Joined Cases T-425/04, T-444/04, T-450/04 and T-456/04

French Republic and Others

v

European Commission

(State aid – Financial measures in favour of France Télécom – Shareholder loan proposal – Public statements by a member of the French Government – Decision declaring the aid incompatible with the common market and not ordering its recovery – Actions for annulment – Interest in bringing proceedings – Admissibility – Concept of State aid – Advantage – State resources – Duty to state reasons)

Summary of the Judgment

1. Actions for annulment – Actions of the Member States – Action against a Commission decision finding aid to be incompatible with the common market – Admissibility not conditional upon establishing a legal interest in bringing proceedings

2. Actions for annulment – Natural or legal persons – Interest in bringing proceedings – Commission decision finding aid to be incompatible with the common market

3. State aid – Definition – Public statements by a member of the government of a Member State manifesting the latter’s willingness to take appropriate steps to resolve the financial difficulties of an undertaking – Advantage granted without transferring public resources – Not included – Proposal to grant a credit line to an undertaking

(Art. 87(1) EC)

4. State aid – Definition – Grant of an advantage by a State through State resources – Public statements by a member of the government of a Member State manifesting the latter’s willingness to take appropriate steps to resolve the financial difficulties of an undertaking – Advantage granted without transferring public resources – Not included

(Art. 87(1) EC)

5. State aid – Commission decision – Judicial review

6. Acts of the institutions – Statement of reasons – Obligation – Scope

(Art. 253 EC)

1. The EC Treaty draws a clear distinction between the right of Community institutions and Member States to bring an action for annulment and that of legal persons and individuals, in that all Member States are given the right to contest the legality of decisions of the Commission by means of an action for annulment, without having to establish any legal interest in bringing proceedings. A Member State need not therefore prove that an act of the Commission which it is contesting produces legal effects with regard to that Member State in order for its action to be admissible. A legal interest in bringing proceedings covers only actions brought by natural or legal persons and not those brought by institutions or Member States.

Furthermore, the concept of a legal interest in bringing proceedings must not be confused with the concept of a challengeable act, pursuant to which an act must be intended to produce legal effects capable of adversely affecting the interests of those concerned in order for it to be capable of being the subject of an action for annulment, which must be ascertained by looking to its substance.

A decision of the Commission finding that State aid is incompatible with the common market produces such binding legal effects and therefore constitutes an act open to challenge by a Member State.

(see paras 118-119)

2. An action for annulment brought by a natural or legal person is not admissible unless the applicant establishes a vested and present interest in seeing the contested measure annulled. Such an interest presupposes that the annulment of the measure must of itself be capable of having legal consequences or, to use a different form of words, the action must be liable, if successful, to procure an advantage for the party who has brought it. Consequently, a measure which gives full satisfaction to that person is not, by definition, capable of adversely affecting him and such a person has no interest in seeking its annulment.

However, as regards a Commission decision finding that State aid is incompatible with the common market, a competitor undertaking of the beneficiary of aid establishes a vested and present interest in seeing that decision annulled, when it claims that the Member State adopted further aid measures involving separate advantages for the beneficiary undertaking and further damaging the competitor undertaking’s market position.

The existence of aid and of its incompatibility with the common market does not preclude a priori the existence of other incompatible aid measures which, although not referred to in the Commission’s decision, are also covered by the administrative procedure culminating in the adoption of that decision and which, moreover, are capable of substantially affecting the market position of certain competitors of the beneficiary of the aid.

In addition, when an applicant claims that the contested measure, even though it may be partially favourable to him, none the less does not adequately protect his legal situation, it must be recognised that he has an interest in bringing proceedings to have the legality of that decision verified by the Court.

(see paras 116, 127-128, 130-131)

3. In order for a measure to be characterised as State aid within the meaning of Article 87(1) EC, it must, firstly, involve an advantage, which may take various forms (‘in any form whatsoever’), and, secondly, that advantage must derive, directly or indirectly, from public resources (granted ‘by a Member State or through State resources’). The concept of advantage implies that the State measure must have the consequence of an improvement in the economic and/or financial position, or even an enrichment of the beneficiary by, for example, mitigating the charges which are normally included in its budget.

As regards the impact of public statements by a member of the government of a Member State manifesting the latter’s willingness to take appropriate steps to resolve the financial difficulties of an undertaking, it must be held that those statements may result in an appreciable advantage for that undertaking, inasmuch as they enable the financial markets to regain confidence, make it possible, easier and cheaper for the undertaking to gain access to new loans necessary in order to refinance its short-term debts and, in the end, help to stabilise its very fragile financial situation. Those statements may decisively influence the reaction of the rating agencies and thus contribute to the improvement of the undertaking’s image in the eyes of investors and creditors and prove decisive for the conduct of the financial market operators which subsequently participate in the refinancing of the undertaking in question.

Moreover, under the principles governing the granting of loans and refinancing on the capital markets, a company’s rating and, therefore, the risk of default associated with the loans granted to it, is decisive for the purpose of measuring the cost of refinancing which that company must bear, in particular, in terms of interest payable on the issue of new bonds. It follows that the lower that risk of default, the easier and cheaper it is to refinance the loans in question on the capital markets. In other words, any positive influence on a company’s rating, if only as a result of public declarations which are likely to create or strengthen investor confidence, produces an immediate impact on the level of costs which the company must incur in order to refinance itself on the capital markets.

In addition, in order to categorise a measure as State aid, the Commission is required to establish on the basis of objective factors that all the cumulative conditions of the concept of aid within the meaning of Article 87(1) EC, including the existence of an advantage, are satisfied, taking account of the economic effects of the measure in question.

The Commission cannot presume, solely on the basis of a unilateral offer by the State to grant a credit line of a certain amount to a company – which was never implemented – that that offer involves advantageous economic effects for the beneficiary, without nevertheless taking account of the conditions governing the performance of the loan contract in question and, in particular, of those relating to the grant and repayment of that loan, and especially not where the beneficiary did not accept that offer but confined itself to refinancing itself on the terms prevailing on the market. If it were otherwise, even a loan contract containing objectively disadvantageous terms, such as higher interest rates and stricter repayment terms than those offered by the market, would have to be characterised as an advantage as referred to in Article 87(1) EC, and this merely on the ground that a public creditor declared itself prepared to make a certain sum available to the beneficiary.

(see paras 215, 231, 234, 237-238, 253, 255)

4. Only advantages granted directly or indirectly through State resources are held to be aid within the meaning of Article 87(1) EC. The distinction made in that provision between aid granted ‘by a Member State’ and aid granted ‘through State resources’ does not signify that all advantages granted by a State, whether financed through State resources or not, constitute aid, but is intended merely to bring within that definition both advantages which are granted directly by the State and those granted by a public or private body designated or established by that State.

In that context, the application of the private investor criterion necessarily presupposes that the measures taken by the State in favour of an undertaking confer an advantage deriving from State resources.

In addition, as regards the scope of the judicial review to be carried out, it should be recalled that the concept of aid is objective and that, consequently, the characterisation of a measure as State aid, which, according to the Treaty, is the responsibility of both the Commission and the Community Courts, cannot in principle justify the attribution of a broad discretion to the Commission, save for particular circumstances owing to the complex nature of the State intervention in question. It is only in cases where Article 87(3) EC falls to be applied and where, accordingly, the Commission, in the context of its determination of whether certain measures are compatible with the common market, must rely on complex economic, social, regional and sectoral assessments that a broad discretion is conferred on that institution. State aid, as defined in the Treaty, is a legal concept which must be interpreted on the basis of objective factors. For that reason, the Community Courts must in principle, having regard both to the specific features of the case before them and to the technical or complex nature of the Commission’s assessments, carry out a comprehensive review as to whether a measure falls within the scope of Article 87(1) EC.

The advantage must derive from a transfer of State resources. That requirement of a connection between the advantage identified and the commitment of State resources presupposes, in principle, that the advantage in question is closely linked to a corresponding charge included in the State budget or to the creation, on the basis of legally binding obligations entered into by the State, of a sufficiently real economic risk to that budget.

In the case of public statements by a member of the government of a Member State manifesting the latter’s willingness to take appropriate steps to resolve the financial difficulties of an undertaking, a concrete, unconditional and irrevocable commitment of public resources on the part of the Member State, for the purpose of Article 87(1) EC, would require those statements to set out explicitly either the exact sums to be invested, or the specific debts to be guaranteed, or, at the very least, a predefined financial framework, such as a credit line up to a certain amount, as well as the conditions for granting the proposed assistance.

The mere fact that the Member State uses its particular reputation with the financial markets cannot suffice to demonstrate that its resources were exposed to a risk such as can be considered to constitute a transfer of State resources within the meaning of Article 87(1) EC, which is sufficiently linked to the advantage conferred on the undertaking by the public declarations by a member of the government of a Member State. It is not sufficient that, instead of committing, directly or indirectly, State resources, the Member State makes use of the particular rules by which the financial markets operate in order to stabilise the undertaking’s economic position in the short term, specifically with the aim of satisfying the entrepreneurial and financial conditions necessary for the adoption of more concrete measures of support which would have to be taken subsequently.

(see paras 214, 217-219, 262, 280, 282, 297)

5. In Community proceedings concerning State aid, the assessment of facts and evidence falls within the Court’s complete discretion. In addition, in that context, the question whether and to what extent a rule of national law applies to the case in point falls within the scope of a factual assessment by the Court and is subject to the rules on the taking of evidence and on the apportionment of the burden of proof.

(see para. 269)

6. The statement of reasons required by Article 253 EC must be appropriate to the measure at issue and must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in question in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the competent Community Court to exercise its power of review. Moreover, the duty to state adequate reasons in decisions is an essential procedural requirement which must be distinguished from the question whether the reasoning is well founded, which is concerned with the substantive legality of the measure at issue. The reasoning of a decision consists in a formal statement of the grounds on which that decision is based. If those grounds are vitiated by errors, the latter will vitiate the substantive legality of the decision, but not the statement of reasons in it, which may be adequate even though it sets out reasons which are incorrect.

