2003/216/EC: Commission Decision of 15 January 2002 on State aid granted by France to Crédit Mutuel (notified under document number C(2001) 3956) (Text with EEA relevance)
Date: 2002-01-15
Institutions: European Commission
Subjects: France, State aid, bank, control of State aid, savings

4.4.2003

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Official Journal of the European Union

L 88/39

COMMISSION DECISION

of 15 January 2002

on State aid granted by France to CrØdit Mutuel

(notified under document number C(2001) 3956)

(Only the French text is authentic)

(Text with EEA relevance)

(2003/216/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(3)

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

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

(4)

(5)

(6)

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

Whereas:

I. PROCEDURE

(1)

By letter dated 6 February 1998,
the Commission
informed the French authorities that it had decided to
initiate the procedure laid down in Article 88(2) of the
Treaty in respect of the advantages granted by the State
to CrØdit Mutuel through the Livret bleu savings system.
The French authorities granted CrØdit Mutuel exclusive
rights in 1975 to distribute the Livret bleu. This decision
to initiate proceedings
followed the lodging of a
complaint on 25 January 1991 by the Association
fran(cid:231)aise des banques (AFB), the Chambre syndicale des
banques
and CrØdit Agricole
(CSBP)
concerning the aid granted by the French State to CrØdit
Mutuel. The Commission had requested the
first
information concerning the Livret bleu in a letter dated
27 May 1991.

populaires

(2)

In response to the questions raised in the letter initiating
proceedings, the French authorities submitted a file to
the Commission, by letter dated 8 April 1998.

The Commission decision to initiate proceedings was
published in the Official
the European
Communities (2). The Commission invited interested
parties to submit their comments on the aid.

Journal

of

arguments

CrØdit Mutuel sent a letter to the Commission on 18
June 1998 setting out
the
description of the measures covered by the proceedings
file
as state aid,
interested
concerning the Livret bleu. A number of
parties
the
comments
Commission (see Section III).

together with an analytical account

submitted

to reject

their

also

to

sent

complainants

The
additional written
to the Commission by letters dated 29
statements
October 1999, 16 May 2000, 16 October 2000 and
19 January 2001.

four

Given the file submitted by CrØdit Mutuel, and in
particular the analytical accounts relating to the Livret
bleu which concluded that not only did the Livret bleu
system not result in excess compensation of the costs
paid by CrØdit Mutuel, but in fact involved a net cost
for the latter, the Commission decided to conduct an
the Livret bleu analytical accounts. For this
audit of
purpose, on the basis of an invitation to tender,
it
recruited a British consultant, Littlejohn Frazer (hereafter
referred to as (cid:145)the consultant(cid:146)), specialised in accoun-
French
tancy
accounting consultancies, Auditec and Scacchi. The
audit started in November 1998 and continued up until
13 December 1999. CrØdit Mutuel sent a memo to the
Commission on 21 July 1999 contesting the provisional
The
by
conclusions
consultant’s final report was submitted to the French
authorities and to CrØdit Mutuel for examination on 10

together with

consultant.

produced

auditing,

two

and

the

(1) OJ C 146, 12.5.1998, p. 6.

(2) See footnote 1.

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January 2000. A technical meeting was organised on 7
the Commission, assisted by its
February 2000 for
consultant, the French authorities and CrØdit Mutuel, to
discuss the audit report.

(10)

(CIC)

The Commission also received a joint
letter on 7
December 1998 from the Banque Nationale de Paris,
CrØdit Commercial de France and SociØtØ GØnØrale
submitting a copy of the memorandum of application
which these three banks had lodged before the Conseil
d’Etat in France, disputing the sale of CrØdit Industriel et
to CrØdit Mutuel by the public
Commercial
insurance group, GAN.
In the letter, the three banks
called for these proceedings to be extended to the use
made by CrØdit Mutuel of the aid it had received in
connection with the Livret bleu, which had for instance
to acquire CIC in April 1998. The
enabled it
Commission noted that
set down in the
memorandum did not provide any new information to
enable it to determine whether the Livret bleu system
involved aid to CrØdit Mutuel or, if so, to assess whether
such aid was
compatible with the Treaty. The
Commission had not therefore acceded to the request to
extend these proceedings.

the facts

(11)

By letter dated 14 September 1999, the Commission
asked the French authorities to explain the general
interest tasks entrusted to CrØdit Mutuel. In three letters
dated 21 February 2000, 3 November 2000 and 5
February 2001,
the Commission forwarded to the
French authorities for comment various items submitted
on the case by the complainants concerning the
loss-leader effect of
in particular two
the Livret bleu,
statistical studies produced by Cabinet Glais, and asked
them about the modification of the tax arrangements
applicable to the Livret bleu following the decision by the
Conseil d’Etat on 5 January 2000 concerning the illegal
nature of the Livret bleu tax arrangements. The French
authorities replied by letter dated 1 February 2001.

In May 2000,
the ConfØdØration nationale du CrØdit
Mutuel gave a mandate to the Arthur Andersen firm to
review the methodology used in the CrØdit Mutuel
analytical accounts and to draw up profit and loss
accounts
task was
relating to the Livret bleu. This
completed in September 2000 with the submission of a
detailed report on the Livret bleu profit and loss
accounts, which assessed the result of the Livret bleu
analytical accounts at a pre-tax loss of FRF 498 million.
The final evaluation of the loss was reached taking into
account certain disputable corrective factors. A meeting
the report was held on 2
to discuss the results of
February
the
Commission, CrØdit Mutuel asked Arthur Andersen to
forward a memo dated 8 February 2001 justifying the
method used, namely (cid:145)correction of the excess weighting
granted to the IARD insurance activity(cid:146) which had in
particular been criticised by the Commission.

observations

Following

2001.

by

The Commission extended the consultant’s contract in
April 2001 to allow him to identify the discrepancies
between the two accounting reports and to determine
which modifications of figures or methodology could
legitimately be accepted and integrated into his previous
evaluation. The final report was handed over on 23 July
2001. It evaluates the result of the Livret bleu analytical
accounts at a cumulated non-capitalised profit of FRF
1 074 million. The report was sent
to the French
authorities on the same day. On 26 July 2001, a
meeting was held between CrØdit Mutuel and Arthur
and Arthur Andersen
Andersen. CrØdit Mutuel
final
announced
conclusions of
the Commission’s consultant. Arthur
Andersen defended its earlier conclusions in a document
dated 13 September 2000, forwarded as an annex to a
memo by the French authorities on 15 September
2001. The French authorities sent the Commission a
new memo on 26 October 2001 containing a legal
analysis of the Livret bleu from the point of Community
competition law, as well as a memo of 7 January 2002
the public service mission,
concerning the cost of
reiterating the figures presented by CrØdit Mutuel
without providing any new information.

disagreed with

they

that

the

the

thus

initiation of

in the form of exclusive rights

In April 2000,
the
after
proceedings, the European Banking Federation lodged a
complaint against the aid granted by the French State to
CrØdit Mutuel
to
distribute the tax-free Livret bleu. The complaint was
underpinned by an additional written statement of 22
January 2001 comprising most of
the documents
already entered in the file by the AFB, and explaining
the tax status of interest on the Livret bleu in the light of
the decision by the Conseil d’Etat on 5 January 2000.

(12)

Because of the various items of information submitted
by the complainants testifying to the loss-leader effects
that gave CrØdit Mutuel a considerable advantage in
terms of attracting clients, the Commission extended its
consultant’s mission in September 2000 and again in
April 2001 to include the evaluation of the loss-leader
effects of the Livret bleu. The consultant mentioned the
major problems it had encountered in obtaining from
CrØdit Mutuel the data necessary for such a technically

(7)

(8)

(9)

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L 88/41

delicate study. It had not therefore been able to apply
the methodology devised at the outset. The Commission
was unable to obtain any conclusive results from this
procedure.

allowing for a normal profit margin,
this would
constitute excess compensation that is regarded as State
aid.

2. CrØdit Mutuel

(13)

Three of the complainants, the AFB, CrØdit Agricole and
the CSBP, urged the Commission to take action by letter
dated 25 September 2001. A previous letter dated 10
April 2001 had denied allegations in the French press
that
the complainants no longer wished to continue
with their complaint.

(15)

a

is

decentralised banking

CrØdit Mutuel
group
consisting of a national network of CrØdit Mutuel
branches with the status of cooperative companies. The
1 850 local banks must belong to a regional federation,
while each federation belongs to the ConfØdØration
nationale du CrØdit Mutuel, the (cid:145)central body(cid:146) of the
network according to the Banking Act of 24 January
1984. The CrØdit Mutuel branches are owned by 5,7
million members. The Federal Branches are members of
the Caisse Centrale du CrØdit Mutuel, which is the
national financial body that ensures the financial liquid
assets of the regional groups. The group has the same
characteristics as a single undertaking with consolidated
accounts. The State is represented in the governing
bodies by a Government Commissioner who sits on the
Board of Directors and attends the General Meetings of
the ConfØdØration Nationale du CrØdit Mutuel.

(16)

approximately 3 300 branches

CrØdit Mutuel is the fifth biggest French bank in terms
of savings and the third biggest in terms of its network
(end of 1999).
of
Following the merger with CIC, CrØdit Mutuel had a
workforce numbering 27 500 employees at the end of
1999, a consolidated balance sheet of FRF 941 billion
and had produced a net result for the group of FRF 4,1
billion in the 1999 financial year. The group’s high
financial margins can be explained in particular by a
relatively low operating coefficient (the ratio between
overheads and net banking income) (cid:150) 66,7 % in 1996 (cid:150)
which places CrØdit Mutuel among the French banks
is, however,
level
with the lowest expenses. This
considerably higher than that of
the most profitable
European banks. The amount of its capital and shares
within the Group virtually trebled in the 1990s,
Its solvency
amounting to FRF 61 billion in 1999.
coefficient (the (cid:145)Cooke(cid:146) ratio) was 15,8 % in 1997, hence
much higher than the regulation minimum (3) of 8 %,
and higher than that of its main competitors.

(17)

The CIC banking group was privatised in April 1998,
and the Government chose CrØdit Mutuel from among
several banking groups who had applied to take over
the group. Following the takeover, the Group consisting
of CrØdit Mutuel and CIC became one of the biggest
French banking groups which, with 4 880 branches,
was the second biggest network of bank branches in
France, with a total balance sheet of almost FRF 1 300
billion.

(3) The regulation level was established in Directive 89/647/EEC of 18
credit

December 1989 concerning
institutions (OJ L 386, 30.12.1989, p. 14).

ratio for

solvency

the

II. DESCRIPTION OF THE LIVRET BLEU SYSTEM

1. Introduction

(14)

CrØdit Mutuel was entrusted with the task of distributing
the Livret bleu, a task subject to strict prerogatives and
constraints. The prerogatives consist of
the exclusive
distribution to the general public of a tax-free savings
the Livret bleu (see Section II.3) and the
product,
payment of a collection commission by the Caisse des
DØp(cid:244)ts et Consignations (CDC). The obligations concern
the use of the resources obtained through the Livret bleu.
These obligations have evolved over time: initially CrØdit
Mutuel was obliged to allocate 50 % (this was later
increased to 65 %) of the resources to general interest
assets (for instance the financing of local authorities and
other public bodies), with the balance being freely
available to the bank. As of 1991, a growing part of the
total savings was allocated to the financing of public
housing, with the resources being channelled through
CDC. The total amount of savings is now channelled
through CDC. The latter pays CrØdit Mutuel a fee
corresponding to the gross interest rate set by the
authorities, passed on to savers, as well as a brokerage
commission equal to 1,3 %.

The Commission will examine the situation to see to
what extent the distribution of the Livret bleu may have
given economic advantages to CrØdit Mutuel as a result
of the savings commission it received from CDC. If the
commission exceeds the system’s net costs,
in other
words the difference between the income from other
assets (general
interest assets)
interest and non-general
and the real collection and management costs, and

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(18)

(19)

CrØdit Mutuel
is a bank with a network that has the
characteristic of being structurally collection-oriented: its
deposits (FRF 408 billion in 1998) are higher than the
loans it grants (FRF 345 billion in 1998). This surplus
of resources over applications in its banking activity
makes this establishment a lending establishment on the
market in structural terms. This can be explained by its
mutual-interest status and the number of
individual
customers, whose net savings are positive. CrØdit Mutuel
role in financing professionals,
plays an important
local
craftsmen and retailers, as well as
authorities and voluntary organisations. Apart from its
activities as a credit institution, it is also very active in
the field of insurance, where it achieved a net profit of
FRF 23 billion in 1998 (life and non-life insurance)
which contributes significantly to its results. It also has
recognised know-how, which is exported, in electronic
transactions
payments
(issuing of payment
card
payments by retailers).

and in electronic

and handling of

financial

farmers,

cards

the tax situation of

social charges, regardless of
the
savers (5). The amount of this tax was not in any case
passed on to savers. On 5 January 2000,
the AFB
referred the matter to the Conseil d’Etat, which declared
that Livret bleu’s system of partial tax exemption was
illegal under national tax rules on levies in discharge.
The French authorities decided on 13 January 2000 to
raise the pre-tax rate for the Livret bleu so that the net
amount paid to savers would remain unchanged.
It
seems that before the entry into force of the Decree of
27 September 1991, CrØdit Mutuel benefited from a
(cid:145)cancellation(cid:146) mechanism for tax deductions paid under
the system described above. In other words, either the
State or the Caisse des DØp(cid:244)ts et Consignations (CDC)
paid CrØdit Mutuel
sum corresponding to the
deductions in question, so that the Livret bleu was a
completely tax-free product from that year on, both for
consumers and for CrØdit Mutuel, at least with respect
to the total amounts transferred through the CDC.

a

3. The Livret bleu

(21)

The funds collected via the Livret bleu, the amount of
which fluctuated during the 1990s from FRF 80 billion
to FRF 100 billion, have been allocated in different ways
from the outset.

The Livret bleu is a regulated savings product, aimed at
the general public, for which CrØdit Mutuel was granted
distribution rights by the authorities pursuant to Law
No 75-1242 of 27 December 1975. The interest rates
granted by CrØdit Mutuel on Livret bleu deposits are
fixed by the Government. The commercial interest rate
applied to savers after tax is identical to its main rival
savings product, also for the general public, the Livret A
(distributed by the Caisses d’Øpargne and the Post
savings cannot exceed the
Office). The amount of
ceiling which is also set for the Livret A (4). The Livret
bleu has played an important role for CrØdit Mutuel,
forming a key product
for its private customers for
almost two decades in terms of competition with its
rivals. Its relative importance in quantitative terms has,
however, been declining in recent years. The share
accounted for by the Livret bleu in CrØdit Mutuel’s
deposits, which was 70 % in 1975 and almost 60 % in
1985, has fallen to under 25 % since 1997.

(22) An increasing and compulsory fraction of these funds
has been allocated to public housing, with the funds
being (cid:145)channelled(cid:146) through the CDC, in other words paid
into a deposit account at CDC, or allocated by CrØdit
Mutuel itself to the same applications as those of CDC.
CDC pays CrØdit Mutuel a fixed collection commission
of 1,3 % for the funds channelled to it (added to the net
interest rate paid to savers). The level of the commission
has not changed since the start of these channelling
operations, i.e. since 1991. CDC uses the funds allocated
to finance public housing and to grant loans to public
housing bodies, in the same way as the funds collected
from the Caisses d’Øpargne and Post Office’s Livret A.

(20) Until the end of 1999, the taxation of the Livret bleu
system derogated from the taxation rules normally
applied to savings. In fact, CrØdit Mutuel officially paid
the State one third of the taxation normally owed on
the basis of levies in discharge from savings revenue and

(4) At the date of this Decision, the interest rate was 3 % net of
income tax or of the levy in discharge. The ceiling is FRF 100 000
for private individuals.

income taxable under

(5) Since the levy in discharge has a fixed rate and savers have the
option of not paying the levy in discharge and including the
income from investments
the
in their
personal
income tax system (IRPP), they may find themselves in
four different situations: not liable for tax on this financial income
(if they are not taxable under the personal
income tax system),
taxed on this income in the personal taxation system at a lower
rate or rate equal to the levy in discharge, or liable to pay the levy
in discharge. In the event of an error of calculation by them, they
may also be taxed on this income under the personal income tax
system at a higher rate than the compulsory deduction.

