Joined Cases T-195/01 and T-207/01, Government of Gibraltar v Commission of the European Communities [2002] ECR II-2309, paragraph 130.

(22)  Pursuant to Article 1, point (d), of Regulation (EC) No 659/99, ‘aid scheme’ means any act on the basis of which, without further implementing measures being required, individual aid awards may be made to undertakings defined within the act in a general and abstract manner and any act on the basis of which aid which is not linked to a specific project may be awarded to one or several undertakings for an indefinite period of time and/or for an indefinite amount.

(23)  Judgment of the Court of First Instance of 10 April 2003, Case T-369/00 Département du Loiret v Commission of the European Communities [2003] ECR II-1789, paragraphs 81 et seq.

(24)  As the Court of First Instance has already observed, ‘When it addresses a request for information to a Member State, the Commission is informing that State that it has in its possession information concerning aid alleged to be unlawful and, if necessary, that that aid will have to be repaid ... Accordingly, the simplicity of the request for information does not have the consequence of depriving it of legal effect as a measure capable of interrupting the limitation period provided for in Article 15 of Regulation (EC) No 659/1999’; see Case T-369/00, already cited, paragraphs 79 and 82.

(25)  This is without prejudice to the possibility enjoyed by the French authorities in accordance with case law of, at the time of recovery, ‘deducting certain sums, where appropriate, from the amount to be recovered pursuant to their internal rules, provided that the application of those rules does not make such recovery impossible in practice or discriminate in relation to comparable cases governed by national law’ (Case T-459/93, already cited).

(26)OJ L 140, 30.4.2004, p. 1.

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