(see para. 315)

JUDGMENT OF THE GENERAL COURT (Third Chamber, Extended Composition)

21 May 2010 ( )

(State aid – Financial measures in favour of France Télécom – Shareholder loan proposal – Public declarations by a member of the French Government – Decision declaring the aid incompatible with the common market and not ordering its recovery – Actions for annulment – Interest in bringing proceedings – Admissibility – Concept of State aid – Advantage – State resources – Duty to state reasons)

In Joined Cases T‑425/04, T‑444/04, T‑450/04 and T‑456/04,

French Republic, represented initially by G. de Bergues, R. Abraham and S. Ramet, subsequently by E. Belliard, G. de Bergues and S. Ramet, and finally by E. Belliard, G. de Bergues, A.-L. Vendrolini and J.‑C. Niollet, acting as Agents,

applicant in Case T‑425/04,

France Télécom SA, established in Paris (France), represented initially by A. Gosset-Grainville and S. Hautbourg, and subsequently by S. Hautbourg, lawyers,

applicant in Case T‑444/04,

Bouygues SA, established in Paris,

Bouygues Télécom SA, established in Boulogne-Billancourt (France),

represented by J. Vogel, F. Sureau, D. Théophile and J. Blouet Gaillard, lawyers,

applicants in Case T‑450/04,

Association française des opérateurs de réseaux et services de télécommunications (AFORS Télécom), established in Paris, represented by O. Fréget, F. Herrenschmidt, M. Struys and L. Eskenazi, lawyers,

applicant in Case T‑456/04,

v

European Commission, represented initially by C. Giolito and J. Buendía Sierra, and subsequently by C. Giolito and D. Grespan, acting as Agents,

defendant,

supported by

French Republic, represented, in Case T‑450/04, by E. Belliard, G. de Bergues, A.‑L. Vendrolini and J.-C. Niollet, and, in Case T‑456/04, by G. de Bergues, acting as Agents,

intervener in Cases T‑450/04 and T‑456/04,

by

Bouygues SA, established in Paris,

and

Bouygues Télécom SA, established in Boulogne-Billancourt,

represented by J. Vogel, F. Sureau, D. Théophile and J. Blouet Gaillard, lawyers,

interveners in Case T‑444/04,

and by

France Télécom SA, established in Paris, represented initially by A. Gosset-Grainville and S. Hautbourg, and subsequently by S. Hautbourg, lawyers,

intervener in Cases T‑450/04 and T‑456/04,

APPLICATIONS for annulment of Commission Decision 2006/621/EC of 2 August 2004 on the State aid implemented by France for France Télécom (OJ 2006 L 257, p. 11),

THE GENERAL COURT (Third Chamber, Extended Composition),

composed of J. Azizi (Rapporteur), President, E. Cremona, I. Labucka, S. Frimodt Nielsen and K. O’Higgins, Judges,

Registrar: E. Coulon,

having regard to the written procedure and further to the hearing on 21 April 2009,

gives the following

Judgment

Background to the dispute

I – France Télécom’s financial situation during the period from 2001 to 2004

1 Until 1990, the activities engaged in by France Télécom SA (‘FT’) came under a directorate of the French Ministry of Posts and Telecommunications. FT was formed in 1991 as a public law corporation and since 31 December 1996 has had the status of a public limited company. Since October 1997, FT has been listed on the stock exchange. At the time of the adoption of the decision at issue in these proceedings, FT was a group active in the supply of telecommunications networks and services, mainly in France, in particular in the fixed telephony sector and also, through its subsidiaries, Orange, Wanadoo and Equant, in the mobile telephony, internet, data transmission and other information services sectors. In 2002, the French State’s participation in FT’s capital was 56.45%.

2 On 31 December 2001, FT posted a net debt of EUR 63.5 billion and a loss of EUR 8.3 billion in its published accounts for 2001.

3 As at 30 June 2002, FT’s net debt reached EUR 69.69 billion, including EUR 48.9 billion of bond debt falling due for repayment during the period from 2003 to 2005. That bond debt mainly stemmed from the acquisitions made by FT from 1999 onwards aimed at developing its activity in the mobile telephony sector, such as the takeover of the British operator Orange and the acquisition of part of the capital of the German operator Mobilcom.

4 In the light of FT’s financial situation, the French Minister for Economic Affairs, Finance and Industry (‘the Minister for Economic Affairs’), in an interview published in the daily newspaper Les Echos on 12 July 2002 (‘the declaration of 12 July 2002’), said that:

‘We are the majority shareholder, with 55% of the capital … The State shareholder will behave like a prudent investor and would take appropriate steps if [FT] were to face any difficulties … I repeat, if [FT] were to face any financing problems, which is not the case today, the [French] State would take whatever decisions were necessary to overcome them. You are reviving the rumour of a capital increase … No, certainly not! I am simply saying that we shall take appropriate measures when the time comes. If it is necessary …’

5 According to the half-yearly accounts published on 12 September 2002, FT’s turnover showed an increase of 10% compared with the same period in 2001, earnings before amortisation (‘EBITDA’) amounting to EUR 6.87 billion, that is, an increase of 13.3% in historical data and 9.8% in pro forma data, and earnings of EUR 3.18 billion, up 15% in pro forma data. Earnings after interest (EUR 1.75 billion) but before taxes, minority shareholdings and interests, exclusive of extraordinary items, were EUR 718 million against EUR 271 million as at 30 June 2001. The operating free cash flow amounted to EUR 3.6 billion, up 15% on the first six months of 2001. At the same time, FT confirmed that its consolidated own funds became negative as at 30 June 2002 to the amount of EUR 440 million.

6 On 12 September 2002, the French authorities announced publicly that they had accepted the resignation of FT’s chief executive officer (CEO) (‘FT’s former CEO’).

7 In a press release of 13 September 2002 on FT’s financial situation, the French authorities stated:

‘After the exceptional losses of the first six months, [FT] is faced with a serious shortage of capital. This financial situation is weakening [FT]’s potential. The [French] Government is therefore determined to exercise its responsibilities to the full … Taking note of the new situation brought about by the considerable deterioration in the accounts, [FT’s former CEO] has tendered his resignation to the [French] Government, which has accepted it. The resignation will take effect at a board meeting to be held in the next few weeks, at which a new chairman will be presented … The new chairman will in a very short space of time propose to the board a plan for improving [FT]’s accounts, enabling its debts to be reduced and its financial structure to be restored while maintaining its strategic advantages. The [French] State will help [FT] implement this plan and will contribute to a very substantial strengthening of [FT]’s capital base, according to a timetable and in a manner to be determined in the light of market conditions. In the meantime, the [French] State will, if necessary, take steps to prevent [FT] from being faced with any financing difficulties.’

8 On 2 October 2002, FT’s new CEO (‘FT’s new CEO’) was appointed. The press release announcing that appointment reads as follows:

‘On a proposal from [FT]’s board of directors, the Council of Ministers has decided to appoint [FT’s new CEO] … To that end, the new chairman will immediately carry out an inventory of [FT], the findings of which will be communicated to the board in the weeks ahead and which will form the basis for a financial recovery and strategic development plan enabling [FT]’s debt to be reduced while building on its strengths. Within this framework, [FT’s new CEO] will enjoy the support of the State in its capacity as shareholder, determined as it is to exercise its responsibilities to the full. The [French] State will assist in implementing the recovery measures and will contribute, for its part, to the strengthening of [FT]’s own capital base in a manner to be determined in close collaboration with [FT]’s chairman and board. As already indicated, the [French] State will [in the meantime], if necessary, take steps to prevent [FT] from being faced with any financing difficulties.’

9 On 19 November 2002, the French authorities sent the Commission an ‘information note’ which, on the one hand, described FT’s current financial situation while highlighting the fact that ‘its operational performance is excellent’ and, on the other, indicated their intention to participate in a recapitalisation of FT under market conditions while explaining the terms of their contribution to FT’s recovery plan. In that note, the French authorities stated, inter alia, the following:

‘In order to give [FT] the necessary room for manoeuvre to enter the market under the best possible conditions and at the most opportune moment, the [French] State is prepared to make an upfront prepayment towards the capital increase in the form of a shareholder loan which will be capitalised at the time of the issue of new securities. The amount of that loan will correspond to all or part of the [French] State’s subscription to the future capital increase and may be up to [EUR] 9 [billion]. That loan will be temporary and its conversion into securities will be obligatory. It will also be remunerated at the market rates currently in force and the interest will be capitalised.

In order to implement its participation in [FT]’s recovery plan, the [French] State intends to use ERAP, a [French] public industrial and commercial entity, which will grant [FT] a shareholder loan and have authority to become a major [FT] shareholder once that loan is capitalised. By entering the public participation in [FT] on the assets side of its balance sheet, that public entity will have bond debts on the liabilities side of its balance sheet. That choice of ERAP reflects the [French] State’s intention to identify clearly the financial outlay being granted by isolating it in a dedicated structure.’

10 At FT’s board meeting of 4 December 2002, the new management of FT presented an action plan entitled ‘Ambition FT 2005’ (‘the Ambition 2005 plan’) aimed essentially at rebalancing FT’s balance sheet by strengthening its capital base to the amount of EUR 15 billion.