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Since the Decree of 27 September 1991, all new funds
collected by the Livret bleu were used to finance public
housing, and the total amount at 31 December 1990
was to be gradually transferred to CDC in annual
instalments of 10 %, up to 2000.

Under the Law of 27 December 1975, the share of the
funds allocated to these tasks was to be 50 % of total
funds. This proportion was raised to 65 % (and to 80 %
of new funds collected) from the entry into force of two
Decrees of 31 October 1983 (until 1991) (6).

(23) Another fraction of

these funds was to be used for
applications defined by a Decree of 1 March 1976,
called (cid:145)general interest assets(cid:146). Half must go to financing
local authorities, and the other half to subscribing to
to
State and other public securities, and to loans
complement
for public housing.
Loans could not be granted to commercial companies.

low-interest

loans

(24)

the remainder of

the total amount collected,
Lastly,
from 1983 to 1991 (7) 35 %, and
initially half, but
subsequently less and less in the 1990s, could be freely
used by CrØdit Mutuel for its own account, thus it was
able to shore up its competitive banking activities using
part of the funds collected via the Livret bleu.

(25)

Table 1

Assets corresponding to the funds collected via the Livret bleu

1991

1992

1993

1994

1995

1996

1997

1998

(In FRF billion and as a %)

Average total annual funds

[(cid:133)] (*)

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

Funds channelled via CDC

1 %

6 %

11 %

22 %

34 %

41 %

45 %

61 %

Other general interest assets

50 %

40 %

34 %

26 %

20 %

15 %

11 %

8 %

Legal reserves/cash flow

26 %

29 %

24 %

22 %

20 %

19 %

18 %

16 %

Total regulated assets

77 %

75 %

69 %

69 %

74 %

75 %

74 %

85 %

Total free funds

23 %

25 %

31 %

31 %

26 %

25 %

26 %

15 %

Source: CrØdit Mutuel and Arthur Andersen.

(26) As the authorities stated, this system was designed at a particular time with a view to promoting
the development of CrØdit Mutuel by allowing it access to cheap resources, so that it could develop
its own banking activities which were shored up to a large extent by the funds collected via the
Livret bleu.

(*) Business secret.
(6) Under the Amending Finance Law of 1982 dated 30 December 1982, the share to be used to directly
finance the State budget or specific needs was increased, with a consequent reduction in loans to local
authorities. CrØdit Mutuel contributed on an ad hoc basis for the first time in 1987-1988 in the financing of
public housing (up to FRF 1,8 billion) during an operation organised by CDC to subscribe to securities.

(7) Before taking into account compulsory reserves and liquidity on these total amounts.

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(27)

aware of

The system was radically changed in 1991 to bring it
gradually into line with the Livret A system, as the
French authorities were obviously
the
distortions of competition it caused. Technically, all
resources are now deemed to be allocated to general
interest assets, with the financing of public housing
increasingly receiving a greater share (8). In practice, all
new deposits collected via the Livret bleu seem to have
been allocated to finance public housing. The existing
funds were to be re-allocated over 10 years, between
in order to allow CrØdit Mutuel to
1991 and 2000,
restructure its assets concerning [(cid:133) ] of
its balance
sheet
In return, all administrative
controls on the opening and closing of branches were
completely abolished in 1991. Moreover, payment of
the fixed amount of levies in discharge on interest paid
to savers with Livret bleu accounts was officially
(cid:145)cancelled(cid:146) (9), in other words refunded to CrØdit Mutuel
by CDC or by the State.

(end of 1990).

(28) When the Commission decided to initiate

these
proceedings, the prevailing situation was undergoing a
transition: the funds recently collected via the Livret bleu
appeared to have been allocated to public housing, but
the total funds collected in the past were being allocated
to this purpose very late compared with the initial
Agreement concluded between CrØdit Mutuel and the
State (which provided for a transfer of 10 % of the total
funds each year). The non-general
interest assets were
quite substantial in the last decade (approximately [(cid:133)])
as can be seen from Table 1 above. The channelling of
funds to CDC was, however, speeded up in 1997. In
fact a new element had accelerated and modified the
reform of the assets relating to the Livret bleu. Following
the initiation of these proceedings by the Commission
in December 1997 and the sale of CIC to CrØdit Mutuel
in April 1998,
renegotiated the 1991
Agreement with CrØdit Mutuel. It was then decided to
channel the entire funds collected via the Livret bleu to
CDC at the end of 1998. This measure was completed
in the second half of 1999.

the State

(8)

(9)

(cid:145)All the sums registered in special savings accounts opened for
depositors by CrØdit Mutuel banks ((cid:133)) shall be allocated to general
interest tasks(cid:146) (Art. 1 of the Decree of 27 September 1991).
(cid:145)The
general interest tasks mentioned under Article 1 include: 1. For a
fraction determined by CrØdit Mutuel,
loans covered by (...) the
Code on Construction and Housing [public housing]; 2. For the
balance, an allocation to the account of CDC(cid:146) (Art. 2 of the Decree
of 27 September 1991).
(cid:145)The
cancelled:
for CrØdit Mutuel
1. Compulsory deductions paid by CrØdit Mutuel on the income
from amounts entered in the special accounts mentioned under
Article 1 and used under the conditions provided for under Article
2(cid:146) (Article 3 of the Decree of 27 September 1991).

following costs

shall be

(29)

In the notice on the initiation of these proceedings, the
Commission noted that State aid might have been
granted to CrØdit Mutuel under the Livret bleu system for
the following reasons.

(30)

(31)

(32)

(33)

Firstly,
the resources of CDC, which is a public
institution, are State resources (10) within the meaning
of Article 87 of the Treaty. The 1,3 % intermediation
commission therefore had to be justified to verify the
absence of excess compensation of CrØdit Mutuel for
collection and management charges relating to the Livret
bleu.

Secondly, under Community case-law the component
relating to the tax exemption of the savings scheme
may, like the granting by the State of tax concessions,
constitute a State resource within the meaning of Article
87(1) of the Treaty (11). In the notice on the initiation
of these proceedings, the Commission indicated that the
beneficiaries of the tax aid were the savers and not the
CrØdit Mutuel. However,
it did point out that it was
necessary to determine whether CrØdit Mutuel did not
through the
from this
benefit
savings scheme in question.

tax advantage itself

interest assets. Most of

The third component of the advantage identified (the
net intermediation margin achieved by CrØdit Mutuel on
the non-transferred Livret bleu funds, after deducting
management costs) might also involve State resources in
relation to the general
the
general-interest-task products derive from compulsory
loans to public administrations (the State and local
authorities) and to public enterprises under interest rate
conditions
regulated by the State, which are not
necessarily the same as market conditions. The State is
therefore in a position to control completely the return
it chooses to grant CrØdit Mutuel
these assets.
Because it is compulsory, this aspect forms an integral
part of the balance sheet of Livret bleu expenditure and
income. The result is that CrØdit Mutuel was able to
derive income exceeding the real management and
funds not
collection costs of deposits
transferred to CDC.

from the

for

initiating

Fourthly, when
Commission had mentioned, without
position because of a lack of
information in the file,

the
taking up a
sufficiently precise
the complainants’ argument

proceedings,

the

(10) Case T-358/94 Air France v Commission [1996] ECR II-2109,

paragraphs 55 to 69.
(11) Case C-387/92 Banco

paragraph 14.

exterior de Espaæa

[1994] ECRI-902,

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Official Journal of the European Union

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is

as

of

for

the

the

sake

complainants,

simplification,

pointing to the beneficial effects of the Livret bleu as
regards attracting customers, a system which can be
a
described,
(cid:145)loss-leader(cid:146). According
the
to
exclusive right to distribute a savings product that is
tax-free might allow CrØdit
attractive because it
Mutuel
to attract and keep customers to whom its
network can then sell other banking products or
services (loans, investments, insurance and management
of payment means). The same reasoning used for the
third component could be applied here: the State might
take account of the benefits, where appropriate, arising
from these loss-leader effects by reducing the amount of
the commission it pays for the collection of funds.

III. COMMENTS FROM INTERESTED PARTIES

1. The arguments of the complainants

(34)

The complainants’ arguments were presented by the
Commission in its notice on the initiation of
the
proceedings pursuant to Article 88(2) of the Treaty. The
additional written statements
then
contain the following new arguments.

submitted since

the Livret bleu assesses

(35) A paper (updated at the end of February 1999) and
communicated in October 1999 on the loss-leader effect
of
the financial advantage
obtained by this at FRF 17 billion, assuming that the
in every
increase in CrØdit Mutuel’s market
segment over the period 1986 to 1997 was exclusively
the result of distributing the Livret bleu.

shares

(36) Another paper dated May 1998 and communicated in
October 1999 assesses the loss of tax earnings for the
State at FRF 2,9 billion over the same period. In other
words this is the cost that the CrØdit Mutuel would have
had to pay if it had wished to distribute this product
without the tax exemption by offering savers the same
return after tax.

and subsequently non-permanent, branches of CrØdit
Mutuel dropped in the regions in which CrØdit Mutuel
was traditionally very strong (Pays de Loire, Brittany and
Alsace), while the number of branches in other regions
grew. It is therefore likely that CrØdit Mutuel reduced its
establishments in rural areas in order to concentrate on
urban areas. These figures appear
to refute CrØdit
Mutuel’s allegations that it was obliged to maintain a
large number of branches in rural areas in the 1990s.
They also show that CrØdit Mutuel
is capable of
maintaining an exceptionally dense network of branches
even after the removal of all controls by the authorities.

than for

(38) A memorandum produced by the Glais consultancy
dated August 2000 contains statistics concerning the
competitive advantage enjoyed by CrØdit Mutuel as a
result of the exclusive rights relating to the Livret bleu.
An examination of time series shows the total amount
of Livret bleu deposits and the total amounts of other
deposits increased considerably up until a turning point
in 1985 to 1987. The growth in loans to households
continues after that date and remains stronger for CrØdit
Mutuel
its main competitors. The Glais
consultancy expert deduces that (cid:145)the Livret bleu effect
therefore seems to have worked by attracting customers
[(cid:133)] and from the 1980s, the positive effect seems to
have continued without an increase in deposits. Thus
the customers who remained loyal appear to have been
the ones who financed CrØdit Mutuel’s expansionist
strategy from that period on(cid:146). The expert goes on to
point out
(essentially
that CrØdit Mutuel’s activities
credit activities) appear
to be unrelated to average
developments on the banking market, notably by
establishing an indicator for the persistence of random
economic crises based on activity variables and by
creating a model based on a simple equation relating to
this might be
credit demand.
In the expert’s view,
logically explained by the fact
that CrØdit Mutuel’s
customers remain much more loyal than those of other
banking networks,
the Livret
bleu.

for example because of

(37) A study conducted by the Caisse Nationale du CrØdit
Agricole submitted in May 2000 analyses developments
regarding the number of CrØdit Mutuel branches.
It
emerges that the overall number of permanent branches
fell between 1991 and 1994, and then increased
gradually to reach,
in 1998, the same level as 1990.
This trend differs according to the regions: the number
of branches fell mainly in the Pays de Loire region
(-21 %), in Normandy (-8 %) and to a lesser extent in
Nord-Pas-de-Calais (-3 %). This situation was accentuated
by the slowdown between 1994 and 1998 in the
number of non-permanent branches in the Pays de Loire
region and in Brittany, and to a lesser extent in Alsace.
The study concluded that the number of permanent,

(39)

The second memorandum by the Glais consultancy
(dated December 2000) proposed a new econometric
analysis of the degree of loyalty of each set of customers
with each banking network. The building of a model
based on real interest rates permits the establishment of
an indicator of sensitivity of credit demand to rates. The
to be
auto-regression vector model enables account
taken of adjustment periods and multiple causal
links
that may exist between the variables. Based on a very
high threshold of statistical confidence, the demand for
credit from CrØdit Mutuel is not, in absolute terms, very
sensitive to the level of interest rates (0,26), and is not
at all sensitive (0,01) to the level of rates charged by the
competition (in this case the interest rate chosen was
sensitivity
that of CrØdit Agricole). The

levels of

L 88/46

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Official Journal of the European Union

4.4.2003

obtained for the other banking networks range from
0,86 to 2,93 and from 0,66 to 3,74, with the notable
exception of
the Caisses d’Øpargne (0,37 and 0,47),
which offer the Livret A, a savings account with more or
less the same features as the Livret bleu. According to the
expert, these figures corroborate the hypothesis that the
two networks have much better means of retaining their
customers’
is
impossible to determine whether the offer of a tax-free
savings account or the use of a dense network of
branches in different regions (two instruments shared by
these networks) is the reason for the greater customer
loyalty.

loyalty than other networks do. But

it

2. Comments from interested third parties

(40)

(41)

In response to the publication in the Official Journal of
the Commission notice on the initiation of
these
proceedings, the Commission received comments from a
number of interested parties.

CrØdit Mutuel’s competitors unanimously underlined the
harm they considered they were suffering because of the
monopoly over the Livret bleu given to CrØdit Mutuel.
Most banks considered that the loss-leader effect of this
tax-free product was causing them harm by losing them
customers attracted by the Livret bleu, and they wanted
to see an end to this monopoly. The following
establishments
to the
Commission:

sent comments to this effect

Banque Dupuy, de Parseval

Banque Natexis

Banque de Picardie

Banque Populaire de Franche-ComtØ, du Maconnais
et de l’Ain

Banque Populaire du Haut-Rhin

Banque Populaire de La Loire

Banque Populaire de Lorraine

Banque Populaire de Lyon

Banque Populaire du Midi

Banque Populaire du Massif Central

Banque Populaire de l’Ouest

Banque Populaire Proven(cid:231)ale et Corse

Banque Populaire des PyrØnØes Orientales, de l’Aude
et de l’AriŁge

Banque Populaire du Quercy et de l’Agenais

Banque Populaire Savoisienne

Banque Populaire de la RØgion Economique de
Strasbourg

Banque Populaire du Sud-Ouest

Banque Populaire du Tarn et de l’Aveyron

B.P.ROP Banque Populaire

Banque de Savoie

CrØdit Commercial de France

CrØdit Commercial du Sud-Ouest

CrØdit Lyonnais

SociØtØ GØnØrale

Banque Populaire de Bourgogne

Union des Banques (cid:224) Paris.

Banque Populaire Bretagne Atlantique

Banque Populaire du Centre

Banque Populaire Centre-Atlantique

Banque Populaire de Champagne

Banque Populaire de la C(cid:244)te d’Azur

Banque Populaire du DauphinØ et des Alpes du Sud

(42) One of the complainants, the AFB, sent the Commission
a letter on 4 June 1998 stating that the 1,3 % charge
paid by CDC for funds transferred to it was excessive
and that there was no justification for the difference
between this and the 1,2 % commission paid to the
Caisses d’Øpargne on the funds collected through the
it
Livret A. The AFB points out
proposed to the French authorities at the beginning of
1997 that it would ensure the collection of Livret bleu
funds under the same conditions of channelling funds to
CDC for a charge of only 1 %, but that the Government
had not replied to this offer. The AFB underlined in
particular that the April 1998 report by Mr DouyŁre, a
member of parliament, on the modernisation of
the
Caisses d’Øpargne indicated that the cost for an average
Caisse d’Øpargne like that of Burgundy to collect savings
was 0,96 % of its total funds, and that there was no

in this letter that

4.4.2003

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Official Journal of the European Union

L 88/47

reason why CrØdit Mutuel’s management costs should
from the
be higher. CrØdit Mutuel did not
technical constraints facing the Caisses d’Øpargne which
made
(the
management of the Livret A was not yet completely
electronic in the 1990s, while management of the Livret
bleu was fully electronic).

account management more

expensive

suffer

(43) On a matter

incidental

to these proceedings,

the
Commission also received an additional statement from
the purchase by
the complainants which stated that
CrØdit Mutuel
Industriel et
in April 1997 of CrØdit
Commercial (CIC), when the latter was being privatised
(it had previously been owned by the public insurance
group, GAN), had been possible because of the aid it
had received for the Livret bleu, enabling it to increase its
market
from 2 % in 1969 to
approximately 6,9 % in 1997. According to the
complainants,
had
undertaking’s
increased rapidly because of the aid in question, rising
from FRF 650 million in 1974 to FRF 47,3 billion in
1997.

share of

savings

funds

own

the

(44)

In addition to the comments made by CrØdit Mutuel in
the
its own defence, presented under Section III.3,
Commission received comments
from the following
third parties which were in favour of the Livret bleu
system:

Mr Delevoye, Senator (Pas-de-Calais)

Mr Delnatte, MP (Nord Region)

Mr Dolez, MP (Nord Region)

Mr Ewald, Regional Delegate of
pour le Droit (cid:224) l’Initiative Economique

the Association

Mr Fronton, Union DØpartementale des Associations
Familiales de Haute-Garonne

Mr Foy, Senator (Nord Region)

Mr GaliŁgue, President of
Mutuel de Solesmes

the Caisse de CrØdit

Ms Gournay, Mayor of Caestre

Ms Armelle GuinebertiŁre, Member of the European
Parliament

Mr HervØ, Mayor of Rennes

Mr Bertholet, MP (Dr(cid:244)me)

Mr Humez, President of the ComitØ dØpartemental
de lutte contre la mucoviscidose du Pas-de-Calais

Mr Blondel, Member of the General Council of the
Nord Region

Mr Cabot, Director of
Regional Centre of Toulouse

the Youth Information

Ms Ingelaere, President of Flandr’action

Mr JuppØ, Deputy Mayor of Bordeaux

Mr Lapalu, President of the Association Animation
et Gestion d’Organismes PrivØs

Mr CormorŁche, Mayor of Montuel

Mr Lazaro, MP (Nord Region)

Mr Cornelis, Member of the General Council of the
Nord Region

Mr Lebreton, President of the Conseil GØnØral des
C(cid:244)tes d’Armor

Mr Chavannes, Mayor of AngoulŒme

Mr Ledieu, Mayor of Cateau-CambrØsis

Mr CrØpeau, MP (Charente Maritime)

Mr Debavelaere, Senator (Pas-de-Calais)

Mr Leleu, Director of CrØdit Mutuel Nord

Mr Maille, President of the CommunautØ Urbaine de
Brest

Mr Decool, Mayor of Brouckerque

Mr Masclet, Member of
Nord-Pas-de-Calais

the Regional Council of

L 88/48

EN

Official Journal of the European Union

4.4.2003

Mr MØhaignerie, President of the Conseil GØnØral
d’Ille et Villaine

branches would have, where appropriate, benefited
legally from such aid.

Mr Mio, Member of
Nord-Pas-de-Calais

the Regional Council of

Ms Novak, President of
Droit (cid:224) l’Initiative Economique

the Association pour le

(47)

CrØdit Mutuel
arguments in a detailed file dated 18 June 1998.

reiterated and expanded on these

Ms Permuy, Member of
Nord-Pas-de-Calais

the Regional Council of

(48)

Mr Albert Rivaux, Member of the Regional Council
of Pas-de-Calais

Mr de Rohan, President of the Regional Council of
Brittany

Mr Valla, Member of the General Council of the
ArdŁche Region

Mr Vanlerenberghe, Mayor of Arras

Mr Villain, Mayor of Cambrai

(49)

Mr de Villiers, MP (VendØe).

(45)

the

social

economy,

The vast majority of third parties underlined the role
played by CrØdit Mutuel, particularly at regional level, in
financing
especially
non-profit-making organisations. They also stressed the
supporting role it plays with respect to working class
people, the section of society from which most of its
local elected representatives
customers come. Several
emphasised CrØdit Mutuel’s
up
in
undertakings and creating jobs, and in developing local
in conjunction with the local authorities.
initiatives
its decentralised
Others considered that because of
structures, CrØdit Mutuel was able to meet local needs
better than centralised institutions and to respond better
to the requirement of balanced regional development.

setting

role

that

It deduced from this

CrØdit Mutuel
justified the freedom of allocation from
which it had benefited in the past in relation to one
third of the Livret bleu resources (12) by the fact that it
had paid one third of the taxation on the interest paid
to savers.
justified
excluding one third of the total amount of Livret bleu
savings from the scope of
these proceedings. CrØdit
Mutuel explained that the rule for allocating two thirds
of the total amount of savings to general interest assets
the
should be looked at
the Livret bleu
exemption from tax of
savings. CrØdit Mutuel also stated that
took into
account the risk of lack of liquidity, for instance in the
case of negative net collections (withdrawals).

from the point of view of

two thirds of

this

it

its

special

CrØdit Mutuel considered that the savings scheme in
question did not involve State resources and could not
therefore give rise to State aid within the meaning of
Article 87(1) of the Treaty. In particular it underlined
the fact that the tax advantage in question did not affect
the State budget because of
features,
mentioned earlier.
It disputed the calculations in the
Annexes to the Finance Law entitled (cid:145)Ways and Means(cid:146),
evaluating the tax cost of the partial exemption inherent
to this system and presenting an exhaustive account of
the cost for the State of the Livret bleu system. In return
for the exemption from tax of part of the group of
savers, it stated that taxation of a group not normally
liable for tax or taxed at a low level generated revenue
for the State which should be taken into account in the
net tax assessment of the mechanism, mindful of the
fact that CrØdit Mutuel had paid tax equivalent to one
third of the levy in discharge. CrØdit Mutuel stressed the
fact that, according to its estimates, the Livret bleu tax
regime for the period 1975 to 1996 had generated net
resources of [(cid:133)] for the State.

3. Comments from CrØdit Mutuel

(46)

CrØdit Mutuel sent a letter to the Commission on 11
June 1997 containing its comments in response to the
opening of the proceedings. It considers, primarily, that
conditions under which Livret bleu funds are
the
collected and managed do not constitute State aid. It
adds, alternatively, that even if it does constitute State
aid within the meaning of Article 87 of the Treaty, this
could be eligible for the exemption provided under
Article 86(2) of the Treaty. Only local CrØdit Mutuel

(50)

that

CrØdit Mutuel disputed the fact
it could have
benefited from the tax advantage of the savers since
each year it paid back to the State the deduction at
source of one third of the tax normally applicable, so
that the real rate of the Livret bleu before tax was in fact
the nominal interest rate received by savers plus the tax
deducted at source by CrØdit Mutuel. CrØdit Mutuel
stated that it had paid back some [(cid:133)] to the State in
this way between 1975 and 1996.

(12) From 1983; this proportion was slowly reduced as of 1991.

4.4.2003

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Official Journal of the European Union

L 88/49

(51)

(52)

(53)

that

In the event
the Commission decided that aid
existed, CrØdit Mutuel would also dispute the fact that
trade between Member States had been affected.
According to CrØdit Mutuel, this was a product which
accounted for only 5,8 % of savings collected in France
and 0,72 % in Europe. CrØdit Mutuel was an operator
whose size was very relative. Given the absence of a
European cooperative company statute,
local branches
were unable to operate outside France. The opening of
Livret bleu accounts for non-residents represented only a
small number of accounts in 1997, roughly 8 600, or
0,16 % of total Livret bleu savings. In any case, CrØdit
Mutuel stated, before the implementation of the second
Banking Directive (13) in 1993, the fact that the internal
banking market was not completed was a barrier to
trade.

(55)

CrØdit Mutuel disputed the earnings lost by the State
because of the absence of invitations to tender which
had resulted in it being granted exclusive rights to
distribute this product (compared with the situation in
which an invitation to tender would have allowed the
State to select an institution providing the same service
at a lower cost). It emphasised that, once the State had
decided to have resources collected by means of the
system in question for use in a general interest task, it
was free to appoint CrØdit Mutuel for this purpose since
its network corresponded to the conditions of collection
required in order to exploit savings by the general
public.

CrØdit Mutuel considered that the difference between the
commission of 1,2 % paid by CDC to the Livret A
savings banks and the 1,3 % commission paid to CrØdit
Mutuel for the Livret bleu (this was also paid by CDC)
could be explained by economy of scale, given the total
amount of Livret A savings (14). Based on the analytic
accounting figures it had presented to the Commission,
it could be concluded that the average cost of managing
Livret bleu deposits had dropped by [(cid:133)] in 1993 to [(cid:133)]
in 1997, and that before 1997,
it had remained
permanently higher than the commission margin of
1,3 % which CDC paid it for the transferred funds.

1 %, should be assessed in the light of the choice made
by banks depending on the amount of the deposits in
these accounts. This refusal of cost equalisation by AFB
banks would undermine
the overall management
balance of the system.

a

for

the

that

sent

report

CrØdit Mutuel
to the Commission
containing an analysis of the analytical accounts of the
Livret bleu system. This analysis concluded,
the
period 1991 to 1997,
collection and
management of the Livret bleu savings had generated
higher costs than the income received, and that
the
system was in balance only in certain years. CrØdit
Mutuel concluded that, apart from 1991 to 1992, the
margin on the Livret bleu was lower than the margin it
the
achieved on its other activities.
Commission an auditor’s certificate concerning this
analysis issued by a French auditing firm, Mazars et
GuØrard.

It also sent

(56)

CrØdit Mutuel disputed the fact
it could benefit
from a commercial advantage through the Livret bleu
since:

that

number

the bank’s

customers managed

(cid:151) the gains in CrØdit Mutuel’s market shares during
the period concerned could be explained by its
performance, notably its high level of productivity,
the Livret bleu,
and not by the attractiveness of
whose share of
resources had been
dropping over time. CrØdit Mutuel stated that the
per
of
average
employee was 364 at the CrØdit Mutuel
in 1996
compared with 150 in other
French credit
institutions. From 1991 to 1997, CrØdit Mutuel
increased its share of the savings market by 1,1 %,
while the other banks lost a market share of 0,6 %.
CrØdit Mutuel emphasised the fact that the Caisses
d’Øpargne, which had a comparable product in the
Livret A, had,
like the other banks, experienced a
drop in their share of the savings market during the
period under review. This refuted the causal
link
established by the complainants between the Livret
bleu and the increase in CrØdit Mutuel’s market
share,

(54)

CrØdit Mutuel considered that the argument by the AFB
banks that the Livret bleu savings could be collected at a
lower cost, for an intermediation commission of only

(13) Council Directive 89/646/EEC (OJ L 386, 30.12.1989, p. 1).
(14) The total Livret A funds collected by the Caisses d’Øpargne are
approximately seven times greater than those of the Livret bleu.

(cid:151) other regulated savings products such as the Codevi
(industrial development accounts) introduced by the
authorities in 1983, the Plan d’Epargne Populaire
and the Livret Jeune, were distributed by the banks
and represented a real alternative to the Livret bleu,
the various possibilities
to such an extent

that

L 88/50

EN

Official Journal of the European Union

4.4.2003

(57)

(58)

(59)

offered by these products permitted,
in 1997, a
single person of over 25 years of age to accumulate
tax-free savings of FRF 1 130 000 (compared with
the ceiling of FRF 100 000 on the Livret bleu).

CrØdit Mutuel stated that the attraction of the Livret bleu
had had the effect of reducing considerably the amount
of deposits on current accounts on which the bank did
not pay interest, and which in 1997 represented 15,8 %
of its deposits compared with 36,6 % to 40,8 % for its
main competitors. This substitution had, it stated, had a
negative effect on its profitability and margins, so that
the average cost of deposits with CrØdit Mutuel was
significantly higher than with the AFB banks.

that

the entire
CrØdit Mutuel also disputed the fact
CrØdit Mutuel group had benefited from aid,
in the
event that it was decided that aid had been granted. It
stressed that it was only the local branches, which were
legally independent, which distributed the Livret bleu and
which might therefore have benefited from aid.

CrØdit Mutuel considered that by adopting the legislative
measures (15)
introducing the Livret bleu in 1975, the
Government had established a general
interest system
from the general public for
for collecting savings
allocation to general
financial assets. CrØdit
interest
Mutuel’s network in rural areas and the extent of its
modest-income customers had,
in its view, played an
important role in this choice. In 1998, 58 % of CrØdit
Mutuel’s customers lived in municipalities of under
20 000 inhabitants and 77 % declared a net monthly
income of under FRF 10 000.

(61)

Therefore CrØdit Mutuel would make
savings
estimated at FRF [(cid:133)] million per year. CrØdit
Mutuel estimated that managing small accounts
resulted in a surcharge of [(cid:133)] of the total amount
contained in them, given their features, and mindful
of the fact that the lower the balance, the greater
the number of book entries,

(cid:151) until 1991, the opening of branches was regulated,
so that CrØdit Mutuel could not develop in the most
attractive areas, outside its own traditional areas of
establishment (the East, the North and Brittany),

(cid:151) CrØdit Mutuel also pointed out, rather vaguely and
that
relating to Livret bleu general

without using figures to support
other
interest assets should be taken into account,

this thesis,

surcharges

(cid:151) lastly, CrØdit Mutuel said that there was a risk of
transformation to be borne by it because of the risk
of a variation of the margin between the short-term
rate (which is
regulated) applied to Livret bleu
resources and the medium and long-term rates
applied to the assets.

information, CrØdit Mutuel

that,
Based on this
without the Livret bleu,
it would have been unable to
perform the general interest tasks required of it. It stated
that the share of the Livret bleu funds which it could use
freely had enabled it to balance the system, given the
insufficient margins achieved on general interest assets.

felt

(60)

CrØdit Mutuel underlined the constraints to which it had
been subjected:

(cid:151) the State had,

it argued, obliged CrØdit Mutuel to
maintain [(cid:133)] branches in municipalities with under
2 000 inhabitants, the cost of which was estimated
at FRF [(cid:133)] million per year,

(62)

CrØdit Mutuel also expressed its legitimate confidence in
a system that dated back to 1975. It considered that the
length of the investigation of a complaint, going back to
1991, was likely to violate this legitimate confidence.

(cid:151) it had to maintain (cid:145)special Livret bleu accounts(cid:146),
whose management costs were higher
than the
1,3 % commission paid by CDC. If these accounts,
which contained an average low amount, had been
closed, [(cid:133)] of the Livret bleu accounts representing
the total savings might disappear.
only [(cid:133)] of

(15) Law No 75-1242 of 27 December 1975, 1975 Amending Finance

Law, Article 9.

(63)

In a note dated 13 December 2000, CrØdit Mutuel
criticised the method followed in the first memorandum
issued by the Glais firm. It stressed that other reasons
could explain the statistical phenomena observed, such
as the fact that CrØdit Mutuel had a denser network
than its competitors at
the period
under review (in terms of NBP per branch). It pointed
out that between 1987 and 1998 CrØdit Mutuel had

the beginning of

4.4.2003

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Official Journal of the European Union

L 88/51

won a smaller market share than CrØdit Agricole (whose
balance sheet was smaller), and that CrØdit Mutuel had
gained two points on the lending market compared
with four points for all the AFB banks (which in fact
confirmed CrØdit Mutuel’s spectacular expansion).

put

account

(64) A note dated March 2000 issued by CrØdit Mutuel Midi
the
Atlantique emphasised the arbitrary nature of
analytical
the
by
figures
forward
Commission’s consultant:
the quantitative data were
assessed in a contradictory way, and the qualitative data
(cost of maintaining the network in rural areas and
loss-leader effect) were difficult to gauge. CrØdit Mutuel
confirmed that it agreed with the general introduction
of the Livret bleu, in other words its distribution by the
other banking networks, but it was against the idea of
any refund of aid, which it deemed would penalise over
five million members.

IV. COMMENTS FROM THE FRENCH AUTHORITIES

(65)

(66)

that

instance,

in the first

In their letter of 8 April 1998, the French authorities
considered,
the Livret bleu
system did not involve any substantial tax cost for the
State, as the latter had opted for uniform taxation of the
depositors of one third of
the levy in discharge on
savings revenue,
thereby waiving the remaining two
thirds of the levy in discharge but collecting, on the
other hand, this one third from a group that is normally
liable for tax. On this basis they disputed that
not
Article 87(1) of the Treaty could be applied in any way
because of the absence of State resources allocated to
the system in question.

The French authorities also stressed the fact that the
intermediation commission paid by CDC to CrØdit
Mutuel on the total Livret bleu funds channelled to it did
not constitute aid, but rather remuneration for a service
rendered by the bank, the price of which had been set
in 1991 at 1,3 %. They underlined the extent of the
the
management costs for the Livret bleu because of
number of accounts whose totals were under FRF
5 000. They referred to the analytical account analysis
produced by CrØdit Mutuel, concluding that this amount
was fully justified.