11 The presentation of the Ambition 2005 plan was accompanied by a press release by the Minister for Economic Affairs of 4 December 2002, which reads as follows:

‘[T]he Minister for Economic Affairs … confirms the [French] State’s support for the action plan approved by [FT]’s board of directors on 4 December [2002]. (1) The [FT] group is a coherent industrial entity with a remarkable track record. However, [FT] is now faced with an unbalanced financial structure and a need for capital and refinancing in the medium term. This state of affairs is due to the failure of past investments, which were carried out badly at the height of the financial “bubble” and, more generally, to the market downturn. The impossibility for [FT] to finance its growth otherwise than through debt has made the situation worse. (2) The [French] State, as majority shareholder, has asked the new management to restore [FT]’s financial equilibrium while maintaining the group’s integrity … (3) In the light of the action plan drawn up by management and the investment return prospects, the [French] State will participate in the EUR 15 billion strengthening of [FT]’s capital base in proportion to its share in the capital, giving an investment of EUR 9 billion. The [French] State shareholder thus intends to act like a prudent investor. It will be for [FT] to work out the detailed arrangements and precise timetable for the strengthening of its capital base. The [French] Government wants the utmost account to be taken during the operation of the situation of individual shareholders and of employees with shares in [FT]. To enable [FT] to launch a market operation at the most opportune moment, the [French] State is prepared to make an upfront prepayment towards the strengthening of the capital base in the form of a temporary shareholder loan, remunerated at market rates, placed at [FT]’s disposal. (4) The [French] State’s entire shareholding in [FT] will be transferred to a public industrial and commercial entity, ERAP. The latter will borrow on the financial markets in order to finance the [French] State’s share in the strengthening of [FT]’s capital base.’

12 On 11 and 12 December 2002, FT launched two successive bond issues for a total amount of EUR 2.9 billion.

13 On 20 December 2002, the Entreprise de recherches et d’activités pétrolières (Petroleum Research and Activity Corporation, ERAP) sent FT an initialled and signed draft shareholder loan contract. FT did not sign that draft contract and the shareholder loan was never implemented.

14 On 15 January 2003, FT raised loans in the form of bond issues for a total amount of EUR 5.5 billion. Those bond issues were not covered by a State security or guarantee.

15 On 10 February 2003, FT renewed part of a maturing syndicated loan to the amount of EUR 15 billion.

16 On 4 March 2003, the operation to strengthen the capital base as envisaged by the Ambition 2005 plan was launched. On 24 March 2003, FT carried out a capital increase of EUR 15 billion. The French State participated in that operation to the amount of EUR 9 billion in proportion to its share in FT’s capital. An amount of EUR 6 billion was underwritten by a banking syndicate consisting of 21 banks. That operation was terminated on 11 April 2003.

17 FT ended the 2002 financial year with a loss of approximately EUR 21 billion and a net financial debt of approximately EUR 68 billion. The accounts for 2002 published by FT on 5 March 2003 showed a rise of 8.4% in turnover, of 21% in the operating result before amortisation and of 30.9% in the operating result. On 14 April 2003, the French State held 58.9% of FT’s capital, of which 28.6% through ERAP.

18 On 31 July 2003, the French Government adopted, within the Council of Ministers, a draft law providing for repeal of the requirement that the majority of FT’s capital be publicly held. That draft law was passed by the French National Assembly and entered into force on 31 December 2003.

19 On 1 September 2004, the French State sold approximately 10% of FT’s capital for an amount of EUR 5.2 billion, thus reducing its participation in the capital of FT to 42.25%.

II – Administrative procedure

20 On 4 December 2002, the French Republic notified the Commission of the European Communities of the financial measures provided for by the Ambition 2005 plan, including the shareholder loan proposal, pursuant to Article 88(3) EC and Article 2 of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article [88 EC] (OJ 1999 L 83, p. 1).

21 On 22 January 2003, Bouygues SA and Bouygues Télécom SA (together ‘the Bouygues companies’), two companies governed by French law, the latter of which is active on the French market for mobile telephony, submitted a complaint to the Commission concerning certain aids granted by the French State to FT and to Orange in connection with the refinancing of FT. That complaint related, in particular, firstly, to the announcement of an investment by the French State to the amount of EUR 9 billion and, secondly, to the public declarations made by the French authorities in favour of FT from July 2002 (‘the declarations from July 2002’).

22 By letter of 31 January 2003, the Commission informed the French authorities of its decision to open the formal investigation procedure provided for in Article 88(2) EC with regard to the proposed financial measures in favour of FT.

23 On 12 March 2003, the opening decision was published in the Official Journal of the European Union (OJ 2003 C 57, p. 5). It invited interested parties to submit their comments on the measures in question.

24 By letter of 4 April 2003, the French authorities submitted their comments on the opening decision and disputed the validity of the doubts expressed in that decision by the Commission.

25 By document of 11 April 2003, the Bouygues companies submitted their comments to the Commission while pointing out that their complaint of 22 January 2003 was to be regarded as forming an integral part of their stance in the present procedure. In addition, the Commission received comments from numerous other interested parties, including the Association française des opérateurs de réseaux et services de télécommunications (AFORS Télécom; ‘AFORS’) and FT. In particular, FT and the Bouygues companies submitted a number of studies by economic experts and legal opinions in the course of the administrative procedure.

26 On 30 May 2003, the Commission published an invitation to tender for a contract for ‘the provision of services to assist in assessing the compliance of the financial assistance granted by the French State to FT with the principle of the private investor in a market economy and if necessary to analyse FT’s recovery plan’. On 24 September 2003, that contract was awarded to a consultant, which delivered its economic report on 28 April 2004 (‘the report of 28 April 2004’).

27 The report of 28 April 2004 was accompanied by a legal report of 22 March 2004 (‘the report of 22 March 2004’). By letter of 3 May 2004, the Commission forwarded those two reports to the French authorities, inviting them to submit their comments.

III – Contested decision

A – Notification of the contested decision

28 On 3 August 2004, the Commission notified the French authorities of Decision 2006/621/EC of 2 August 2004 on the State aid implemented by France for France Télécom (OJ 2006 L 257, p. 11; ‘the contested decision’).

29 On 30 August 2004, the Commission sent a copy of the contested decision to FT and to the Bouygues companies.

30 On 3 September 2004, the Commission sent a copy of the contested decision to AFORS.

B – Operative part of the contested decision

31 Article 1 of the contested decision provides that ‘[p]laced in the context of the declarations … from July 2002, the shareholder loan granted by [the French Republic] to [FT] in December 2002 in the form of a EUR 9 billion credit line constitutes State aid incompatible with the common market’.

32 Under Article 2 of the contested decision, ‘[t]he aid referred to in Article 1 does not have to be recovered’.

C – The Commission’s findings relating to FT’s financial situation between June 2002 and March 2003

33 In Section 3 ‘Chronological description of the facts and financial situation of [FT]’ of the contested decision, the Commission in essence made the findings set out below.

34 Firstly, as regards FT’s financial situation, the Commission found that, from June 2002 onwards, FT was a company ‘with serious structural problems and an unbalanced balance sheet’ (recital 17 of the contested decision). In that regard, the Commission noted, on the one hand, a rapid worsening of FT’s credit rating during the first half of 2002, this being demonstrated by the announcements of the rating agencies, such as Standard & Poor’s (‘S & P’), Moody’s and Fitch Ratings (recitals 20 to 27 of the contested decision), and, on the other, following an analysis of FT’s credit spreads, a spread inversion, that is to say, an increase in the risks associated with its very short-term debt, in particular at the beginning of July 2002, compared with the level of the risks associated with its medium- and long-term debt. The spreads relating to the debt of a company reflect the assessment, by the markets, of the risk linked to its capacity to meet its obligations in respect of the payment of interest and the repayment of loans upon maturity, and are normally higher for long-term debt than for short-term debt. Such spreads thus influence the valuation of bonds and the level of interest that may be required for the issue of new bonds. According to the Commission, that increase in risk was borne out by the fall in the price of FT’s bonds in June and July 2002, thus reflecting a lesser value of FT’s debt due to the increased risk of default perceived by the market (recitals 28 to 31 of the contested decision). In addition, the Commission noted a significant fall in FT’s share price during the first half of 2002, reaching its lowest level first on 27 June 2002 (EUR 7.79) and then on 30 September 2002 (EUR 6.01) (recital 35 of the contested decision).

35 Secondly, the Commission found, in essence, that, on the date of the declaration of 12 July 2002, any further downgrade of the rating of FT’s debt would have led to the loss of its investment-grade rating and that the rating agencies S & P and Moody’s were about to downgrade that rating to junk-bond level (recital 37 of the contested decision).

36 However, in its press release of 12 July 2002, S & P stated the following (recitals 37 and 38 of the contested decision):

‘FT could face certain difficulties [in] refinancing its debt obligations coming due in 2003. Nevertheless, the [French] State’s indication underpins [FT]’s investment-grade credit quality ... [T]he French State – which owns 55% of [FT] – has made clear to [S & P] that it will behave as an aware investor and would take appropriate steps if [FT] were to face any difficulties. [FT’s] [long-term] rating cut to BBB - …’

37 In recital 212 of the contested decision, the Commission pointed out that, as early as 24 June 2002, Moody’s had downgraded FT’s rating to just above that of a junk bond. In addition, in recital 221 of and footnote 142 to that decision, the Commission relied on a Deutsche Bank report of 22 July 2002, from which it quoted and commented on the following passages:

‘… on 12 July 2002, S & P downgraded [FT]’s ratings to BBB- ... The agency no longer expects FT to hit the 3.5 x net debt/EBITDA target by 2003, but did assign a “stable” outlook to the low triple B ratings. It seems that the stable outlook is anchored by [the following terms in which S & P’s press release is couched:] “[T]he French State – which owns 55% of FT – has clearly indicated to [S & P] that it will behave as an aware investor and would take appropriate steps if [FT] were to face any difficulties.” Interestingly, S & P had initially said it was not incorporating any extraordinary support from the French Government into its rating when it downgraded [FT]’s ratings to BBB in June. Since then, the agency appears to have taken an about face in stating that the conclusions of the creditwatch status [“]follow … an analysis of [FT]’s liquidity position through the end of 2003 and a review of the French State’s potential involvement in the French telecommunications market” (p. 19); “[FT] benefited from the market’s increased confidence that the French Government will in one way or another support the credit” (p. 20); “we cannot ignore the fact that FT is majority owned by the French State and recent comments from the French Finance Ministry have reassured investor[s] that liquidity will be provided” (p. 54). “However, … we expect that [FT] will ultimately find all the liquidity it needs via the so-called ‘implicit [French] Government support’. This could take the form of banks or the [French] Government providing the necessary loans at market prices” (p. 21). However “what is the market price for, say, [EUR] 10 [billion] of new debt to a BBB- credit? [W]hat is the real price for [EUR] 10 [billion] of debt to a company that is not really a BBB- credit, just treaded there because [of] the Government support? … [W]e suspect there is no right answer to these questions, because if FT was operating in the real world, it would not be able to refinance without a debt for equity swap, in our view.” (p. 33, along the same lines, see p. 54). And again[:] “There have been reports in the press that the French Government will stand behind [FT], implying that it is willing to be the ‘lender of last resort’ to [FT]. These reports have resulted in a significant rally in both bonds and equity prices, with the equity rallying over 90% and the bonds 137 [base points] in two weeks, as nervous shorts covered position.” (p. 28)[.] “It is worth noting that S & P states on its recent conference call on its downgrade of FT’s credit that, in general, a company generating free cash flow with debt to EBITDA of four times would qualify as a BBB- credit, the last investment-grade rating. FT’s current BBB- rating appears to be based largely on the promise of [French] Government support providing liquidity, rather than on fundamentals”.’

According to Deutsche Bank’s calculations, FT’s debt/EBITDA ratio was 4.9 during the second half of 2002 and 5.20 on 31 December 2002.

38 The Commission therefore concluded that, in July 2002, FT was facing a crisis of confidence.

39 FT’s former CEO announced in the press on 16 September 2002 that ‘the fall in credit rating is preventing the planned refinancing’ by FT and that ‘the downgrading at the end of June [2002] of the rating attributed to FT’s debt by … Moody’s … has denied [it] access to the market’ (footnote 131 corresponding to recital 212 of the contested decision; see also recital 248 of that decision). It is also apparent from footnote 176 corresponding to recital 252 of the contested decision that, at a hearing before the commission of inquiry of FT’s auditors, FT’s former CEO stated the following:

‘There is one fundamental point that the black scenario never included: the fact that access to the capital market was closed off to us. We had never entertained that possibility because we thought that the [French] State’s presence as majority shareholder would prevent the market [from] contemplating FT’s bankruptcy without its even being necessary for the [French] State to voice its support. This view was shared by almost all market operators up until the time when one of the three rating agencies – and one only – decided that [FT] was on the verge of insolvency and reviewed its rating, denying it any market access overnight ... When, in June [2002], that one rating agency delivered its opinion and we were denied market access, I knew that, unable to borrow again, [FT] would be in payment difficulties a year later, towards the end of the first half of 2003.’

40 On the one hand, that crisis of confidence was confirmed by FT’s new CEO, at his hearing on 11 December 2002 before the National Assembly’s Economic Affairs Committee, the minutes of which (footnote 32 corresponding to recital 39 of the contested decision) read as follows:

‘[FT’s new CEO] pointed out that the financing plan that had been implemented had not been adhered to and matters had grown worse at the beginning of 2001 with the result that a liquidity crisis was foreseeable by the summer of 2003 … [He] stated that, threatened with a suspension of payments, [FT] was in a state of shock … owing to the scale of its debt, as it had to find enough liquidity to reimburse EUR 15 billion in 2003 and again in 2004, and EUR 20 billion in 2005 …’

41 Recital 248 of the contested decision states that, at a hearing on 5 December 2002 before the French Senate’s Finance Committee, [FT’s new CEO] stated that, ‘faced with huge debts, [FT] did not seem to have woken up to the fact that its credit rating was being downgraded, that it no longer had access to the capital markets’.

42 On the other hand, the French Senate found, in an opinion presented on 21 November 2002 on behalf of the Committee on Economic Affairs and the Plan, that a downgrading of FT’s rating would have worsened the crisis in the management of its short/term debt (recital 39 of the contested decision), as follows:

‘It will be in June 2003, therefore, that [FT]’s financing problems may become critical or even insurmountable. If, between now and then, [FT] has not regained access to the market (owing to its penalising rating), the [French] State will have to find ways of helping [FT] to refinance itself.’

43 It is also apparent from recitals 245 and 246 of the contested decision that, in particular, in the words of a report by JP Morgan dated 2 December 2002, without the State’s support, FT would not have been capable of obtaining fresh capital on the market in order to refinance its debt. In that regard, that report states the following:

‘We continue to view FT’s risk/reward profile as unattractive pending the outcome of a strategy review … Although we see significant scope for FT to cut costs and deliver a compelling yield and even though the CEO has strong track record execution, the [French] Government[’s] role in giving FT the flexibility it requires is pivotal. In the meantime, liquidity risk remains and in our view, a right issue is a matter of when not if … The [French] Government’s role will again be pivotal in refinancing and reducing this debt. However it is [FT’s] liquidity or refinancing risk that is the near-term focus of FT and rating agencies alike, with a daunting refinancing schedule ahead in 2003. This would be impossible without [French] Government intervention – even FT acknowledged this in its [third quarter] conference call.’

44 Faced with that situation, the rating agencies nevertheless maintained FT’s credit rating at investment grade on the strength of the declarations by the French authorities (recital 39 of the contested decision). In addition, it is apparent from recital 222 of the contested decision that, under one of the conditions of the memoranda of understanding signed on 11 and 12 September 2002 between the French State and the group of banks participating in the recapitalisation operation, ‘the maintenance of at least the current ratings (investment-grade quality) of [FT]’s long-term debt by the Moody’s and [S & P] rating agencies … will be included [as a condition] in the guarantee and investment contract’. Finally, on 12 September 2002, one of the participating banks, Morgan Stanley, stated the following, concerning its commitment in relation to FT’s capital increase (footnote 147 corresponding to recital 222 of the contested decision):

‘We feel that the planned transaction would be difficult under present conditions and that a favourable reaction by the markets to the declarations and official statements to be published at the end of the week will be a key factor in creating the necessary conditions for carrying out the transaction.’

45 Thirdly, in the light of FT’s financial situation in September 2002 (recitals 40 to 49 of the contested decision) and, in particular, of the press releases by the French authorities on 13 September 2002 (see paragraph 7 above) and 2 October 2002 (see paragraph 8 above), the rating agencies changed their assessment relating to the management of FT’s debt and noted an increase in market confidence.

46 Thus, Moody’s changed the outlook of FT’s debt from negative to stable, owing to the French State’s restated commitment to support FT, in a press release of 13 September 2002 (recital 52 of and footnote 45 to the contested decision), which reads as follows:

‘Moody’s [has] taken increased comfort from the [French] Government’s statement, which once again confirmed [its] strong support for FT. Whilst Moody’s concerns regarding the overall level of financial risk and particularly FT’s weak liquidity position remain, Moody’s has grown more comfortable with expectation that the French Government will act in a supportive manner, if FT started to encounter difficulties with its debt repayment schedule.’

47 Likewise, on 17 December 2002, S & P indicated, firstly, that, since July 2002, the French authorities’ support had been a key factor in maintaining FT’s investment-grade rating. Secondly, that the French authorities’ announcement concerning the shareholder loan and their commitment to subscribe, in proportion to their holding in FT’s capital, to a EUR 15 billion recapitalisation operation constituted proof of that support and of significant protection for FT’s creditors (recital 58 of and footnotes 52 and 53 to the contested decision).

48 The Commission further noted that, following FT’s capital increase in February and March 2003, the rating agencies ceased to consider the French State’s support to be a key factor in FT’s credit rating, support which still appeared very important to S & P on 17 December 2002 and to Moody’s in February 2003. Thus, Moody’s stated (recital 61 of and footnote 54 to the contested decision):

‘The French Government has consistently stated its support for FT and its willingness to provide financial support if required, thereby addressing potential liquidity concerns. This support has been evidenced by … providing a EUR 9 billion loan facility to FT, which pays cash interest, but is only repayable in FT’s equity, upon maturity in 18 months time … Moody’s factors [French] Government support into the [Baa3] rating … [T]he financial risk of the highly leveraged FT is not commensurate with investment grade (compensated by strong operational performance/implicit support of French Government).’

49 Moreover, on 14 May 2003, that is to say, after the capital increase, FT’s credit rating by S & P was based clearly on FT’s financial data. (recital 61 of and footnote 54 to the contested decision).

50 According to recital 247 of the contested decision, in particular, a report by Global Equity Research of 20 February 2003 confirmed that it was only following the declarations by the French authorities that the capital market allowed FT to refinance itself on suitable terms. In the words of that report, ‘[the] immediate liquidity issues are solved: since the Government’s upfront prepayment of its [EUR] 15 [billion] equity offering in the form of a [EUR] 9 [billion] standby facility, FT has been able to reaccess the debt capital markets to solve its immediate liquidity challenges’.

D – Object of the contested decision

51 In Section 6 ‘Object of the present Decision’ of the contested decision, the Commission first recalled the subject‑matter of the French Republic’s notification, which concerned a shareholder loan proposal intended to be implemented as part of the Ambition 2005 plan. It then noted that, ‘[i]n order to decide whether the measures at issue are compatible with the Treaty, [it] ha[d] examined the events connected with the proposal’s notification, including the Government’s declarations of July to [December] 2002’, and that ‘the notified measures [could not] be analysed without having regard to [those] declarations’. By those declarations, the French authorities manifested their willingness to take appropriate steps to resolve FT’s financial difficulties. The shareholder loan proposal was the concretisation of their intentions expressed previously. From a material point of view, there was no legal reason to limit the examination of the relevant facts to the facts which the French State had decided to mention in the notification. The concept of aid was an objective concept based on economic reality. It followed that, if the Commission had knowledge of earlier facts which were objectively relevant, it must include them in its analysis (recital 185 of the contested decision). The Commission added that it had indicated, in recital 70 of and footnote 40 to the opening decision, that the declarations from July 2002 might constitute factors which must be taken into account in its investigation (footnote 105 to the contested decision).