(68)

(69)

cooperative company statute and the constraints that
the crossborder
this situation produced in terms of
expansion of cooperative companies such as CrØdit
Mutuel, CrØdit Mutuel’s branches did not operate across
national borders. Moreover,
the Livret bleu accounts
opened for non-residents represented less than 0,1 % of
the total savings. The authorities also stated that foreign
banks in France were targeting a very different market
to that of CrØdit Mutuel. They therefore disputed any
possibility of intra-Community trade being affected by a
measure contrary to the common interest.

interest

financial

economic

The French authorities emphasised that the advantages
which CrØdit Mutuel received from the Livret bleu should
be examined in the light of the costs connected with a
general
task. They pointed in
particular to the increasing allocation of the Livret bleu
funds to general
interest assets: the fraction
rose successively from 50 % of Livret bleu funds between
1975 and 1983 to 65 % between 1983 and 1991. They
funds
pointed out
these
agreed with CrØdit Mutuel
funds would be allocated to general financial
interest
assets from 2000. They Stated that they intended to
speed up the implementation of the 1991 Agreement so
that the Livret bleu funds could be allocated for this
purpose earlier than envisaged, from the end of 1998.

following the allocation of
in 1991, 100 % of

that

The French authorities also stressed that while the
opening of bank branches had been liberalised in the
the banking sector on 24 November 1986,
rest of
CrØdit Mutuel had remained subject
to a system of
administrative authorisation up until 1991 because of
the decision by CNC (Conseil national du crØdit) on 10
January 1967. It was not until 1 July 1991 that the
obligation for CrØdit Mutuel
to obtain authorisation
from the ComitØ des Øtablissements de crØdit prior to
opening, modifying,
any
branches had been abolished. The French authorities
considered that until 1991, the constraints relating to
the geographical distribution of CrØdit Mutuel outside
the major cities was based on a political decision by the
authorities and had resulted in delayed development in
urban areas.

transferring

closing

or

(67)

The French authorities disputed that trade could have
been affected before the completion of the single market
and financial
in banking
the
activities
adoption of
the second Banking Directive on 15
December 1989 and its incorporation into French law
on 1 January 1993. The French authorities considered
that, after that date, given the absence of a European

following

(70)

the

elements,

French authorities
Based on these
concluded that CrØdit Mutuel did not receive any State
aid for the Livret bleu, and, alternatively, in any case such
aid, where appropriate, should be declared compatible
with the Treaty pursuant to Article 86(2) because of the
interest tasks assigned to CrØdit Mutuel. They
general

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underlined the legitimate confidence shown in CrØdit
the complaint with the
Mutuel until
Commission in 1991.

the lodging of

1. The distortion of competition and the effect on
trade between Member States

(71)

(72)

(73)

(74)

(75)

introduced

amendment

In a note sent on 1 February 2001,
the French
authorities unambiguously stated, with regard to the
regulatory
the
Decision by the Conseil d’Etat on 5 January 2000, that
alignment with this Decision did not result
in any
change
in the Livret bleu taxation system. Savers
continued to receive the same net interest rate as for the
Livret A. CrØdit Mutuel continued to pay the levy in
discharge to the public revenue department.

following

Lastly, the French authorities explained that transfer to
CDC of all the funds collected via the Livret bleu had
been made official
in a Protocol dated 31 December
1998 between the Minister of Finance and the President
of the ConfØdØration nationale du CrØdit Mutuel, and
had been fully implemented by 31 March 1999.

Finally, in a note dated 26 October 2001, the French
authorities rejected the description of State funds in
relation to general interest assets, considering that the
condition of trade being affected was not fulfilled before
the Second
the incorporation into French law of
Banking Directive, and that aid introduced in a market
originally closed to competition should be regarded as
existing aid. They also reiterated the figures produced by
CrØdit Mutuel and by Arthur Andersen.

1.1. The effect on trade since 1975

(76)

activities

In 1979, the market share of foreign banks was 8 % for
credit activities (4 % for branches without legal status,
and 4 % for subsidiaries incorporated under French law),
and 4,5 % for deposit
(2 % and 2,5 %
respectively). The share of non-French European banks
compared with all foreign banks was 50 % for credit
and 70 % for savings deposits. These shares changed
very little between 1975 and 1979 (16). CrØdit Mutuel
therefore faced competition from foreign networks in
France from the 1970s. The number of banks in Paris
under foreign control has increased rapidly since 1968,
rising from 47 banks to 86 in 1975 and to 111 in
1979.

(77) According to established case-law, the effect on trade is
regarded as sufficient if the position of the undertaking
has been strengthened compared with its competitors in
is not
the context of
the beneficiary to have an exporting
necessary for
operation: aid to the national undertaking is likely to
reduce the export opportunities for undertakings in
other Member States (18). Several indicators show that
the effect on trade is present in this case.

intra-Community trade (17).

It

V. ASSESSMENT OF THE COMPENSATION MEASURES

(a) T h e n e e d t o t a k e a c c o u n t o f a l l t h e

a c t i v i t i e s o f C r Ø d i t M u t u e l , p a r t i c u l a r l y
c r e d i t a c t i v i t i e s

out

point

The Commission would
under
established case-law of the Court of Justice, aid must be
appraised on the basis of
its effects. Before drawing
conclusions as to the nature of the aid in the measures
examined, the effects of the system on the results of
CrØdit Mutuel must be studied.

that,

Several conditions must be met if a measure is to be
defined as State aid: the aid must be granted by the
it must confer a
State or using State resources;
competitive advantage on the beneficiary undertaking;
and it must have an effect on intra-Community trade.
The last point will be examined first before going on to
analyse
the aid will be
evaluated.

the other points. Lastly,

(78) Until 1999 CrØdit Mutuel had the possibility of using
part of the Livret bleu deposits for very diverse banking
activities. The distortion of competition is not, therefore,
confined to the deposits market, but also concerns at
the credit market. The information which the
least

(16) The 1979 figures of

the French Commission de contr(cid:244)le des
banques (Banking Supervisory Committee) are used as this was the
first year for which detailed figures on foreign banks are available.

(17) Case 730/79 Philip Morris v Commission, [1980] ECR p. 2671.
(18) Joined cases C-278/92, C-279/92 and C-280/92 Spain

v
Commission [1994] ECRI-4103. Moreover, this statement is not
affected by the fact that the aid is relatively low, by the small size
of
the beneficiary or by the latter’s small Community market
share, or even by the absence of exporting activity by the
beneficiary or the fact that the undertaking exports almost all of
its products outside the Community.

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Commission obtained essentially relates to the end of
the 1980s and the 1990s. In 1975, operations involving
CrØdit Mutuel’s assets seem to be essentially loans and
purchases of State securities. The funds collected via the
Livret bleu played an important role in the development
of CrØdit Mutuel’s credit operations. The Livret bleu funds
enabled CrØdit Mutuel to grant loans of an identical
volume to that of the funds collected. As the growth in
the funds collected was very rapid in the second half of
the 1970s, the Livret bleu accounted for 60 % of total
deposits until the mid-1980s. The Livret bleu enabled the
bank to expand its offer on the credit market once
competition with foreign banks had been introduced.

(b) T h e c r i t e r i o n o f p a r t i a l l i b e r a l i s a t i o n o f

c a p i t a l m o v e m e n t s

(81)

(79) With regard to the deposits market,

transfers

information,

that payment

it is worthwhile
pointing out
and capital
movements were possible and in fact even standard
practice (for instance for immigrant workers) before the
incorporation into French law of Council Directive
88/361/EEC (OJ L 178, 8.7.1998, p. 5), which fully
the
capital movements. According
liberalised
Commission’s
capital
movements was liberalised in France as of 1968 (19).
From 1975, French residents could, and did, lodge funds
abroad. The rules apparently provided for a system of ex
ante administrative declarations to the Bank of France,
which was temporarily tightened up as of 1981 because
of the flight of capital. It was more or less abolished in
1986 (20). Residents of other Member States could
deposit
bleu
in France, notably
accounts (21).

control of

in Livret

funds

the

to

liberalisation of

refers to (cid:145)full
liberalisation(cid:146) (recital 7). Case-law shows
and
the
that
payments was from the outset closely linked to freedom
of movement of persons, goods and services and
freedom of establishment (23).

capital movements

(c) T h e e f f e c t o n t r a d e b e t w e e n M e m b e r

S t a t e s i n t h e a b s e n c e o f l i b e r a l i s a t i o n

the level of

the measure was

effect on trade between Member States was
The
recognised by the Court even in the absence of
liberalisation of the market, as can be seen from the
in the Van Eycke (24) case concerning a
judgment
national regulation dating from 1983 and 1986 which
interest rates for certain
in practice set
categories of savings deposits entitling the holder to tax
benefits. The Court did not rule out the possibility of an
infringement of Article 85, based implicitly on the fact
that
likely to have an effect on
intra-Community trade within the meaning of Article
85 of the Treaty. The Community system applicable was
that of the first Council Directive of 11 May 1960, and
not Directive 88/361/EEC. This
is
confirmed in the conclusions of Advocate General
Mancini: in reply to the complainant who invoked the
absence of effects on trade,
the Advocate General
pointed out that (cid:145)there is no doubt that the banking
sector is subject to the rules of competition(cid:146) (paragraph
3).

interpretation

(80)

Community law concerns the liberalisation of certain
capital movements and payments. The first Council
Directive applying Article 67 of the Treaty refers to the
liberalisation of capital movements as soon as possible.
This Directive, and the following ones amending it (22),
have
movements
unconditionally to the extent that Directive 88/361/EEC

liberalised

gradually

these

(19) With the Decree of 4 September 1968 on freedom of financial

relations with other countries.

(20) With regard to currency outflows shown as capital transactions on

the balance of payments.

(21) This concerns a very small group of savers, since the main
advantage of the product is the tax exemption, and non-residents
will have their financial centres in France in exceptional cases
only, and are therefore taxed in France in exceptional cases only.
(22) Council Directive 63/21/EEC (OJ 9, 22.1.1963, p. 62/63),
85/583/EEC (OJ L 372, 31.12.1985, p. 39) and 86/566/EEC (OJ L
322, 26.11.1986, p. 22).

(82) Mention might

a prior

case,
also be made of
Z(cid:252)chner (25), in which a national court wanted to know
whether bank charges on a cheque drawn on 17 July
1979 on a German bank in favour of a beneficiary
living in Italy might be contrary to Article 85 of the
Treaty. The Court refused to rule out the application of
the rules of competition because of Article 90(2) and
Article 104 et seq. of the Treaty, thus taking the view
that this practice was liable to have an effect on trade.

(23) For instance, see Case 15/78 Koestler [1978] ECR 1971, Case
203/80, Casati [1981] ECR 2595, Joined Cases 286/82 and 26/83
Luisi et Carbone [1984] ECR 377, Case C-484/93 Svensson and
Gustavsson [1995] ECRI 3955, and Case C-222/95 Parodi [1997]
ECR I-3899.

(24) Case C -267/86 Van Eycke [1988] ECR 4769.
(25) Case 172/82 Z(cid:252)chner [1981] ECR 2021.

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(83) As long ago as the second report on Competition Policy
the
published in 1972 (paragraphs 50 to 53),
Commission confirmed that
the rules of competition
applied in principle to the banking sector. The report
stated that the Commission had already examined a case
involving banking in the light of Article 85 and that it
was in the process of examining European cooperation
agreements
different Member
banks
States (26).

between

in

(84)

If all of these cases involved an effect on trade within
the meaning of Article 85, it may be deduced that there
was also an effect on trade pursuant to the rules on
State aid.

(88)

1.2. The completion of liberalisation of the banking sector in
the European Union since the end of the 1970s and the
strengthening of competition

(85) While the completion of the internal market dates from
it should be
the Second Banking Directive of 1989,
noted that the market began to be gradually liberalised
and competition gradually strengthened as of the 1970s.

(86)

The complete liberalisation of the single banking market
in the European Union was achieved over a period of
more than 30 years. The First Banking Council Directive
77/780/EEC (OJ L 322, 17.12.1977, p. 30) established
the first rules on the coordination of national laws and
regulations relating to the taking-up and pursuit of the
business of credit institutions in other Member States. It
must be pointed out that freedom of establishment of
subsidiaries already existed in the European Community
countries, and most large banks had subsidiaries abroad,
as well as branches without legal status (even in the
absence of uniform regulation at EU level). The
subsidiaries and branches in France of other European
Union countries were thus in a position to suffer from
unfair competition from CrØdit Mutuel before the date
of the entry into force of the first and second Banking
Directives.

(87) A decisive stage in the completion of the single banking
taken with the liberalisation of capital

market was

(26) The Eighth Report, published in 1978,

(paragraphs 32 to 37)
states that the rules of competition had already been applied in
cases relating to traveller’s cheques in Belgium, Eurocheques in
France and in the Sarabex case (concerning the Foreign Exchange
and Current Deposit Brokers’ Association). The European
cooperation agreements mentioned in 1972 are referred to once
again. In a table on page 36 of the report, 40 banks are listed,
including five French banks (Banque Nationale de Paris; SociØtØ
GØnØrale; CrØdit Lyonnais; CrØdit Commercial de France and
CrØdit Agricole).

In the past

flows of deposits

In practice,
cross-border

movements in Directive 88/361/EEC, to be incorporated
into national law by the Member States by 1 July 1990
this measure considerably
at
the latest.
and
increased the
investments.
flows were
if only by means of
controlled by the authorities,
exchange controls. France incorporated into national
law the Directive on the
capital
movements in Decrees 89-938 and 90-58, which came
into force on 30 December 1989 and 16 January 1990
respectively. The exchange control introduced in 1981
was abolished in 1986.

liberalisation of

these capital

of

of

July

branches

1992 with

France
the

in
second

in the banking sector was
Freedom of establishment
the
completed
in
incorporation
Banking Directive
89/646/EEC (27). Article 6(2) of the said Directive states
that (cid:145)host Member States may not, as a condition of the
institutions,
authorisation
authorised in other Member States,
initial
endowment capital exceeding 50 % of the initial capital
required by national rules for the authorisation of credit
institutions of the same nature(cid:146) (28). This measure was
to be incorporated by 1 January 1990 at the latest. The
Council thereby intended to prevent any attempt by a
Member State from restricting freedom of establishment
of a branch by unfair regulations after 1990.

require

credit

of

(89)

The result is that gradually, and in particular from 1990
on, the effect on trade of aid granted to a banking
establishment became extremely serious (29), since any
bank could perform banking activities in the other
Member States through the establishment of branches
to authorisation) or by providing
(no longer subject
services freely across borders.

1.3. The position of CrØdit Mutuel on the French banking

market

(90)

The Commission examined the arguments put forward
by CrØdit Mutuel on limited local competence of the
local CrØdit Mutuel branches and the absence of an
impact on trade arising from this system. It points out,

(27) This Directive was incorporated into French law by Law 92-665
of 16 July 1992 (JORF (French National Gazette) of 17.7.1992, p.
9576) and Regulations 92/11-12-13-14 of 23 December (JORF of
9.1.1993, p. 512).

(28) This was even before the actual abolition of authorisation by the
host country of bank branches authorised in other Member States
provided for under Article 6(1) of
(to be
incorporated by 1 January 1993 at the latest).

the Directive

(29) See, among others, the Commission Decisions concerning CrØdit
Lyonnais, Banco di Napoli, Banco di Sicilia, SociØtØ Marseillaise de
CrØdit and Westdeutsche Landesbank.

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however, that CrØdit Mutuel is a group with legal status
and consolidated accounts, which also enjoys internal
financial solidarity in the form of
the confederation,
which ensures the liquidity of the regional federations. It
points out that the group has considerable own funds
which facilitates its access to capital markets and that
the rating agencies give it an overall group rating. It
states that each local branch did not reply,
in the
context of these proceedings, but
that CrØdit Mutuel
sent it a single reply. Neither the Commission nor the
the
main financial partners of CrØdit Mutuel nor
financial markets had any doubt that CrØdit Mutuel was
an undertaking that could reallocate within its structure
any aid paid to a particular internal group entity.
It
noted that, given its size (cid:151) it being one of the biggest
institutions (cid:150) CrØdit Mutuel was in a
French credit
position to finance itself or to invest its funds on the
financial markets.

(93)

(91)

cost of

the net

in recent

years. Any

introduces an obligation which limits

is a going concern that has made
CrØdit Mutuel
excess
considerable profit
compensation for
collecting and
managing general economic interest tasks would enable
it to increase its profit and to accumulate additional
own funds. The constraint of solvency (in the financial
market economy) laid down in the European banking
rules (30)
the
growth capacity of credit institutions. Any operating aid
represents a considerable lever in overcoming these
constraints, in that it increases own funds. Because of
these constraints on solvency,
it is easier to ascertain
that a distortion of competition has taken place in the
case of aid granted to credit institutions. If the direct or
indirect effect of the aid is to increase own funds, then a
distortion of competition can be reflected in the
increased activity of the bank.

of the Livret bleu and has had an increasing effect of
sector.
in
distorting
Consequently it must be considered that the potential
aid was new aid when introduced in 1975.

competition

financial

the

2. Definition of State resources

is

It is settled case-law that the concept of State aid means
any advantages serving from State resources granted by
the authorities to an undertaking, provided that
this
fully or partly granted without any
advantage
financial consideration in return, in other words granted
without any remuneration or subject to a remuneration
that does not
the price at which the said
advantage might be assessed. This definition therefore
covers the allocation of resources to an undertaking, the
reduction of charges that it should normally have to pay
or any other advantage that enables the undertaking to
make savings that influence its production costs (31).

reflect

(94) Under EU case-law, only advantages granted directly or
indirectly from State resources are to be regarded as aid
within the meaning of Article 87(1). The Commission
must check first
to see from which State resources
CrØdit Mutuel may have benefited: (1) the tax advantage
accorded to savers, (2) the fund collection commission
paid by CDC, (3) the revenue from the general interest
assets, and (4)
the possible advantages and costs
indirectly linked to the Livret bleu system.

1.4. Conclusion

2.1. Tax exemption

(92) Given the nature of the potential aid granted to CrØdit
the economic
Mutuel as operating aid as well as
situation in the European banking sector and the
solvency constraints specific to the banking sector, this
aid has had an effect on trade from the entry into force

(95)

The system in force until the end of 1999 contained a
derogation from the general system of
taxation on
savings. Normally this allowed savers to choose between
a gross interest rate with the financial revenue being
included in their taxable income, or an interest rate net
of the levy in discharge (deducted at source).
In this
particular case, since no levy was applied to CrØdit
Mutuel, it theoretically assumed responsibility for paying
a tax equal to one third of the levy in discharge.

(30) The basic level of own funds is set at a minimum of 4 % of
weighted assets, while that of own funds in the broad meaning of
the term is a minimum of 8 %. Cf. Council Directive 89/647/EEC
of 18 December 1989 concerning a solvency ratio for credit
institutions (OJ L 336, 3.12.1989, p. 14).

(31) Case 30/59 De Gezamenlijke Steenkolenmijnen in Limburg v High
Authority [1961] ECR3; English special edition 1961, p. 1, Case
61/79 Denkavit italiana [1980] ECR 1205 and Case 387/92 Banco
exterior de Espana [1994] ECRI-902.

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(96)

rule and not

The reduction of the tax to one third of the normal levy
in discharge means that the system involved the use of
State resources and the adoption of a more favourable
regime for savers compared with the norm. The system
involves an expense for the State since the latter could
perhaps have obtained more tax resources had it chosen
to apply the general
the
compulsory levy to one third. This aid appears to
benefit individual consumers directly and not the bank,
therefore it cannot be said that CrØdit Mutuel
is the
direct beneficiary of the tax aid. However, this tax aid,
having a social character, is associated with a product
distributed by only one player, CrØdit Mutuel. Therefore
the aid does not satisfy the condition of compatibility
laid down in Article 87(2)(a) of the Treaty, which states
that aid is granted (cid:145)without discrimination related to the
origin of the products concerned(cid:146) (32).

to limit

allocating 50 % of resources (this proportion was later
increased to 65 %) to general interest assets (notably the
financing of local authorities and other public bodies),
with the balance being left to the bank to dispose of it
freely. It is worthwhile noting that CrØdit Mutuel had no
obligation relating to financing conditions involving the
funds at its disposal, for instance as regard interest rates.
As of 1991, a growing part of the funds was allocated
to the financing of public housing by channelling the
funds to the Caisse des DØp(cid:244)ts et Consignations (CDC).
All the savings funds are now transferred to CDC. The
latter pays CrØdit Mutuel a commission corresponding
to the gross interest rate fixed by the authorities passed
on to savers, plus an intermediation commission of
1,3 %. Since CDC is a public enterprise that receives
interest tasks, the
State resources to perform general
fund collection commission must be regarded as a State
resource. The interest is paid to the savers, hence CrØdit
Mutuel receives this commission only. This commission
forms an integral part of the public service entrusted to
CrØdit Mutuel, and is therefore attributable to the State.

(97) With respect to the payment by CrØdit Mutuel of a tax
set at one third of the normal levy in discharge, it might
be considered legitimate for CrØdit Mutuel to record the
amount of this in the costs linked to the Livret bleu
system. However,
the conclusions in the Council of
State judgment of 5 January 2000 stating that the tax
system in force is illegal explicitly confirm the fact that
CrØdit Mutuel in practice benefited as of 1991 from the
(cid:145)cancellation(cid:146) of the taxes to which interest received on
Livret bleu accounts is subject, in other words the State
or CDC refunded the levies in discharge paid by CrØdit
Mutuel. This means that all the interest on Livret bleu
accounts, and not just two thirds of it, was exempt, at
least dating from the decree of 27 September 1991
concerning the transferred funds.

2.3. The income from the general interest assets

2.2. The general interest service entrusted to CrØdit Mutuel

(99)

(98)

CrØdit Mutuel was entrusted with the task of distributing
the Livret bleu, a task to which strict prerogatives and
constraints pertained. The prerogatives consisted of the
exclusive distribution of the Livret bleu and the payment
fund collection commission by CDC. The
of
obligations concerned the use of
the funds collected
through the Livret bleu. These obligations changed over
initially CrØdit Mutuel had the obligation of
time:

a

(32) In this case, tax aid to consumers is granted only to savers with a
Livret bleu account at CrØdit Mutuel (or with Livret A accounts at
the Caisses d’Epargne et de la Poste).

The general
interest assets listed exhaustively in the
Decree of 1 March 1976 consisted mainly of loans to
local authorities and subscriptions of securities issued or
guaranteed by the State (for instance government bonds)
and loans to public housing management bodies. Based
on the information received, the compulsory nature of
these assets combined with the fact that the rates had
been regulated by the State and were not
freely
determined by the market, means that there are grounds
for considering that the general interest assets form an
integral part of
It will be
demonstrated below that these compulsory conditions
enabled CrØdit Mutuel
to achieve very considerable
profits on these funds. The definition of general interest
task was amended in the Decree of 27 September 1991:
the assets covered are now exclusively loans to finance
social housing and the allocation to the CDC (see the
transfer of deposits mentioned above). But it was only
these new tasks
very slowly during the 1990s that

the Livret bleu system.

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replaced the old ones: only the new funds collected
were immediately fully allocated to these new tasks as
of 1991.

4.1. Procedures for taking into account all income and

expenditure linked to the total Livret bleu funds

3. The competitive advantage

(100)

If the compensation received by CrØdit Mutuel for the
taking the form of a fund collection
public service,
commission paid by CDC, exceeds the net costs arising
from the public service (mindful of all the costs and
benefits relating to the provision of the service), CrØdit
Mutuel benefits
from a competitive advantage over
other banks since it receives additional resources that
are not granted to other banks.

4. Assessment of the amount of State aid

(101) Since the French authorities have invoked the existence
of a general economic interest task linked to the Livret
bleu system, the Commission must focus on obtaining a
balance of the income and expenditure linked to the
performance of
this service in order to determine a
justifiable level of compensation paid by the State.

(102) Firstly, the procedures for taking into account all the
income and expenditure relating specifically to the Livret
bleu are explained. Secondly, the principles underlying
the CrØdit Mutuel
system are
analytical
described. Thirdly, the remaining points of disagreement
between the experts are decided by the Commission
while, fourthly, the results of the accounts relating to
the Livret bleu system are given, after taking into account
the abovementioned expenditure and income.

accounts

(a) T h e b a l a n c e o f i n c o m e a n d e x p e n d i t u r e
l i n k e d t o t h e t o t a l L i v r e t b l e u f u n d s

(103) The financial mechanism relating to the CrØdit Mutuel
Livret bleu system must be assessed from the point of
view of the overall economy of this savings system, in
other words account must be taken of all the costs and
the
benefits arising from the system,
benefits drawn directly from the use of
the funds
collected from the distribution of a tax-free savings
product of this kind.

in particular

(104) To make it easier to analyse the direct effects, it is useful
to recall some of the CrØdit Mutuel accounting elements
of the Livret bleu system. Three types of assets stand
back to back to the total amount of Livret bleu savings
(featured on the liabilities side):

(cid:151) the funds transferred to CDC (in line with the

provision on channelling funds to CDC),

(cid:151) the general interest assets,

(cid:151) the assets left to CrØdit Mutuel.

With regard to the liabilities side of the balance sheet,
the system is characterised by State regulated interest
charges (revisable fixed rates, hence not very volatile),
while on the assets side the main features are variable
interest rate income on general
interest assets and on
to CrØdit Mutuel, and the fixed fund
the assets left
collection
2
paid
summarises briefly the main elements in the Livret bleu
profit and loss account.

commission

by CDC.

Table

(105)

Table 2

Outline of the Livret bleu profit and loss account

Livret bleu profit and loss account

Expenditure

Income

CDC commission (3 % (a) + 1,3 %)

Net interest on Livret bleu (3 % (a))

Margin on general interest assets (var.)

Margin on CM assets (var.)

(a)

In July 2001.

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(106) The Commission analysed the system as a whole to
assess the general economic advantages obtained by
CrØdit Mutuel
through the Livret bleu. First the State
grants a fund collection commission to CrØdit Mutuel
via CDC for the provision of
the collection service.
Account must also be taken of the economic advantages
other than the CDC commission that CrØdit Mutuel
obtains from the Livret bleu.

part of
the obligations imposed by the State in the
context of the Livret bleu system. It should also be noted
that excluding some assets that are profitable would be
absurd: the State would have to compensate for losses
made by some assets, even though sufficient profit was
being made from other assets within the Livret bleu
system, which is not taken into account.

the costs

commercial margin) by CrØdit Mutuel

(107) Should the amount of the financial advantages which it
is possible to evaluate in accounting terms (collection
commission plus income from management) exceed,
incurred (including a
where appropriate,
normal
in
collecting and managing the deposits, the State would
authorise
of
compensation
distributing the Livret bleu through an excessively high
collection commission. To arrive at this evaluation, it is
essential to take into account all the financial advantages
of distributing the Livret bleu, as well as all the income
and expenditure linked to this system and to the assets
and matching liabilities, for two main reasons.

excess

cost

the

of

(108) (cid:151) Firstly, the Court has ruled that aid must be assessed
on the basis of its effects. It must be pointed out
that the Livret bleu generates income which is not
limited to the revenue from the general
interest
assets or the funds transferred to CDC. The Livret
bleu deposits have enabled CrØdit Mutuel to obtain
resources under more advantageous conditions than
would have been possible if it had simply obtained
refinancing on the financial markets, and to obtain
for compulsory
profits by using this
general interest assets or for assets freely chosen by
it (33). The State has a duty to reduce the amount of
the resources it pays for the performance of this
service if CrØdit Mutuel draws benefit from it in
other ways.

resource

(109) The income from the general

interest assets must be
taken into account in any case since it forms an integral

(33) In other words,

if CrØdit Mutuel had had to obtain similar
resources in terms of stability on the interbank market, it would
have had to pay higher refinancing charges. The monopoly over
the Livret bleu has therefore had the effect of reducing the bank’s
normal expenses. It is therefore necessary to take account of all
the charges linked to deposits (increased charges due to collection,
but also reduction in normal charges because of the lower cost of
this resource), and all
the income from assets and matching
liabilities, including the funds freely available to the bank.

(110) The situation is less clear in relation to the assets freely
undertaken by CrØdit Mutuel, which recorded a loss of
approximately FRF 1 billion over the period under
review. These losses affect the State budget since, if they
did not exist, it would be balanced, thus requiring the
collection commission to be lowered accordingly. The
Commission considered, however, that the net cost of
the assets freely chosen by CrØdit Mutuel should be
included.

(111) The

task

concerned

consultant’s

independent

the
evaluation of the Livret bleu analytical accounts system
(expenditure and also income from the assets to which
the resources relate) and an analysis of the coherence of
the
the data provided by CrØdit Mutuel. Given this,
consultant was asked to identify all
the advantages
linked to the income obtained from the Livret bleu assets
and the costs of the resources (different from normal
market costs). Following the deduction of the normal
profitability margin known as (cid:145) own funds cost(cid:146) (34) by
experts, the residual profit (from the commission paid
by the State) may consist of incompatible State aid, for
the State should have paid CrØdit Mutuel a lower
commission for the collection service that corresponded
to the net costs, rather than excess compensation.

(112) (cid:151) Secondly, CrØdit Mutuel mentioned, during the
proceedings, a large number of constraints and
special features relating to the management of the
Livret bleu (see part III on the arguments put forward
by CrØdit Mutuel). The approach adopted by the
Commission allows these problems to be dealt with
by reference to the accounts, hence on the basis of
practice. It permits a correct evaluation of the real
financial weight of these constraints based on past
figures from the Livret bleu account management.

(34) If the cost of own funds measuring the profitability of activities is
taken into account, this enables one to distinguish in the Livret
bleu results the share corresponding to a normal return on own
funds (hence the members’ capital) from the share which exceeds
the average profitability of a bank. See section 4.4. concerning the
analysis of the cost of own funds.

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(b) S o m e t e c h n i c a l e x p l a n a t i o n s

(113) The collection of savings through the Livret bleu also has
certain specific economic features that differentiate it
from the normal collection of savings by a bank.

(118) The Commission’s consultant

takes into account

the
income and expenditure arising from the system for
CrØdit Mutuel by separating the analysis into three parts
depending on how the funds collected are allocated:
funds allocated to general
funds transferred to CDC,
freely selected by CrØdit
interest assets and assets
Mutuel. The Consultant’s method permits a response to
CrØdit Mutuel’s argument
the system involves a
cost (36) for it since it must pay tax on revenue to the
State (37). This method also allows a normal return on
own funds to be taken into consideration.

that

(114) The nature and special taxation system relating to the
Livret bleu cushion the impact of interest rate variations
on savings reallocation movements, and this form of
saving is less volatile than investments at market rates.
The behaviour of
and foremost,
influenced by the net rates of the Livret bleu, compared
with alternative investments with the same degree of
risk and liquidity: the net rate of the Livret bleu is higher
than that of the Livret B (taxed). All things being equal,
as investments at market rates are taxed, they must have
a considerably higher gross return in order to be chosen
instead of savings accounts.

savers

first

is,

(115) Secondly, the behaviour of savers is also tied to certain
sociological and psychological parameters that are quite
specific in the case of tax-free accounts. Since the return
on the Livret bleu is set by the State, savers have more
confidence in it. By selecting this type of saver, a
relatively paradoxical situation results: although this is
the most liquid (cid:145)placement with return(cid:146), it is also one of
the least volatile.

(116) This confidence shown by savers has

traditionally
allowed the authorities to set low rates of return net of
inflation. Even in a context of much higher returns on
market placements, withdrawals of savings were very
limited in the 1990s (35).

(117)

In any case, the special features associated with this way
of collecting funds compared with obtaining financing
on the interbank market or
the financial markets
the benefits which
requires a specific evaluation of
CrØdit Mutuel obtained from the management of these
funds, and this can only be done through the network’s
analytical accounts.

(35) During the 1990s, there was a single year during which there was
a significant drop in collections for the Livret bleu: 1993 (-4 %).
The drop in collections for the Livret A was higher:
in 1996
(-10 %) and in 1999 (-8 %). Collections should be positive again in
2001.

(c) T h e q u e s t i o n o f t h e l o s s - l e a d e r e f f e c t

(119)

In order to determine the net cost and appropriate level
the
of resources paid by the State in compensation,
analysis of the effects of the Livret bleu system must, in
addition to the abovementioned direct advantages, cover
any advantages and costs derived from the system if
these effects have a significant impact.

financial

tax exemption is

attractive because of

(120) The exclusive right to distribute a savings product that
is
likely,
according to the complainants, to allow CrØdit Mutuel
to attract and to maintain the loyalty of customers, to
whom its network can then sell other banking products
and services (loans,
insurance,
etc.). The increasing sale of financial
investments and
insurance products by branches would demonstrate the
advantages inherent in this. If, moreover, the market of
the product in question was characterised by an unequal
situation between the seller and the buyer, as regards
information, as is the case in particular for financial
reputation for distributing
products, an institution’s
quality products or products that are advantageous for
customers would become a decisive factor. In this case,

investments,

(36) CrØdit Mutuel states that it contributed an amount of [(cid:133)] to the
State budget between 1975 and 1996 by way of payment on
behalf of savers of the partial taxes on the Livret bleu. As we know,
this cost was (cid:145)cancelled(cid:146), in any case from 1991 on, by CDC.
(37) It is worthwhile noting that other banks have to pay indirectly a
cost of the same kind which, with regard to the setting of (gross)
interest rates on deposits, must take account of the returns on
other comparable products and the fact that the saver compares
net tax rates, which has the effect of forcing banks to raise their
gross rates in order to compete with tax-free products. In the new
system of transfer of all funds to CDC, the resources collected
through the Livret bleu are entirely tax-free.