52 In recital 186 et seq. of the contested decision, the Commission summed up its approach as follows:

‘(186) In the present case, the Commission notes that the measures of December 2002, which were the subject-matter of the notification, were preceded by several declarations and measures by the French authorities dating from July [2002]. Firstly, these declarations and measures make it possible to better understand the reasons for and scope of the December [2002] measures. Secondly, they definitely had an impact on the perception which the markets and economic operators had of [FT]’s situation in December [2002]. Inasmuch as the conduct of economic operators was itself influenced by the conduct of the State, it does not constitute an objective parameter for then judging the conduct of the State. These prior interventions must therefore be taken into account in analysing the presence of aid in the December measures.

(187) It is possible to view the successive declarations and measures of the French authorities from July 2002 onwards as forming a set which took concrete shape in the December [2002] measures (making available of a shareholder loan), these being the measures which were notified ...

(188) The analysis of the present case suggests at first sight the existence of a time lag between the advantages for [FT], which were particularly distinct in July [2002], and the potential commitment of State resources, which seems to be more clearly established in December [2002]. Inasmuch as they clearly had an effect on the markets and conferred an advantage on [FT], the declarations by the Minister for Economic Affairs … may be characterised as aid. It would not be easy, however, to establish beyond all doubt whether the [12] July 2002 declaration … [was] of such a character as to commit, at least potentially, State resources. In this respect, the Commission has carefully analysed numerous legal arguments seeking to show, firstly, that such public declarations were equivalent from a legal standpoint to a State guarantee and, secondly, that they placed the State’s reputation on the line, with economic costs in the event of non/compliance. Taken as a whole, these elements might be thought to actually risk putting State resources in jeopardy (either by making the State liable towards investors, or by increasing the cost of future State transactions). The argument to the effect that the [12] July 2002 declaration … is aid is therefore innovative, but probably not without foundation.

(189) The Commission does not, however, have sufficient evidence in the present case to establish irrefutably the existence of aid on the basis of this innovative argument. On the other hand, it does consider that it can establish the existence of aid elements by following a more traditional approach, taking as a basis the December [2002] measures which were the subject-matter of the notification.

(190) For one thing, the existence of a commitment of State resources is clear in December [2002]. For another, the existence of an advantage for [FT] in December is also evident as soon as one takes account of the impact on the markets of the prior declarations and measures.

(191) In this connection, the “private investor in a market economy” test cannot be used to justify this December [2002] intervention as the French authorities claim, inasmuch as economic operators’ conduct in December was clearly influenced by the prior actions and declarations of the Government since July [2002]. While it may be doubted that the … declarations [since July 2002] were sufficiently concrete to constitute aid in themselves, there is scarcely any doubt that such declarations were more than sufficient to “contaminate” the markets’ perception and to influence economic operators’ subsequent conduct. If such is the case, this conduct on the part of economic operators cannot be taken as a neutral point of comparison from which to judge the [French] State’s conduct. The presumption based on the “private investor in a market economy” test cannot therefore take as [a] point of departure the market situation as it was in December [2002] but ought logically to be based on a market situation uncontaminated by the impact of the prior declarations.’

E – Application of Article 87(1) EC and of the principle of the prudent private investor in a market economy

53 In Section 7 ‘Assessment of the measure at issue in the light of Article 87(1) [EC]’ of the contested decision, the Commission noted, in particular (recital 194 of the contested decision), the following:

‘[T]he shareholder loan (which constitutes the upfront prepayment by the [French] State towards [FT]’s recapitalisation) confers an advantage on [FT] as it enables it to increase its means of financing and to reassure the market as to its capacity to meet its maturities. Even if the [shareholder] loan [contract] has never been signed, the appearance given to the market of the existence of such a loan is likely to confer an advantage on [FT] as the market has considered [FT]’s financial situation to be more secure … This may have influenced [FT]’s borrowing terms.’

54 The Commission then noted (recital 195 of the contested decision) the following:

‘[T]he fact that an advantage results from the giving of a State commitment leading to a potential, but not immediate, transfer of resources does not rule out the possibility that the advantage may have been granted through State resources. “In that respect, it should … be noted that, according to settled case-law, it is not necessary to establish in every case that there has been a transfer of State resources for the advantage granted to one or more undertakings to be capable of being regarded as a State aid within the meaning of Article 87(1) EC” [footnote 113: Case C‑482/99 France v Commission [2002] ECR I‑4397 (‘Stardust’), paragraph 36; see also Case C‑387/92 Banco Exterior de España [1994] ECR I‑877, paragraph 14, and Case C‑6/97 Italy v Commission [1999] ECR I‑2981, paragraph 16]. Thus, even an advantage granted through a potential additional burden for the State constitutes State aid where it affects competition and trade between Member States [footnote 114: Case C‑200/97 Ecotrade [1998] ECR I‑7907, paragraph 43, and Joined Cases T‑204/97 and T‑270/97 EPAC v Commission [2000] ECR II‑2267, paragraph 80].’

55 Such a ‘potential additional burden’ on the State’s resources was ‘created by the announcement of the provision of the shareholder loan coupled with the fulfilment of the preconditions for such provision …, by the impression given to the market that the loan had actually been provided … and, lastly, by the dispatch to [FT] of the loan contract initialled and signed by ERAP’. Even though the contract was never signed by FT, this does not mean that there was no potential commitment of State resources. According to the Commission, firstly, ‘[i]n so far as the document constituted a contractual offer and as long as it was not rescinded, [FT] could have signed it at any time, thereby acquiring the right to obtain immediate payment of the sum of EUR 9 billion’ and, secondly, ‘[i]nasmuch as it could not be unaware of this, the [French] State accordingly had to keep at [FT]’s disposal through ERAP the amount of the corresponding resources’ (recital 196 of the contested decision). The Commission therefore had to consider whether the advantage thus granted to FT satisfied the prudent private investor test and whether it affected competition and trade between Member States (recital 197 of the contested decision).

56 After finding that the advantage conferred on FT distorted or threatened to distort competition and was likely to affect trade between Member States (recitals 198 to 201 of the contested decision), the Commission went on to examine, in Section 8 ‘Principle of the prudent private investor in a market economy’ of the contested decision, whether that principle had been observed taking into account all the declarations made by the French authorities during the months preceding the shareholder loan proposal (recital 202 et seq. of the contested decision).

57 In the light of the declaration of 12 July 2002 (see paragraph 4 above) and of the press releases of the French authorities of 13 September, 2 October and 4 December 2002 (see paragraphs 7, 8 and 11 above), the Commission concluded, in essence, that, ‘[t]aken as a whole, these declarations [could] be regarded as having made public the [French] State’s intention whereby, if [FT] had any financing problems or financial difficulties, it, the State, would do whatever was necessary to overcome them’ and as making plain the State’s commitment in that regard. Those public declarations, which were repeated, concordant and attributable to the French State, were sufficiently clear, precise and firm for them to reflect in a credible manner the latter’s unconditional commitment, in particular towards the world of finance and industry, which would have construed them thus (recitals 206 to 213 and 217 of the contested decision). Moreover, in addition to those public declarations, the French authorities also contacted the ‘main market operators’, such as S & P (see paragraphs 35 and 37 above), in order to inform them of their intentions and rapidly restore market confidence, thereby preventing the downgrading of FT’s debt rating to junk-bond status (recital 212 of the contested decision).

58 Such declarations are, in the Commission’s view, entirely likely to be considered credible by the market and as a result create an expectation on the part of the latter that the State ‘will do everything necessary to resolve any financial difficulties that [FT] may face’. According to the Commission, ‘[a]ny failure by the [French] State to fulfil that expectation would have directly affected its reputation in its capacity as owner, shareholder or manager of companies, whether quoted or not, and in its capacity as issuer of bonds to finance the public debt’. Thus, those declarations were the expression of a strategy based on the reputation of the State (recital 217 of the contested decision). Consequently, those factors could ‘be deemed to actually endanger State resources’ and ‘the argument to the effect that the French authorities’ declarations [since] July 2002 are aid is … innovative, but probably not without foundation’ (recital 218 of the contested decision).

59 In recital 219 of the contested decision, the Commission nevertheless concluded that it could not ‘establish irrefutably the existence of aid on this basis’. It did, ‘on the other hand’, consider ‘that it [could] demonstrate the presence of aid elements in a more conventional manner taking as a basis the December 2002 measures which were the subject of the notification’. In that respect, it was sufficient ‘to establish that the prior declarations had a real impact on the perception of the markets in December [2002], without having to characterise these … declarations as being in themselves State aid’.

60 Relying inter alia on the report of 28 April 2004, which referred to an abnormal and not negligible increase in the value of FT’s shares (by between 37.8% and 43.8%) and bonds (by between 3.2% and 9.7%) following the declaration of 12 July 2002, on S & P’s press release of the same date (see paragraph 36 above) and on the Deutsche Bank report of 22 July 2002 (see paragraph 37 above), the Commission concluded that ‘the market regarded these declarations as a credible strategy of commitment by the [French] State to support FT’ (recitals 220 to 222 of the contested decision).

61 The French authorities’ declarations were decisive in maintaining FT’s investment-grade credit rating whereas a junk-bond rating would have made the shareholder loan more unlikely and certainly much more costly (end of recital 225 of the contested decision). In that sense, the French authorities’ decision to act upfront of FT’s recapitalisation by granting a credit line constituted a concretisation of their declarations (recital 226 of the contested decision).