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the fact of distributing an advantageous product like the
Livret bleu to attract customers could constitute an
advantage for the institution, as this would enable it to
target customers more (38). In other words, this would
give rise to the same effects as costly marketing
campaigns or the distribution of a product at a loss in a
bid to attract customers.

(121)

it is
In the documents provided by the complainants,
assumed that a loss-leader effect exists, but
there is
nothing to demonstrate formally the existence of this
is not
effect and the financial
evaluated precisely.

this effect

impact of

the Commission points out

(122) With regard to the research conducted by the Glais
firm,
that CrØdit Mutuel
may quite rightly State that these statistical analyses do
not provide certain proof of a quantifiable loss-leader
effect.

(123) Three subjective evaluations were put forward in the
complainants’ observations. First, given the fact
that
other banks offered to distribute the Livret bleu on the
basis of a 1 % commission, the complainants proposed
an approximate figure for this advantage for the present
and the future (39) by calculating the differential with
the level of commission received by CrØdit Mutuel,
hence 0,3 %, which corresponds to roughly FRF 300
million per year. However, there is nothing to prove
that CrØdit Mutuel’s competitors could perform this
service under the same conditions with this level of
commission.

(124) Under the second method used by the complainants, the
advantage gained by CrØdit Mutuel in the past can be
measured by reference to the rise in its market shares.
This method of assessing aid cannot be accepted as it is
based on the hypothesis that gains in market shares are
solely due to the Livret bleu, a claim that
is not
supported by any objective proof.

(125) The

third

right of
distribution is based on the loss of tax earnings caused

evaluation of

exclusive

the

(38) The opinion by the Competition Council, No 96-A-12 of 17
reiterates the argument whereby a tax-free
in a privileged

(cid:145)places the institutions distributing it

September 1996,
account
situation to offer other products(cid:146).

(39) In the context of the complete transfer of all Livret bleu funds to
CDC. This subjective reasoning cannot be applied to the past since
the total funds were not fully transferred then.

by the tax exemption allowed under the Livret bleu. If
CrØdit Mutuel had wished to distribute a savings
account without tax exemption by offering the same net
return as the Livret bleu regardless of the tax situation of
savers, it would in fact have had to pay a cost equal to
the amount of the (potential) notional tax paid by the
savers. According to the complainants, the cumulated
tax advantage over
the period 1991 to 1997 of
approximately FRF 4,5 billion must be regarded as
having provided CrØdit Mutuel with advantages equal to
this amount. This reasoning cannot be accepted, because
CrØdit Mutuel would quite probably not have distributed
the Livret bleu under the same conditions if it had had to
pay the full cost of the tax exemption, which, moreover,
directly benefited the members.

(126) The possible advantages in question are difficult

to
prove and to quantify. The direct financial advantage of
operating the Livret bleu is directly measurable from the
Livret bleu’s accounts. However, the financial advantage
arising from the sale of other products or services to
customers who remained loyal because of the Livret bleu
could be observed in the analytical accounts of these
other products
to distinguish
immediately between what was sold to customers who
remained because of or were attracted by the Livret bleu,
and what was sold to customers who came to CrØdit
Mutuel for other reasons. The Commission Consultant
was therefore unable to assess the loss-leader effects
following the accounting method applied to evaluate the
overall direct financial advantages of the Livret bleu.

it were possible

if

(127) Attempts by the Commission Consultant to conduct a
more sophisticated evaluation did not prove successful.
The Commission was unable to obtain a reasonable
evaluation of the theoretical financial
impact of these
effects. This decision is therefore based exclusively on
the conclusions obtained in the context of evaluating
the analytical accounts of the Livret bleu.

4.2. Structure of analytical accounts of the Livret bleu

(128) Before presenting the results of the analysis conducted
by the Commission consultant, it is necessary to make a
comment concerning methodology. When producing
his estimates, the consultant had to cope with the fact
that there was no real analytical accounts system for the
the
Livret bleu and no homogenous

treatment of

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accounts of each CrØdit Mutuel
federation. Moreover,
the entire accounting structure is based on the accounts
for one year (1996), with the other years having been
extrapolated from this structure. Secondly,
is also
based on a sampling of federations, whose management
ratios are then extrapolated from the net banking
revenue of the confederation. This is the best estimate
the Commission was able to obtain following four
contradictory expert assessments (see the description of
the procedure under section I).

it

(129) The

experts

in
encountered considerable problems
reconstructing the analytical accounts system of
the
Livret bleu as can be seen from the significant differences
in the estimates produced by the first assessments. The
accounting figures for the different federations, which
are fully independent
in legal and accounting terms,
turned out to be not at all homogenous. The role of the
confederation has concerned policy coordination more
than management, at least until the beginning of the
In 1991 the Livret bleu system was radically
1990s.
changed and,
the parameters
from that year on,
characterising the activity and the scope of CrØdit
Mutuel remained sufficiently stable to apply the same
accounting analysis method to the entire period 1991
to 2000.

to a large

by now. Material

accounting departments has
extent
of
disappeared
accounting documents has become very difficult.
The sampling technique can only produce good
results if the sample data are not at all questionable.

verification

the

that

confederation has meant

In conclusion, the absence of analytical accounts within
accounting
the
reconstruction has had to be confined to the period
starting with the 1991 financial year. It emerged that
there was no satisfactory method for calculating the
accounting result of the Livret bleu during the oldest
period (1976 to 1990). The Commission therefore
limited the calculation of the aid to the period 1991 to
2000.

(131) The Commission’s

takes

account

the resources

of
consultant
expenditures and incomes for CrØdit Mutuel from the
Livret bleu system by separating the analysis into three
parts, depending on how the resources collected were
allocated:
those
assigned to general interest assets and those used freely
by CrØdit Mutuel. The method used by the consultant
also provides a response to the argument by CrØdit
Mutuel whereby the system involved an expense (40) for
it since it had to pay levies to the State. The method
also takes into account, at last, a normal commission for
own funds.

transferred to CDC,

(130)

It emerged from the legal analysis of the nature of the
aid granted in the context of the Livret bleu that there
was new aid since the end of 1975. Therefore the
question of calculating the aid for the period 1976 to
1990 arose. Two factors were taken into account to
produce this evaluation in practice:

(132)

is

sound

provide
it

to
the aid, but

(cid:151) it may be considered that the method used for the
years 1991 to 2000 was, despite its weaknesses,
reasonable
sufficiently
a
assessment of
impossible to
extrapolate figures for the period prior to the 1990s
because this period was based on the structure of
federations and activities for 1996.
In the 1970s
and 1980s, the federations witnessed a change in
their fields of activity, with some even merging. The
structure that resulted from the 1996 sampling is
not, therefore, applicable. The further we move back
the more approximate the
in time from 1996,
results become,

important,

in the first
the methodological

to describe
is
It
concisely
to
construct the CrØdit Mutuel analytical accounts system.
All
the activities performed by CrØdit Mutuel were
divided into five sectors:

instance,
framework used

(cid:151) savings (comprising three activities: collection of
deposits through the Livret bleu, the collection of
other deposits and other forms of savings),

(cid:151) credit,

(cid:151) insurance (IARD),

(cid:151) payments management,

(cid:151) the only alternative would be to organise one or
more samples for the distant past. This appears to
be unreasonable in practice: the accounting figures
to
for such a long time ago would be difficult
the
obtain and to process, since the memory of

(40) CrØdit Mutuel states that it contributed an amount of [(cid:133)] to the
State budget between 1975 and 1996 by way of payment on
behalf of savers of the partial taxes on the Livret bleu. As we know,
this cost was (cid:145)cancelled(cid:146), in any event from 1991 on, by CDC.

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(cid:151) management of cash flow and securities operations,

(cid:151) operating capital.

(136) One point on which there was disagreement between
the initial evaluation by CrØdit Mutuel and the one by
the consultant concerned the imputation of overheads
to the after-sales service. After a few improvements
made by Arthur Andersen, CrØdit Mutuel and the
imputing
consultant agreed on a joint method for
overheads.

(133) The construction of

the analytical accounts

system
involves an evaluation of the share of the income and,
what is even more complicated, of the overheads that
can be allocated to each sector. The entire construction
is, of course, very easily affected by hypotheses based on
the way the bank chose to allocate results and costs. In
this context, the consultant’s role, and hence that of the
Commission, is confined to a large extent to verifying
the internal inconsistencies of the proposed construction
and
the
added
construction.

corrections

subsequent

the

to

(134) Following the first evaluation of the results of the Livret
bleu analytical accounts provided by CrØdit Mutuel (and
(cid:145)certified(cid:146) by the auditors, Mazars et GuØrard), a new
estimate was produced by the Commission consultant.
CrØdit Mutuel called in the firm Arthur Andersen to
and
review of
full
perform a
accounting figures to permit
the
Livret bleu profit and loss account. Arthur Andersen used
the same structure for the profit and loss account.
However,
two changes were made concerning the
processing and data used compared with the previous
studies, and three ad hoc corrections were made:

the methodology
the drawing up of

(i)

the original sample used by CrØdit Mutuel was
extended to two new federations [(cid:133)] and [(cid:133)];

(ii) the

formulae

for

allocating the overheads

for

customer service relations were refined;

(iii) the ad hoc corrections relate to the method of
adjustment of
the excess weighting given to the
IARD (insurance) activity in the sample, the method
of calculating the cost of own funds and the
introduction of a charge for coverage of shareholder
liability.

(135) For his evaluation the Commission consultant had
already used a sample extended to include [(cid:133)]. As a
result he checked the procedures used to incorporate
new data for [(cid:133)] and validated the use of the data in
the enlarged sample. While the sample originally set up
the group’s
represented [(cid:133)] of
by CrØdit Mutuel
overheads,
the group’s
it now accounts for [(cid:133)] of
overheads following the inclusion of the two biggest
CrØdit Mutuel regional federations.

(137) When the sample was being set up, the accounting data
was being chosen and the treatment of these data in the
Livret bleu profit and loss account was being decided, the
evaluations by Arthur Andersen and the Commission
consultant coincided. The only points of disagreement
concerned the ad hoc corrections mentioned above that
were adopted by Arthur Andersen. The Commission
will, initially, decide on the final points of disagreement
persisting between the Commission consultant and
CrØdit Mutuel. Then it will present different evaluations
of the Livret bleu results for each application to which
the funds collected were assigned.

4.3. The points of disagreement between the consultant and

CrØdit Mutuel

(138) As the task given to the Commission consultant

to
examine the analyses by Arthur Andersen did not result
in an agreement between the consultant and CrØdit
Mutuel,
the Commission must decide between the
proposals by the independent consultant and those by
the Arthur Andersen auditors mandated by CrØdit
Mutuel.

(a) T h e m e t h o d o f c o r r e c t i n g t h e e x c e s s

w e i g h t i n g g i v e n t o t h e I A R D a c t i v i t y i n
t h e s a m p l e

(139) When it came to describing the final sample, Arthur
Andersen proposed two statistics aimed at assessing the
(cid:145)representativeness(cid:146) of the sample in terms of proportion
of overheads allocated to the various sectors. In other
words, the aim is to check whether the allocation of
overheads
sample
complies with that of the total group (all the federations
in the CrØdit Mutuel group). The basic postulate is that

to the different

in the

sectors

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sectors

should be

the
same
proportions (measured in terms of overheads) as in the
total
a perfectly
order
in
population
(cid:145)representative(cid:146) sample.

represented in the

have

to

the

of
in

because

the
the

admissible
of

(140) The statistic created consists of comparing the share of
total overheads in the sample [(cid:133)] with the share of
overheads in the savings sector in the sample [(cid:133)]. The
difference between the two percentages may seem to be
sufficiently low for this difference to be regarded as
inherent
statistically
fluctuation
sampling
samples
technique (41), and Arthur Andersen may have grounds
for regarding this difference as (cid:145)coherent(cid:146). Although the
text (42) by Arthur Andersen is not very explicit, the
statistic means that out of the total overheads allocated
to the savings sector, [(cid:133)] are allocated to (included in)
the reference sample (43). Let us recall the conclusion
drawn by Arthur Andersen at
the
construction of the sample has an acceptable structure
as far as the savings sector is concerned, and hence a
the
fortiori
statistics created for the Livret bleu cannot be influenced
by problems relating to the structure of the sample.

activity. Consequently,

the Livret bleu

juncture:

this

(141) A similar statistic is created for the IARD sector.
[(cid:133)] which represents

(cid:145)The
total
sample
overheads, represents [(cid:133)] of
the IARD commission
collected(cid:146) (44). We agree with the first part of Arthur
Andersen’s statement: the IARD sector appears to be
over-represented in the sample, hence some statistics
relating to the IARD sector drawn from the sample may
be biased.

[(cid:133)] of

the

(41) Although it is not a (cid:145)real(cid:146) random sample.
(42)

(cid:145)With regard to the share of the overheads allocated to the savings
sector, we note that the reference sample represents approximately
the
[(cid:133)] of
overheads allocated to Savings, which in our view is consistent(cid:146)
(our emphasis), extract
from the report by Arthur Andersen,
Mission Livret bleu, p. 29.

the total overheads, and approximately [(cid:133)] of

(43) The additional

information presented by Arthur Andersen in a
note on 8 February 2001 states, in this respect: (cid:145)For example, in
1996, the respective weights [of the sample] are the following:
share of savings (total funds): [(cid:133)](cid:146). This percentage, which we
interpret to be the share of total savings featured in the sample, is
identical to the share of overheads, which would suggest a perfect
match in the sample between the volume of savings and the
volume of overheads allocated to the savings. We would add,
moreover, that the method of construction of the sample uses
allocation formulae mainly established in 1996 (p. 4, ibid.). There
are therefore grounds for considering that this proportion is very
close if not the same for the other years.

(44) P. 32, ibid.

that

from this (45)

the IARD sector

(142) Arthur Andersen deduces
this
implies an
over-representation of
excessively high allocation of management costs to the
IARD sector in the sample (46), and that these costs
must be reduced by reallocating them to other sectors.
The second deduction seems to be incorrect: it is quite
likely that the management costs allocated to the IARD
in the sample are in the right proportion compared
with the income from the sector (47). Yet Arthur
Andersen has in fact pointed out that the income (IARD
is over-represented in the sample (see
commission)
recital 141). To reduce the IARD expenses without
adjusting the IARD income would have the immediate
consequence of distorting the IARD profit and loss
account in the sample (not enough expenses for the
same volume of income) (48), but would also distort the
savings profit and loss account
the IARD
expenses is transferred to savings (too high a level of
IARD and savings expenses for the same volume of
savings income).

if part of

(143) Postulating that too large an amount of management
costs was assigned to the IARD sector and not enough
to other
sectors, Arthur Andersen next proposed
correcting this over-representation with an ad hoc
measure. A fictitious sample excluding the IARD was set
up based on the previous one but completely excluding
the IARD activity. The consultant pointed out (and this
was not refuted) that the management costs relating to
IARD had in practice been mainly broken down among
the other sectors. A (cid:145)theoretical(cid:146) sector was set up

(45)

(cid:145)...
[(cid:133)] of
the IARD commission received. Hence a certain
if not corrected, would mean that the IARD
distortion which,
sector would be allocated too high a share of overheads compared
with the other sectors(cid:146) (p. 32, ibid.) Note the vague wording.
(46) In reality, this first deduction is not at all logical. It is logical to
doubt the fact that the over-representation of the insurance sector
would have the direct effect of distorting the calculation of the
result of the analytical accounts system of the insurance sector. An
allocation to the insurance sector of higher overheads in the
sample is the counterpart of income that is also higher (noted by
Arthur Andersen in the form of the IARD commission or the
IARD turnover). It is true that one could conceive of the result
being (cid:145)amplified(cid:146) (increased by a given multiplying factor) since the
extrapolation of the sample would result in CrØdit Mutuel being
regarded as having a more important activity in this sector than is
in fact the case. But there is not necessarily a directional bias (in
the statistical sense), in other words an error in the result in a
specific direction (systematic increase or reduction), since if the
management costs are increased,
the income in the sector in
question may also be increased (for instance more insurance
premiums collected).

(47) Otherwise if the costs allocated are too high compared with the
income, this would mean that the analytical accounts are wrong
and have been poorly constructed.

(48) The methodology note of 13 September 2001 does not touch on
this key issue at all. The experts attempt to estimate the balance of
the profit and loss account (income (cid:150) costs), not the costs taken
alone.

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combining the real sample and the sample excluding
IARD, with a variable weighting according to the year,
in order
to obtain an IARD/non IARD structure
identical to the one observed for the total population
(entire group).

(146)

(b) T h e C o m m i s s i o n c a n n o t a c c e p t t h e

p r o p o s e d c o r r e c t i o n f o r t h r e e r e a s o n s

(i) The fact that the IARD sector is over-represented in

the sample does not at all mean that the
management costs assigned to the savings sector are
insufficient.

(ii) The methodology used is not valid from the

statistical point of view.

Professor TillØ,

It may be conceivable from a statistical point of view to
improve the quality of the statistics drawn from the
sample (reducing the variation of
the estimators) by
fitting the sample to the structure in terms of sector of
total population, both in relation to the structure of net
banking products and in relation to that of management
costs. The method proposed by CrØdit Mutuel and
adopted by Arthur Andersen (50) does not, however,
have any statistical basis and introduces a number of
the
biases.
structure of the sample for the IARD sector (whereas
what interests us is the structure of the savings sample),
warned prudently of the consequences of the proposed
the estimation procedure
method:
modifies the proportions of all the sectors(cid:146), and hence
the proportion of the savings sector.
It is clear that
while initially there was no excess weighting (bias) in
the costs for savings (as proved apparently by the
statistic proposed by Arthur Andersen), the correction
introduces
influencing in the
statistical sense the statistic of our interest-rate variable.

such a bias, hence

(cid:145)a modification of

consulted only

about

(144)

(145)

bleu

accounts

analytical

system is

In fact, the interest-rate variable in the construction of
the Livret
the
distribution of management costs to the savings sector,
not to the IARD (49). Arthur Andersen concludes that
the statistic it chose as a reference suggested that there
was no bias in the distribution of management costs to
the savings sector in the sample. In other words, it is
illogical to conclude that the bias of over-representation
of the IARD sector must result in the reallocation of
management costs to the savings sector, whereas the
first argument concluded that
there was no bias of
over-representation of the savings sector.

the IARD sector

it must be understood that while there is a
In fact,
representation of
in the
stronger
(loans, management of
sectors
the other
sample,
are
of
payment means, management
in the sample than in the total
represented less
population. But the first statistic showed that this was
not the case for the savings sector.

securities)

(iii) The methodology used has the result of arbitrarily
reallocating the management costs to the savings
sector.

(147) As

by

the

out

pointed

consultant,

IARD
the
management costs in the theoretical sample excluding
the IARD were artificially allocated to the other sectors,
whereas the purpose of the analytical accounts exercise
is precisely to identify the costs relating to each sector.
Even when combined in variable proportion with the
real sample (51), the result achieved (and sought) is to
arbitrarily allocate management costs from the IARD
sector to the other sectors. Moreover, there is absolutely
no doubt that artificially reducing the costs assigned to
this sector without adjusting in the same proportion the
income
of
to
federations has the effect of distorting the accounting
balance of income and expenditure.

corresponding

sample

same

the

(49) CrØdit Mutuel sent a document by Arthur Andersen to the
Commission on 13 September 2001 which discusses
this
problem. The paper does not specify that what is concerned is the
drafting of a profit and loss account (the question of allocating
income corresponding to the costs in the form of overheads is not
considered at all) or that the interest rate variable is the assigning
of overheads
to savings. The two experts concerned were
therefore unable to give a view on the suitability of the statistical
method chosen compared with the variable they were attempting
to estimate. It must be pointed out that an acceptable adjustment
method to improve an estimator is likely to undermine the quality
of another estimator.

(148)

It must be stressed that if the proposed methodology
it should also have been applied to the
were valid,

(50) Not without some precautionary words:

(cid:145)this methodology could
be criticised from a theoretical point of view. However, we
consider that if no correction is made, this would be even more
disputable(cid:146). We will not comment on the second part of
the
sentence in the light of earlier comments.

(51) According to the proportions calculated in line with the IARD

structure of the total population.

4.4.2003

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Official Journal of the European Union

L 88/65

savings sector
(which is also over-represented). The
result would then have been a significant reduction of
the management costs assigned to the savings sector,
and consequently an increase in the Livret bleu result. It
is not surprising, therefore, that CrØdit Mutuel preferred
to apply arbitrarily the correction to the IARD sector. It
must also be pointed out that the original statistic used
by Arthur Andersen would show, after the adjustment,
an even higher proportion of management
costs
allocated to the savings sector in the sample (using the
amounts of the management costs resulting from the
combination of the real sample and the sample without
IARD, mentioned above), hence an over-representation
of the savings management costs in the sample, this
time certainly greater than the over-representation of
income in the savings sector. This adjustment thus leads
to the emergence of a bias, this time perfectly clear, in
the calculation of the analytical accounts result for all
the components in the savings sector.

(149)

In conclusion,
the Commission must agree with the
consultant in rejecting the proposed adjustment since
there are no grounds for it and it therefore distorts the
Livret bleu profit and loss account.

(c) T h e m e t h o d o f c a l c u l a t i n g t h e
p r o f i t a b i l i t y o f o w n f u n d s

(150) The structure of the analytical accounts system allows
the achievement of a normal margin in the various
activities to be taken into account. In the case of the
banking sector where the margins compared with the
net banking income do not have the same significance
as in other activities, the result is evaluated in this case
using the concept of the cost of own funds. The term
(cid:145)cost(cid:146) may give rise to confusion: it is not an accounting
(economic) opportunity (52)
charge but
which measures the profitability of a given activity. To
calculate the profit made from the Livret bleu activity
that
corresponding to normal
profitability for such an activity, it is therefore necessary
to subtract from the profit a (cid:145)cost of own funds(cid:146) which

the cost of

exceeds

result

the

(52) Suppose that the result after deducting the cost of own funds is
negative, this means that the bank would be better to drop the
activity in order to shore up its own funds with its other activities
which are profit-making after taking into account the cost of own
funds. The problem is, of course, to calculate what is the level of
remuneration of a benchmark shareholder.

represents the achievement of a normal margin from
the activity (53).

is

the most objective in this case.

(151) The Commission considers that the level of profitability
of [(cid:133)] as shown in CrØdit Mutuel’s internal analytical
accounts (54)
It
accepted the rate of profitability that CrØdit Mutuel uses
internally to calculate the cost and prices of its products.
This means that the State guaranteed to CrØdit Mutuel
the same margin of profitability on the Livret bleu
activity for the public service mission as the profitability
used by CrØdit Mutuel
for its other competitive risk
activities. This rate of profitability does not include the
corporate tax paid subsequently and, where appropriate,
the tax on profits, for in analytical accounts only the
taxes recorded on charges (for instance on operating
charges) are taken into account, not the tax on profits.

(152) Deposit

less

activity involves

risk than credit or
investment activities. The internal rate of profitability of
a deposit activity is by necessity lower. Yet
the
Commission accepted the same rate of profitability for
the deposit activity and other more risky activities,
the same rate of
namely [(cid:133)]. The acceptance of
and for other
profitability for

collecting deposits

(53) In its report of September 2000, Arthur Andersen proposed a
new method of calculating the cost of own funds which has the
effect of increasing by [(cid:133)] the cost of own funds compared with
the initial evaluation by CrØdit Mutuel. Arthur Andersen in fact
suggested using a rate calculated on the basis of the ratio between
the pre-tax result (after withdrawal of provisions and FGBR) and
in its view, reflects better the overall
own funds. This rate,
profitability of the bank, whereas CrØdit Mutuel had adopted as
the cost of own funds
the amount of dividends actually
distributed.
It is essential to take into account the fact that setting this rate of
profitability is of a political nature for the bank management since
a particular activity will be profitable depending on the level of
the cost of own funds chosen. Arthur Andersen explains in this
respect that (cid:145)[the method of calculating the cost of own funds
depends] not only on the way banks are organised, but also on
the management targets set by the General Management(cid:146). Arthur
Andersen does not criticise in principle the initial evaluation by
CrØdit Mutuel, which it regards as (cid:145)globally consistent(cid:146). The second
method proposed by the auditor is unambiguously an alternative
method which is (cid:145)recommended(cid:146)
in so far as CrØdit Mutuel’s
method (cid:145)does not appear to be fully suitable(cid:146). In its note of 13
these
September 2001 Arthur Andersen completely drops
reservations. CrØdit Mutuel sent
this note to the Commission
following a meeting at which the Commission officials and the
consultant explained the reasons why their evaluation was based
on the initial evaluation by CrØdit Mutuel.

(54) Memorandum of 12 June 1998.

L 88/66

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Official Journal of the European Union

4.4.2003

the effect of

activities has
increasing the internal
profitability rate accepted for the deposit activity in a
disproportionate manner
risks
inherent in this activity. Consequently it is impossible to
accept CrØdit Mutuel’s argument that this profitability
rate would be too low in the case of the Livret bleu
activity.

compared with the

(153)

that CrØdit Mutuel

It must be pointed out
is not
incorporated as a limited liability company: it has the
status of a mutual benefit company. Members in fact
draw direct benefits in the form of rates or services for
customers that reduce the apparent profitability rate of
the bank. As the members are also the customers, they
have an obvious interest,
in the context of such a
mutual interest structure, in drawing benefit from CrØdit
Mutuel by availing themselves of more interesting rates
rather than by receiving profits that are taxable. This
management strategy is not one that
is followed by
banks incorporated as limited liability companies. As
it may
CrØdit Mutuel has a special organisation,
therefore choose a specific own funds remuneration
policy. The Commission therefore agrees with the
consultant and with CrØdit Mutuel’s original position
that the real financial cost of CrØdit Mutuel’s own funds
must be taken into account.

(154) The

Commission

the
independent consultant has grounds to accept the own
funds cost initially proposed by CrØdit Mutuel.

considers

therefore

that

(d) C o v e r a g e o f m e m b e r l i a b i l i t y

(155) The consultant considered that the cost of providing
CrØdit Mutuel members with a guarantee on total assets,
charged by CrØdit Mutuel (in its memorandum of June
1998), which reduced its Livret bleu result, was not
justified because this was not an analytical accounts
operational
risk in question was
completely dissociated from the Livret bleu system. This
correction resulted in an increase in the Livret bleu
operating result of [(cid:133)] over the period 1991 to 1998.

and the

figure

(156) The report by Arthur Andersen proposes a more
sophisticated model to evaluate this cost, resulting in a
reduction of the (cid:145)cost(cid:146) of this coverage of around 80 %

of the cost evaluated by CrØdit Mutuel ([(cid:133)] compared
the period 1991 to 1998). The
with [(cid:133)] over
Commission also took note of the reservation expressed
by the auditors
these
costs (55).

regarding the

relevance of

(157)

In a note sent on 21 July 1999, CrØdit Mutuel
acknowledged that
liability was not
this coverage of
reflected in the accounts. But the network confirmed
that it accumulated own funds in a sufficient amount to
prevent any members
from being held liable. The
Commission considered that a high level of own funds,
as demonstrated by CrØdit Mutuel, could be maintained
for
there was no
information in the accounts that identified the share of
these own funds that was effectively allocated to such
coverage.

all kind of

and that

reasons

(158) The Commission points out

to

forwarded

in the account
that
it, Arthur Andersen
certification
considered that
this cost should be given the same
treatment as the operating costs because CrØdit Mutuel
intend to make its members bear this risk
did not
should it occur. The legal obligation simply states that
such a cost shall be paid by its members. In other words
the Commission recognises that the risk of members
being held liable exists, but
it arises from the
articles of association and must be accepted as such by
any person wishing to become a member in return for
the benefits accruing from membership.

that

(159) Therefore paying this liability cost

itself

for members was
based on a discretionary decision by CrØdit Mutuel. The
legal obligation is borne by the members, hence CrØdit
Mutuel
is under no obligation to guarantee its
members. It is in fact not in the spirit of its articles of
association that such liability should be looked after by
since this mechanism of
the mutual
liability is
such a
structure (56).

interest body,
in fact

feature of

specific

a

(55) Arthur Andersen considers that it (cid:145)is unable to provide a decisive
argument to support either side in [the] debate [on the relevance
of such a cost](cid:146) (p. 45, ibid.). Arthur Andersen’s assessment of this
point has also changed considerably in its note of 13 September:
(cid:145)we consider it wrong to consider that this is a purely theoretical
cost(cid:146).

(56) If the same reasoning were applied to limited liability companies,
it would be obviously absurd: a limited liability company has no
(cid:145)moral(cid:146) duty to cover the risk of loss of funds committed by the
shareholders up to the amount of the capital subscribed.

4.4.2003

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Official Journal of the European Union

L 88/67

the

justifies

solidarity mechanisms

(160) CrØdit Mutuel has invoked the Banking Act of 24
this concerns the mechanisms of
January 1984, but
offsetting losses between federations
in the mutual
interest establishment: it does not concern the coverage
of personal liability of members (57). These obligations
bear no relationship to the constraints of profitability
and own funds mentioned in this respect by the French
authorities in their memorandum of 26 October 2001.
In its memorandum of 13 September 2001, Arthur
Andersen
for
shareholder liability by the fact that CrØdit Mutuel had
apparently paid to the banks that were in deficit an
amount of almost [(cid:133)] over the period in question.
These transfers between profit centres, which are not
peculiar to CrØdit Mutuel but are engaged in by all large
national and multinational companies, do not at all
demonstrate that members are being held liable, but
that a realignment has taken place between
rather
federations
liability. The
implementation of this realignment between federations
to guarantee members
would be quite insufficient
against major
again the
difference in nature between realignment mechanisms
and the model of
liability coverage presented. The
Commission points out that, in any case, the operating
results of any federations in deficit benefiting from this
realignment mechanism are already taken into account
in the Livret bleu analytical accounts. As a result,
entering an additional charge for the mutualisation of
in any operating losses by these
losses would result
federations being entered twice.

risks, which proves yet

shareholder

replaces

that

(161)

like

the Commission considers,

In conclusion,
its
consultant, that CrØdit Mutuel has no legal obligation to
cover the risks borne by its members by means of
operations other
from the
mutualisation of losses between federations (58), that no
information in the accounts proves that such coverage
was introduced and that therefore the alleged costs for
covering member
liability are purely fictitious and
cannot be accepted.

than those

resulting

(e) C o n c l u s i o n

consultant

(162) Having examined these three points of disagreement
the
between the
Commission considers that the evaluation produced by
the independent consultant recruited to perform the
evaluation of the Livret bleu analytical accounts should
be accepted.

and CrØdit Mutuel,

(f) F u r t h e r e x p l a n a t i o n s

(163)

In accordance with the policy generally pursued by the
Commission, corporate tax is not
included in the
calculation of the final amount of State aid.

(164) The rate used for the capitalisation of results each year
will be the Commission reference rate for France at
1 January of the year.

(165)

Table 3

Commission annual reference rate for France

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

10,61

11,00

8,93

7,94

8,22

7,01

5,83

4,77

4,76

5,70

(57) The central bodies (cid:145)shall take all necessary measures to guarantee
the liquidity and solvency of each of these establishments and of
the network as a whole(cid:146)
(Article 21). They may decide to
introduce or to limit the distribution of a dividend to members or
of remuneration of company shares to shareholders of credit
institutions or of investment companies affiliated to them.

(58) The accounting effect of which is already taken into consideration

by the experts.