62 According to the Commission, the fact that the operation to recapitalise FT, carried out in April 2003, was a success and the shareholder loan was never actually made is not decisive. In applying the prudent private investor criterion, the basis of assessment must be the information the investor has at his disposal at the time he takes his investment decision. The success of the operation in April 2003 cannot therefore be taken into account in assessing the French State’s conduct in December 2002. Moreover, ‘in applying the concomitance criterion’ the Commission ‘cannot base the assessment of the State’s conduct on the conduct of other economic operators’ in so far as their conduct and the market were influenced by the French authorities’ declarations. In the Commission’s view, ‘[t]he [French] State’s declarations, made in July and then repeated, to the effect that it would take the necessary steps to enable [FT] to overcome its financing difficulties distort the concomitance test in so far as private investors cannot be considered to have made up their minds on the sole basis of [FT]’s situation. This holds true irrespective of whether those declarations contain State aid or not’. The application of the principle of the prudent private investor in a market economy cannot be based on the market situation in December 2002, but must logically be based ‘on the situation of a market uncontaminated by prior declarations and interventions’ (recital 227 of the contested decision).

63 However, ‘it would appear’ that, if the investment decisions in question are examined in the context of the situation prior to July 2002, that is to say, in the light of the financial and confidence crisis affecting FT at that time and in the absence of any measures and declarations by the French authorities, they do not satisfy the prudent private investor test (recital 228 of the contested decision). In those circumstances, it is ‘improbable that a private investor would, from July 2002, have made declarations similar to those made by the French Government, likely as they were, from a purely economic point of view, seriously [to] place his credibility and reputation on the line and, from a legal point of view, even [to] oblige him from that date to support [FT] financially come what may’. Accordingly, such an investor would have assumed a very considerable risk vis-à-vis FT, without being indemnified or compensated. Even a reference shareholder in possession of the same information as that which the French authorities had at their disposal at the time would not have made a declaration of support for FT in July 2002 without first carrying out a thorough audit of FT’s financial situation and taking any measures necessary for its recovery in order to be able to assess the risk involved in such a step. In any event, such a reference shareholder would have needed the financial markets’ help in putting right FT’s situation. However, those markets ‘did not at that time seem prepared to invest in or grant much in the way of credit to [FT]’ (recital 229 of the contested decision).

64 It follows from all the above that ‘the test of the prudent private investor in a market economy [was] not satisfied’ and that, ‘[c]onsequently, the advantage conferred on [FT] by the proposal to grant a shareholder loan – examined in the light of the prior declarations and interventions of the French authorities – constitute[d] State aid, even if the scale of the advantage [was] difficult to calculate’ (recital 230 of the contested decision).

F – Compatibility of the aid in question with the common market

65 In Section 9 ‘Compatibility of the aid’ of the contested decision, the Commission observed that, firstly, FT had to be regarded as a firm in difficulty within the meaning of points 4 to 6 of the Commission’s Notice concerning the Community guidelines on State aid for rescuing and restructuring firms in difficulty (OJ 1999 C 288, p. 2) and that, secondly, the aid measures at issue could not be characterised as aid for rescuing and restructuring firms in difficulty as they did not fulfil the conditions for authorisation laid down in those guidelines (recitals 231 to 255 of the contested decision). In accordance with Article 87(3)(c) EC and with the abovementioned guidelines, it therefore concluded that those measures were incompatible with the common market (recital 256 of the contested decision).

G – Recovery of the aid at issue

66 In Section 10 ‘Recovery of the aid’ of the contested decision, the Commission declared that it was unable at that stage to quantify precisely the aid in question for the purpose of its recovery pursuant to Article 14 of Regulation No 659/1999 (recitals 257 to 259 of the contested decision).

67 According to the Commission, ‘[d]espite all its efforts, [it] ha[d] been unable to arrive at a reasonable assessment of the notified measures’ “net” financial impact, which ought to be established on the basis of a theoretical calculation isolating the effects of the declarations and actions attributable to the [French] State from any other event which may have exerted an influence on [FT]’s situation or on the perception of that situation by the markets’. It added that ‘[n]or does it seem possible to incorporate in the [contested] decision calculation parameters which are sufficiently precise to be able to carry out the final calculation during the [contested] decision’s implementing phase’. The Commission therefore concluded that, ‘[i]n these particular circumstances, respect for the Member State’s rights of defence might constitute an obstacle to recovery pursuant to Article 14(1) of Regulation … No 659/1999, according to which “the Commission shall not require recovery of the aid if this would be contrary to a general principle of Community law”’ (recital 261 of the contested decision).

68 According to the Commission, that conclusion is also justified in the light of the principle of the protection of legitimate expectations on the part of the aid recipient (recital 262 of the contested decision). In that regard, in recitals 263 and 264 of the contested decision, it stated the following:

‘(263) The Commission has taken the [French] Government’s declarations into account in its assessment of the compliance of the measure at issue with the State aid rules. Viewed in isolation, the shareholder loan proposal would probably have been considered not to constitute aid under the Treaty. However, the Commission has come to the conclusion that the declarations had the effect of restoring confidence to the market as far as [FT] was concerned, thereby ruling out the application of the prudent private investor principle and turning the shareholder loan proposal into the concretisation of the aid granted to [FT]. The Commission recognises that this is the first time it has had to examine whether this type of conduct constitutes aid. In so far as the aid depends, as a result, on conduct which preceded the notification of the shareholder loan proposal, a diligent operator could have had confidence in the lawfulness of the conduct of the Member State concerned, which, for its part, had duly notified the loan proposal. As Advocate General Darmon stated in his Opinion in Case C‑5/89 [Commission v Germany [1990] ECR I‑3437], “the doubts with which some undertakings may be assailed, when faced with ‘atypical’ forms of aid, as to whether notification is necessary should not be made light of”.

(264) In conclusion, the Commission finds that [FT] could legitimately have confidence in [the French Republic]’s conduct not constituting State aid. In the light of the above, the Commission considers that, in the present case, ordering the aid’s recovery would be contrary to the general principles of Community law.’

Procedure and forms of order sought

I – Cases T‑425/04 and T‑444/04

69 By application lodged at the Court Registry on 13 October 2004, the French Republic brought the action registered under number T‑425/04.

70 By application lodged at the Court Registry on 5 November 2004, FT brought the action registered under number T‑444/04.

71 The French Republic and FT claim that the Court should:

– annul the contested decision;

– order the Commission to pay the costs.

72 The Commission contends that the Court should:

– dismiss the actions as inadmissible;

– in the alternative, dismiss the actions as unfounded;

– order the French Republic and FT to pay the costs.

73 By application lodged at the Court Registry on 25 October 2007, the Bouygues companies sought leave to intervene in Case T‑444/04 in support of the forms of order sought by the Commission.

74 By document lodged at the Court Registry on 20 November 2007, the Commission indicated that it had no objections to the Bouygues companies being granted leave to intervene in support of the forms of order sought by it. However, it made it clear that it reserved its position as regards the consistency of the arguments advanced by the Bouygues companies in the context of that intervention with those put forward in support of their action in Case T‑450/04 (see paragraph 78 et seq. below).

75 By document lodged at the Court Registry on 21 November 2007, FT claimed that the Court should declare that application for leave to intervene inadmissible and order the Bouygues companies to pay the costs and, in the alternative, to limit that intervention to the oral procedure.

76 By document lodged at the Court Registry on 4 December 2007, FT requested confidential treatment vis‑à‑vis the Bouygues companies of certain information contained in the application and the reply lodged in Case T‑444/04.

77 By order of 30 January 2008, the President of the Third Chamber of the Court granted the Bouygues companies leave to intervene in the oral procedure in Case T‑444/04 in support of the forms of order sought by the Commission and ordered that a provisional, non‑confidential version of the Report for the Hearing be communicated to the interveners while reserving the decision on the merits of FT’s request for confidential treatment None of the parties raised any objections relating to the content of that non‑confidential version of the Report for the Hearing.

II – Case T‑450/04

78 By application lodged at the Court Registry on 9 November 2004, the Bouygues companies brought the action registered under number T‑450/04.

79 The Bouygues companies claim that the Court should:

– annul the contested decision;

– order the Commission to pay the costs.

80 The Commission contends that the Court should:

– dismiss the application for annulment of Article 1 of the contested decision as inadmissible and, in the alternative, as unfounded;

– dismiss the application for annulment of Article 2 of the contested decision as unfounded;

– order the Bouygues companies to pay the costs.

81 By documents lodged at the Court Registry on 25 and 29 March 2005, FT and the French Republic sought leave to intervene in Case T‑450/04 in support of the forms of order sought by the Commission. By orders of 25 May 2005, the President of the Third Chamber of the Court allowed those interventions. The interveners lodged their statements in intervention, as did the Bouygues companies and the Commission their observations on those statements, within the prescribed periods.

82 The French Republic contends that the Court should:

– dismiss the application for annulment of Article 2 of the contested decision as unfounded;

– order the Bouygues companies to pay the costs.

83 FT contends that the Court should:

– dismiss the action as unfounded;

– order the Bouygues companies to pay the costs.

III – Case T‑456/04

84 By application lodged at the Court Registry on 12 November 2004, AFORS brought the action registered under number T‑456/04.

85 AFORS claims that the Court should:

– annul Article 2 of the contested decision;

– order the Commission to pay the costs.

86 The Commission contends that the Court should:

– dismiss the application for annulment of Article 1 of the contested decision as inadmissible;

– dismiss the application for annulment of Article 2 of the contested decision as unfounded;

– order AFORS to pay the costs.

87 By documents lodged at the Court Registry on 25 and 29 March 2005, FT and the French Republic sought leave to intervene in Case T‑456/04 in support of the forms of order sought by the Commission. By orders of 12 and 25 May 2005, the President of the Third Chamber of the Court allowed those interventions. The interveners lodged their statements in intervention and AFORS lodged its observations on those statements within the prescribed periods.

88 The French Republic contends that the Court should:

– dismiss the action;

– order AFORS to pay the costs.

89 FT contends that the Court should:

– dismiss the application for annulment of Article 1 of the contested decision as inadmissible;

– dismiss the application for annulment of Article 2 of the contested decision as unfounded;

– order AFORS to pay the costs.

IV – Measures of organisation of procedure, reassignment to a Chamber sitting in extended composition and joinder

90 By letter of 11 December 2007, by way of measures of organisation of procedure provided for in Article 64 of the Court’s Rules of Procedure, concerning Cases T‑425/04, T‑444/04 and T‑450/04, the Court, firstly, asked the Commission to lodge certain documents and, secondly, put a number of questions in writing to the French Republic, FT and the Commission, asking them to reply to them in writing. Those parties complied with those measures of organisation of procedure within the prescribed periods.

91 On 13 February 2008, pursuant to Article 14 of the Rules of Procedure and on the proposal of the Third Chamber, the Court, having heard the parties in accordance with Article 51 of those rules, decided to reassign the four cases to a Chamber sitting in extended composition.

92 By document lodged at the Court Registry on 15 April 2008, in Case T‑450/04, the Bouygues companies requested that Cases T‑425/04, T‑444/04, T‑450/04 and T‑456/04 be joined pursuant to Article 50(1) of the Rules of Procedure. The other parties to those cases submitted their observations on that request within the prescribed periods.

93 By document lodged at the Court Registry on 14 May 2008, FT requested, in accordance with Article 50(2) of the Rules of Procedure, that certain information contained in the application, in the reply and in certain annexes to the application lodged in Case T‑444/04 be accorded confidential treatment vis-à-vis the other parties in Cases T‑425/04, T‑450/04 and T‑456/04, and produced non-confidential versions of those pleadings.

94 By order of the President of the Third Chamber, Extended Composition, of the Court of 17 February 2009, Cases T‑425/04, T‑444/04, T‑450/04 and T‑456/04 were joined for the purposes of the oral procedure and the judgment, in accordance with Article 50 of the Rules of Procedure. In addition, the President of the Third Chamber, Extended Composition, ordered, firstly, that consultation of the pleadings in the joined cases be limited to the non‑confidential versions of the documents and, secondly, that non‑confidential, provisional versions of the Reports for the Hearing be communicated to the parties while reserving the decision on the merits of FT’s request for confidential treatment. None of the parties raised any objections in that regard.

V – Oral procedure

95 On hearing the report of the Judge-Rapporteur, the Court (Third Chamber, Extended Composition) decided to open the oral procedure.

96 The parties presented oral argument and replied to the oral questions of the Court at the hearing on 21 April 2009.

97 At the hearing, the Commission withdrew its first head of claim in Case T‑456/04 contending that the Court should dismiss as inadmissible AFORS’ application for annulment of Article 1 of the contested decision; formal note of this was taken in the minutes of the hearing.

Law

I – The application for annulment of Article 1 of the contested decision

A – The pleas of inadmissibility raised in Cases T‑425/04, T‑444/04, T‑450/04 and T‑456/04

1. Arguments of the parties

98 The Commission contends that the actions in Cases T‑425/04 and T‑444/04 and the application for annulment of Article 1 of the contested decision in Case T‑450/04 are inadmissible for lack of a legal interest in bringing proceedings.

99 As regards the actions of the French Republic and FT, the Commission contends that those applicants have obtained satisfaction and have no legal interest in the annulment of the contested decision in its entirety, since, even though that decision declared the aid in question incompatible with the common market, it does not order its recovery.

100 Although a Member State is a privileged applicant under the Treaty and is not required to prove that the act at issue produces legal effects with regard to that Member State, it should nevertheless have a vested and present interest in the annulment of that act. Consequently, a Member State may bring an action only against acts adversely affecting it, namely, against those which are such as to bring about a distinct change in its legal position. In addition, in order to determine whether an act produces legal effects, it is necessary to look at its substance. Those conditions also apply, a fortiori, to any other applicant, such as FT and the Bouygues companies.

101 As regards the action brought by the Bouygues companies, the Commission submits that, in their first plea for annulment, those applicants agree with the reasoning set out, in particular, as far as recital 219 of the contested decision. In reality, they are not contesting that decision in so far as it characterises the notified measures as incompatible aid, since that characterisation is in their interest and meets their wishes. They are contesting it only in so far as the Commission did not find that, taken as a whole or separately, the declarations from July 2002 constitute State aid. Article 1 of the contested decision thus gives satisfaction to the Bouygues companies and they cannot show a vested and present interest in its annulment.

102 In the view of the Commission, only the operative part of an act is capable of producing legal effects and, as a consequence, of adversely affecting the interests of those concerned. The assessments contained in the reasoning of the contested decision may not, as such, be the subject of an action for annulment and may be subject to judicial review by the Community judicature only if, as the reasoning of an act adversely affecting the interests of those concerned, they constitute the essential basis for its operative part. It is thus accepted that a decision which gives satisfaction to the applicant is not capable of adversely affecting him, without prejudice to the rights of the third parties concerned to bring an action for annulment against that decision.

103 In that regard, the Commission refers to the order in Case C‑164/02 Netherlands v Commission [2004] ECR I‑1177, paragraphs 18 to 25, according to which an action brought by a Member State as the addressee of a decision concerning State aid which is favourable to that Member State in that it declares certain aid measures to be compatible with the common market is inadmissible for lack of a legal interest in bringing proceedings. According to the Court of Justice, the operative part of that decision had no binding legal effects capable of affecting the applicant’s interests, since it did not bring about a serious and clear change in its legal position. Admittedly, the situation which gave rise to that order differed slightly from that in this case in that the measures in favour of FT were characterised as aid incompatible with the common market. However, the fact remains that, on the one hand, by finding that it was not possible to require the recovery of that aid, the contested decision gives satisfaction to the French Republic and FT and, by its very nature, is not capable either of bringing about a change in their legal position or of adversely affecting their interests. On the other hand, in so far as Article 1 of the contested decision characterises the measures in favour of FT as incompatible aid, it gives satisfaction to the Bouygues companies and is likewise not capable of bringing about a change in their legal position or of adversely affecting their interests. Indeed, the Bouygues companies do not challenge that operative part, but merely seek the annulment of the assessment that only the shareholder loan, as placed in the context of the declarations from July 2002, constitutes State aid. In any event, those four applicants do not have a vested and present interest in the outcome of this case, since, even if their claims are well founded, their legal position would remain unchanged as a consequence of annulment of Article 1, irrespective of the grounds justifying such annulment.

104 The Commission, supported by the French Republic, adds that, although it does not dispute the legal interest of the Bouygues companies in bringing an action for annulment of Article 2 of the contested decision, it nevertheless takes the view that their position is contradictory. If the Bouygues companies’ application for annulment of Article 1 of the contested decision were deemed to be well founded, the Court could not rule on their application for annulment of Article 2 of that decision. In such a case, the shareholder loan would no longer be the aid referred to in Article 1 to be taken into account for the purpose of applying Article 2 of the contested decision. That contradiction merely reinforces the Commission’s argument that it is not open to the Bouygues companies to challenge Article 1 of that decision.

105 Moreover, the possible obligation for the French Republic, based on the contested decision, to notify in the future any aid measure similar to that characterised as aid in this case would not, even if it involved a certain procedural burden, result in any change in its legal position or that of FT which would suffice for recognition of their vested and present interest in bringing proceedings. That is borne out by the order in Netherlands v Commission, paragraph 103 above, in which the Court of Justice did not find any vested and present interest on the part of the applicant State even though the latter had raised that argument. If the interest which an applicant claims concerns a future legal situation, he must demonstrate that the prejudice to that situation is already certain. Similarly, if a national court found it necessary to take the contested decision into consideration and had doubts as to its scope, that court would be able to refer a question to the Court of Justice for a preliminary ruling under Article 234 EC, so that, in any event, the applicants would not in the least be deprived, in the event of any dispute, of the opportunity to assert their rights before the national court.

106 The Commission rejects FT’s argument that the contested decision causes it to run the risk of repaying the aid at issue, in view, in particular, of the actions brought in Cases T‑450/04 and T‑456/04. In the present case, the mere reference to actions brought by third parties cannot in itself demonstrate that applicant’s legal interest in bringing proceedings. In the Commission’s view, firstly, any actions at national level are purely hypothetical. Although the implementation of the aid measures was unlawful before the adoption of the contested decision, including the decision not to order recovery of the aid in question, and the national courts must protect the rights of individuals, it is nevertheless common ground that, in the present case, no such actions were brought prior to that decision. Secondly, so far as concerns the actions brought in Cases T‑450/04 and T‑456/04, the Commission points out that, if they were well founded, only a new Commission decision adopted in order to comply with the judgment in accordance with Article 233 EC would adversely affect FT’s interests. However, as long as no such new decision exists, that applicant is not required to repay any incompatible aid.

107 The Commission accordingly concludes that it is not open either to the French Republic or to FT to bring proceedings for annulment of the contested decision in Cases T‑425/04 and T‑444/04. In Case T‑450/04, it contends that the Bouygues companies’ application for annulment of Article 1 of that decision is inadmissible.

108 The French Republic, FT and the Bouygues companies claim that the pleas of inadmissibility raised by the Commission should be rejected.

109 The Bouygues companies submit that their application for annulment of Article 1 of the contested decision is admissible in so far as that article, read in conjunction with the reasoning forming its essential basis, implicitly but necessarily includes the Commission’s legally binding refusal to accept the Bouygues companies’ argument that the declarations from July 2002 in themselves constituted State aid.

110 Finally, as regards the action brought by AFORS in Case T‑456/04, FT contends that any application for annulment of Article 1 of the contested decision is inadmissible. In that regard, AFORS points out that its action covers only Article 2 of that decision.

2. Findings of the Court

a) Preliminary observations

111 It must be observed, first of all, that, in Cases T‑425/04 and T‑444/04, the Commission disputes the legal interest of the French Republic and FT in bringing proceedings against the contested decision in its entirety, without distinguishing, in that regard, between Article 1 and Article 2 of that decision. In Case T‑450/04, on the other hand, the Commission does make such a distinction in that it calls in question only the legal interest of the Bouygues companies in bringing proceedings against Article 1 of the contested decision, but not that in bringing proceedings against Article 2 of that decision.

112 Thus, in the view of the Commission, Articles 1 and 2 of the contested decision constitute severable elements for the purposes of a partial annulment.

113 The Court holds that that is true in this case.

114 Article 2 of the contested decision, which finds that the aid declared incompatible with the common market in Article 1 does not have to be recovered, can be annulled in isolation, without that involving an alteration of the scope of Article 1 or of the reasoning which forms its essential basis (see, to that effect Case C‑540/03 Parliament v Council [2006] ECR I‑5769, paragraphs 27 and 28, and the case‑law cited).

115 In addition, the fact that a possible total annulment of Article 1 of the contested decision, on the basis of the pleas put forward by the French Republic and by FT, would be bound to render Article 2 invalid does not affect the severability of the latter article, since that invalidity has no effect on its content and is wholly separate from the question whether or not it orders recovery. Moreover, as the Bouygues companies argued at the hearing, in the event of a partial annulment of Article 1 of the contested decision, on the basis of the pleas put forward by the Bouygues companies in Case T‑450/04, which would allow the finding of aid incompatible with the common market to stand, Article 2 would still be the proper subject of a separate annulment.

116 Next, as regards the legal interest in bringing proceedings, it is necessary to recall the settled case-law according to which an action for annulment brought by a natural or legal person is not admissible unless the applicant establishes a vested and present interest in seeing the contested measure annulled. Such an interest presupposes that the annulment of the measure must of itself be capable of having legal consequences or, to use a different form of words, the action must be liable, if successful, to procure an advantage for the party who has brought it. Consequently, a measure which gives full satisfaction to that person is not, by definition, capable of adversely affecting him and such a person has no interest in seeking its annulment (see, to that effect, Case T‑354/05 TF1 v Commission [2009] ECR II‑471, paragraphs 84 and 85, and the case‑law cited).

117 Those are the principles in the light of which it must be considered whether the French Republic, FT and the Bouygues companies have a legal interest in the annulment of Article 1 of the contested decision.

b) The legal interest of the French Republic and of FT in bringing proceedings against Article 1 of the contested decision

118 Firstly, as regards the legal interest of the French Republic in bringing proceedings, it must be pointed out that the Treaty draws a clear distinction between the right of Community institutions and Member States to bring an action for annulment and that of legal persons and individuals, in that all Member States are given the right to contest the legality of decisions of the Commission by means of an action for annulment, without having to establish any legal interest in bringing proceedings. A Member State need not therefore prove that an act of the Commission which it is contesting produces legal effects with regard to that Member State in order for its action to be admissible (order in Case C‑208/99 Portugal v Commission [2001] ECR I‑9183, paragraphs 22 and 23; Case T‑233/04 Netherlands v Commission [2008] ECR II‑591, paragraph 37; and Joined Cases T‑309/04, T‑317/04, T‑329/04 and T‑336/04 TV 2/Danmark and Others v Commission [2008] ECR II‑2935, paragraph 63). That finding also follows from the case‑law definition of a legal interest in bringing proceedings (see paragraph 116 above), which covers only actions brought by natural or legal persons and not those brought by institutions or Member States.

119 Furthermore, contrary to what the Commission seems to contemplate, the concept of a legal interest in bringing proceedings must not be confused with the concept of a challengeable act, pursuant to which an act must be intended to produce legal effects capable of adversely affecting the interests of those concerned in order for it to be capable of being the subject of an action for annulment, which must be ascertained by looking to its substance (see, to that effect, Case C‑147/96 Netherlands v Commission [2000] ECR I‑4723, paragraphs 25 and 27; orders in Portugal v Commission, paragraph 118 above, paragraph 24, and Netherlands v Commission, paragraph 103 above, paragraphs 18 and 19; and TV 2/Danmark and Others v Commission, paragraph 118 above, paragraph 63). The inevitable conclusion in this regard is that, in the light of its substance, the contested decision constitutes such a challengeable act producing binding legal effects.

120 In the present case, having regard to the provisions of the Treaty and in the light of the case‑law referred to in paragraphs 118 and 119 above, the French Republic, solely in its capacity as a Member State, is entitled to bring an action for annulment against Article 1 of the contested decision without being required to show a legal interest in bringing proceedings in that regard.

121 Secondly, as regards FT’s legal interest in bringing proceedings against Article 1 of the contested decision, it must be held, first of all, that that article is also intended to produce binding legal effects vis‑à‑vis FT in so far as it is the sole beneficiary of the aid measure which is declared in that article to be incompatible with the common market.

122 In that regard, the Commission wrongly refers to the case‑law according to which only the operative part of an act is capable of producing legal effects and, as a consequence, of adversely affecting a person’s legal interests (see Case T‑213/00 CMA CGM and Others v Commission [2003] ECR II‑913, paragraph 186, and the case‑law cited). It is clear from Article 1 of the contested decision that the Commission characterises the shareholder loan, as placed in the context of the declarations from July 2002, as State aid incompatible with the common market within the meaning of Article 87 EC. It is precisely that finding, in conjunction with the statement of reasons in that decision forming its essential basis, which FT is challenging by its action on the ground that it affects its legal position and that it adversely affects its interests. Likewise, the Commission’s argument that the contested decision gives satisfaction to FT must be rejected, since that argument confuses the legal effects of Article 1 of that decision with those of Article 2, which finds that there is no need to order recovery of the aid in question.

123 Moreover, the Commission cannot reasonably contend that FT has no interest in the outcome of this case on the ground that its legal position would remain unchanged even if its action were well founded. Firstly, annulment of Article 1 of the contested decision on the basis of the pleas put forward by FT would have the consequence that the finding of unlawfulness of the aid measure in question, which is an individual measure in its favour, would be null and void, which constitutes a legal consequence bringing about a change in its legal position and procuring an advantage for it. Secondly, contrary to what the Commission maintains, that vested and present interest of FT in the annulment of Article 1 of the contested decision is confirmed by the hypothetical situation where, in Cases T‑450/04 and T‑456/04, the applications of the Bouygues companies and AFORS for the annulment of Article 2 of that decision are upheld, since such an annulment would have the consequence that the Commission would be obliged to order, to the detriment of FT, recovery of the unlawful aid referred to in Article 1.

124 It follows from the foregoing considerations that FT has a vested and present interest in the annulment of Article 1 of the contested decision.

125 The pleas of inadmissibility raised by the Commission in Cases T‑425/04 and T‑444/04 must therefore be rejected in so far as they relate to the admissibility of the applications for annulment of Article 1 of the contested decision brought by the French Republic and FT.

c) The legal interest of the Bouygues companies in bringing proceedings against Article 1 of the contested decision

126 It must be noted, as a preliminary point, that, from the point of view both of its form and of its substance, the contested decision constitutes an act intended to produce binding legal effects. Moreover, in so far as Article 1 of the contested decision finds the existence of aid to FT and declares it incompatible with the common market, that article coincides with the claim and interests of the Bouygues companies, as set out in their complaint of 22 January 2003.

127 However, the finding of the existence of aid and of its incompatibility with the common market in Article 1 of the contested decision does not preclude a priori the existence of other incompatible aid measures which, although not referred to in that article, are also covered by the administrative procedure culminating in the adoption of that decision and which, moreover, are capable of substantially affecting the market position of certain competitors of the beneficiary of the aid (see, to that effect, Case C‑78/03 P Commission v Aktionsgemeinschaft Recht und Eigentum [2005] ECR I‑10737, paragraph 37). That could be true of the position of the Bouygues companies in relation to that of FT on the French market for mobile telephony.

128 In that regard, the Commission again wrongly relies on the case-law according to which only the operative part of an act is capable of producing legal effects and of adversely affecting a person’s legal interests (see CMA CGM and Others v Commission, paragraph 122 above, paragraph 186, and the case‑law cited). In the present case, it is clearly apparent from Article 1 of the contested decision and from the reasoning forming its basis, which is set out in recitals 185 to 230 of that decision, that the Commission confines itself to characterising the shareholder loan itself, as examined in the light of the declarations from July 2002, as State aid incompatible with the common market within the meaning of Article 87 EC. However, that finding, which appears both in the operative part of that decision and in the statement of reasons on which it is based, is precisely that which the Bouygues companies are challenging by means of their action on the ground that it affects their legal position and adversely affects their interests, in so far as it refers to only one aid measure, even though, in their view, by means of the declarations from July 2002, the French State adopted further aid measures involving separate advantages for FT and further damaging their market position. In that context, the Bouygues companies are fully entitled to plead that the Commission’s overall approach, as set out, in particular, in recitals 187 to 191 and 203 to 228 of the contested decision, necessarily implies its refusal to characterise the declarations from July 2002 as aid measures in themselves. Consequently, the Commission is not justified in claiming that the Bouygues companies are not, in reality, challenging Article 1 of the contested decision and that they agree with the reasoning underlying it.

129 In the same way, the Commission cannot reasonably contend that Article 1 of the contested decision gives satisfaction to the Bouygues companies and that they do not have a vested and present interest in the outcome of this case on the ground that, even if their action were deemed to be well founded, their legal position would remain unchanged. The annulment of Article 1 of the contested decision on the basis of the pleas put forward by the Bouygues companies would have the effect of invalidating the finding of the existence of an aid measure incompatible with the common market only in so far as it refers to th