L 88/68

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Official Journal of the European Union

4.4.2003

In this respect it should be pointed out that the State
did not assign this service to the most suitable bidder in
a tendering procedure, but entrusted it directly through
negotiations with CrØdit Mutuel, which does not allow
for any guarantee, by deduction, as to whether or not
rate of
the commission is appropriate. The lower
commission granted to the Caisses d’Øpargne might be
justified by the greater amount of savings accrued by
the Livret A, but, on the other hand, the automation of
the Livret blue, unlike the Livret A, could result in lower
management costs. Moreover, it is not proven that the
right
State
is paying
commission for
are
performing. In any case, the purpose of this decision
concerns the question whether CrØdit Mutuel received
State aid, and not the other savings collection systems
of other banks.

the Caisses d’Øpargne
collection service
the

the
they

the related costs,

(169) The work of the Commission’s consultant shows that
over the period 1991 to 1998, this part of the total
savings generated gross income of over [(cid:133)]. Following
the deduction of
the consultant
concluded that the balance for this activity had become
profitable again in 1998 (by FRF 26 million) after losses
throughout the 1990s. It may be deduced from these
results that the consultant’s evaluation was, to say the
least,
(cid:145)conservative(cid:146), as it is not conceivable that CrØdit
Mutuel would have accepted in 1991 to continue in the
long term collecting savings through the Livret bleu
solely with a view to transferring the funds to CDC if it
had not considered the collection commission to be
sufficient. On the contrary,
the
estimates by CrØdit Mutuel and, to a lesser extent, by
Arthur Andersen, is clearly questionable in relation to
this type of activity.

the coherence of

4.4. Results of the Livret bleu profit and loss account

(168)

(166)

various

It is worthwhile indicating, for the record, the results of
evaluations (59)
the
conducted before the final evaluation of the consultant,
which was accepted by the Commission.

intermediary

expert

(a) F u n d s t r a n s f e r r e d t o C D C

(167) According

the

funds

the costs of

to CDC left

to CrØdit Mutuel,

intermediation
commission of 1,3 % had become necessary because the
the bank with
transfer of
management charges for the Livret bleu whereas the
income from the same resources no longer existed. The
grounds given for the commission paid by the State is
the fact that profits from other activities should not be
the Livret bleu system.
used to cover
According to calculations recently produced by CrØdit
Mutuel, the overall management cost for the Livret bleu
was between [(cid:133)] and [(cid:133)] of total funds between 1990
and 1993, and then gradually fell to [(cid:133)] in 1997. This
commission does not
seem excessive, according to
CrØdit Mutuel, given higher commission paid by the
State to banks managing the Codevi and to the Post
Office for the management of the Livret A (1,5 %). While
it is true that the savings banks themselves manage the
Livret A for a lower commission (1,2 %), this could be
justified by the economy of scale from which the
Caisses d’Øpargne benefit,
the total Livret A savings
managed being almost four times higher than that of
the Livret bleu.

(59) The second approach by CrØdit Mutuel is presented (cid:145)which likens
the Livret bleu fully to the Livret A, omitting the partial taxation
aspect(cid:146) certified by Mazars and GuØrard (the information in the file
in fact allow us to conclude that CrØdit Mutuel was compensated
by the authorities for having fully offset the effects of partial
taxation), which is the basic hypothesis of
the two scenarios
drawn up by Arthur Andersen (this hypothesis is the most
favourable one for CrØdit Mutuel, mindful of the fact that in any
case the difference between the two scenarios is only slight).

4.4.2003

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Official Journal of the European Union

L 88/69

(170)

Table 4

Net results of the Livret bleu on the funds transferred to CDC for the period 1991 to 1998 (net margin
in FRF million and as a percentage)

(in FRF million)

Margin

1991

1992

1993

1994

1995

1996

1997

1998

Total

Initial estimate by CrØdit
Mutuel

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

Initial estimate by consultant

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

Second assessment by AA

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

Commission estimate

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

Margin (as a %)

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

Source: Arthur Andersen, Littlejohn Frazer.

for

than compensated CrØdit Mutuel

(171) While the 1,3 % commission might have been relatively
insufficiently in itself during the 1990s, after 1998 it
more
the
management costs of this part of the Livret bleu funds.
Given that the consultant’s work stops in 1998 and that
CrØdit Mutuel could benefit in future from productivity
gains on the management of the Livret bleu, there are
grounds for raising the possibility that this commission
is excessive in the context of the transfer of all the
funds.
the margin increased
regularly since 1996, in other words with the speeding
up of the transfer of Livret bleu funds to CDC. Transfer

It should be noted that

of all funds to CDC may have improved the profitability
of
the
this activity for CrØdit Mutuel because of
economy of scale.

(b) G e n e r a l i n t e r e s t a s s e t s

(172) General interest assets produced gross income of almost
[(cid:133)] over the period 1991 to 1998. Following the
deduction of related costs, the residual margin for CrØdit
Mutuel was approximately [(cid:133)]. It must be noted that
CrØdit Mutuel’s
initial evaluation proposed a much
higher estimate.

(173)

Table 5

Net Livret bleu results on general interest assets for the period 1991 to 1998 (net margin in FRF million
and as a percentage)

(in FRF million)

Margin

1991

1992

1993

1994

1995

1996

1997

1998

Total

Initial estimate by CrØdit
Mutuel

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

Initial estimate by consultant

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

Second assessment by AA

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

Commission estimate

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

Margin (as a %)

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

Source: Arthur Andersen, Littlejohn Frazer.

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(174) This level can be explained by the fact that these are
fixed rates
long-term assets granted at high nominal
which later enjoyed a drop in interest rate plus a State
guarantee. A second factor which explains this, and
which is not insignificant, is that these assets have no
risk since they are government-guaranteed, therefore the
profitability of these assets is not affected by any need
for
the
from the
beneficiaries. CrØdit Mutuel
is opposed to the taking
into account of
these profits since they arise from
income on loans granted or bonds purchased before
1991. We should point out
the Commission
considers that, given the considerable profits achieved
after 1991 on these assets,
the State should have
adjusted the amount of the State resources it chose to
grant CrØdit Mutuel through CDC (60).

insolvency

arising

funds

that

of

(c) A s s e t s c h o s e n b y C r Ø d i t M u t u e l

(175) CrØdit Mutuel and the French authorities considered that
these assets, being freely chosen by the bank, do not
generate for it income that has the character of State
resources, therefore the Commission could not use them
in the context of
in
analytical accounts, these tasks are back-to-back to a

these proceedings. However,

the

bleu.

over

Livret

distributing

specific resource, the deposits collected thanks to the
In
monopoly
competitive conditions,
it is likely that CrØdit Mutuel
would not have been able to obtain this resource at the
same price, therefore these assets and the corresponding
in the overall
resources must be taken into account
economy of the Livret bleu system. In any case, as the
rate of collecting funds for assets freely chosen by the
bank is set by the State, it is logical to take this cost
into account.

(176)

It may seem paradoxical that the assets freely chosen by
the bank generated negative margins for CrØdit Mutuel.
The consultant obtained the same result, although it was
lower in absolute terms than the one declared by CrØdit
Mutuel. This situation is in principle due to the fact that
the assets generated insufficient profitability compared
with the rate of commission and management rates of
these
the Livret bleu. The Commission considers that
figures illustrate once again the extremely conservative
nature of
estimate, which having
incorporated some corrections proposed by Arthur
Andersen, arrived at an estimate of a higher loss than
that initially evaluated by CrØdit Mutuel.

consultant’s

the

(177)

Table 6

Livret bleu profit and loss account for freely chosen assets during the period 1991 to 1998 (net margin
in FRF million and as a percentage)

(in FRF million)

Margin

1991

1992

1993

1994

1995

1996

1997

1998

Total

Initial estimate by CrØdit
Mutuel

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

Initial estimate by consultant

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

Second assessment by AA

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

Commission estimate

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

Margin (as a %)

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

Source: Arthur Andersen, Littlejohn Frazer.

(60) Conversely, in the event that the general economic interest asset
had shown a deficit, the payment of the liability by the State
would have been regarded as aid compatible with the Treaty by
virtue of the general economic interest service.

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(d) S u m m a r y : t h e o v e r a l l r e s u l t o f t h e

p r o f i t a n d l o s s a c c o u n t

(178) The summary of the evaluations for each sector gives
the final evaluation of the Livret bleu profit and loss

account. This Commission decision evaluates
the
amount of aid accumulated over the period 1991 to
1998 at FRF 1 074 million.

(179)

Table 7

Livret bleu profit and loss account for each sector over the period 1991 to 1998 (net margin in FRF
million and as a percentage)

(in FRF million)

Margin

1991

1992

1993

1994

1995

1996

1997

1998

Total

Funds transferred to CDC

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

ﬂ399

General interest assets

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

2 592

Freely chosen assets

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

[(cid:133)]

ﬂ1 119

Total pre-tax margin

1 096

505

301

ﬂ471

ﬂ135

ﬂ87

ﬂ156

20

1 074

Source: Arthur Andersen, Littlejohn Frazer.

(180)

Insofar as the sum of the financial benefits entered in
the accounts that were generated by the Livret bleu
from management of
(collection commission, profit
general interest assets, profit from management of funds
on its own account,
in other words using them for
assets chosen by the bank) exceeds the costs incurred by
in managing the collection process and
CrØdit Mutuel
that
there is a transfer of public resources
funds,
constitutes State aid. This amount does not take into
account:

5. Verification of compatibility with the Treaty of
aid granted to CrØdit Mutuel

5.1. Verification of compatibility with Article 87 of the

Treaty

(cid:151) the results of the profit and loss accounts for 1999
and 2000, which can be obtained easily by applying
the accounting methodology defined by the experts
for the years 1991 to 1998,

(cid:151) the capitalisation of the results at the Commission
reference rates on the exact date of recovery of aid
by the French authorities.

(182) While the system of collecting and allocating partially
savings comprises a support mechanism
tax-exempt
having a social character granted to the beneficiaries of
the Livret bleu general
interest assets, the measures in
question do not,
in this case, consist of aid having a
social character granted to individual consumers, or of
aid to promote the execution of an important project of
common European interest. Neither is the aid intended
to remedy a serious economic disturbance.

(181) To obtain the amount of

the excess compensation
relating to the period 1991 to 2000,
the French
authorities must add to this amount the account balance
for
the years 1999 and 2000 using the method
validated by Arthur Andersen and the Commission
consultant, and capitalise this amount year by year at
the Commission reference rate until the date of recovery
of the incompatible aid.

(183) As this is not aid intended to promote the economic
development of areas where the standard of living is
abnormally
serious
underemployment, or to facilitate the development of
certain areas in France,
the derogations provided for
under Article 87(3)(a) and the first part of (c) of the
Treaty cannot be taken into account.

low or where

there

is

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(184) Since CrØdit Mutuel is a profitable institution that does
not benefit from any restructuring or rescue plan, the
derogation provided for under the first part of the first
phrase in Article 87(3)(c), cannot be taken into account.

(a) E x i s t e n c e o f s e r v i c e s o f g e n e r a l

e c o n o m i c i n t e r e s t r e l a t i n g t o t h e L i v r e t
b l e u s y s t e m

(185) At

the end of

the Commission
these proceedings,
concludes that the aid in question is operating aid. It
must be pointed out that operating aid is particularly
distortive and that there is no derogation under Article
87 of the Treaty that would permit the present case to
be declared compatible with the common market. The
French authorities have not, in any case, provided any
information
these
proceedings that would allow this aid to come within
the scope of one of the derogations under Article 87.

Commission

during

the

to

(188) First of all

and the

the various

services of general

interest, CrØdit Mutuel
referred to three

interest
performed by CrØdit Mutuel must be
identified.
Emphasising the character of a service of general
French
economic
authorities
(i)
collection of deposits destined to finance general interest
assets,
(ii) maintaining branches in certain areas for
regional development purposes, and (iii) encouraging
savings by the general public. The Commission will not
give its opinion on the task of encouraging savings (62),
which would not change the decision one way or
another.

services:

separate

5.2. Verification of compatibility with Article 86(2) of the

Treaty

(186) As mentioned by the Commission when it
if

initiated
these proceedings,
there is no possible derogation
under Article 87 of the Treaty, the only possibility that
the aid is compatible with the common market lies in a
potential derogation from the prohibition on aid under
Article 86(2) of
relating to a general
economic interest service entrusted to CrØdit Mutuel
through the Livret bleu system.

the Treaty,

(187)

If the derogation provided for under Article 86(2) of the
Treaty is to be applied, the State support must be in
proportion to the objective: Article 86(2) states that
undertakings entrusted with the operation of services of
general economic interest ((cid:133)) shall be subject to the
rules contained in this Treaty, in particular to the rules
on competition, insofar as the application of these rules
does not obstruct the performance, in law or in fact, of
the particular
In its 1996
tasks assigned to them.
Communication on general interest services in Europe,
the Commission pointed out that, where appropriate,
exceptions to the rules in the Treaty under Article 86(2)
were subject
the principle of
proportionality, which consisted of checking that the
interest
means used are in proportion to the general
objectives being pursued (61).

to the observance of

(61) General Interest Services in Europe, Commission Communication
(OJ C 281, 26.9.1996, point 21, retained in the updated version
of 20.9.2000).

(i) The collection of deposits through the Livret bleu
destined for financing general interest assets

(189) The Commission may accept (63)

the task of
that
collecting deposits
through the Livret bleu (and in
particular the allocation of all or part of these funds to
general interest assets or the transfer of these deposits to
CDC) may, when looked at on the whole, constitute a
general interest service assigned by the State (64).

(ii) Maintaining branches in rural areas

(190) The Commission notes that CrØdit Mutuel stated,

in
that
response to the initiation of
because of the obligation to maintain a local presence in

these proceedings,

(62) This is traditionally the first objective pursued by the authorities.
The Minister of Finance had stated in debates preceding the vote
on the 1975 law that (cid:145)Based on the principle of mutual interest,
and with many branches operated by voluntary staff,
[CrØdit
Mutuel] is a way of attracting saving by the general public which
must be encouraged(cid:146).

(63) On the question of the general economic interest service,

the
French authorities wrote on 8 April 1998 that (cid:145)if the Commission
were to consider [...] that there was an element of State aid in the
Livret bleu system, it should regard it as compatible with the Treaty
in the light of the objectives pursued by this regime and of Article
[which became] 86(2)(cid:146),
to develop the
necessary arguments(cid:146).

reserving (cid:145)the right

(64) The operation of freely chosen assets is not in itself a general
interest service, but as the resources underpinning these assets
were obtained as a result of such a service, it shows that there are
grounds for considering the overall structure of the Livret bleu
system as a whole, with all its components.

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rural districts,
it had had to deal with costs ranging
from [(cid:133)] to [(cid:133)] per branch, in other words an annual
cost which it estimates at [(cid:133)]. CrØdit Mutuel considers
that collecting savings through a network of branches in
rural areas forms part of the general economic interest
service entrusted to it. This argument put forward by
CrØdit Mutuel is looked at in three stages: verification of
the legal reality of the alleged public service constraint,
examination of the evaluation of the costs produced by
CrØdit Mutuel, and examination of the development of
the CrØdit Mutuel network since 1991 following the
abolition of all State Controls (at 1 July 1991).

(193) With regard to the evaluation of the (cid:145)surcharges(cid:146) relating
to the rural network, the report by Arthur Andersen
does not mention these costs in its evaluation of the
Livret bleu analytical accounts. The evaluation produced
by CrØdit Mutuel
for
maintaining the rural network over the period 1991 to
1997 amounting
In this
evaluation, all the fixed expenses of the rural branches
were
any
allocated
justification (65).

to approximately

bleu, without

into account

Livret

takes

costs

[(cid:133)].

the

to

(191) The Commission points out

that

the CrØdit Mutuel
network of rural agencies already existed when the Livret
bleu was created in 1975. The French authorities, which
maintain that the CrØdit Mutuel network structure is a
result of the constraints they imposed, refer only to the
law concerning the opening and closure of bank
branches, which was repealed in 1987. Between 1987
control was, however,
and 1991,
maintained for CrØdit Mutuel. The rules provide for an
authorisation system, not a formal prohibition on the
closure of branches or on restructuring,
in particular
from 1987 onwards. This
system of control was
abolished on 1 July 1991 in the more general context
of the renegotiation of contractual relations between the
State and CrØdit Mutuel.

system of

a

regarding

(192) The existence of a State control does not prove the
existence of specific constraints. The French authorities
have not produced any legal document (specifications,
note mentioning obligations
geographic
coverage) proving the public service constraints relating
to the geographic distribution of
the CrØdit Mutuel
to a general economic interest
network with respect
service. By the same token, CrØdit Mutuel has not
produced any document proving that
this system of
regulatory control undermined its restructuring plans or
redeployment of the network (for instance in the form
of a refusal by the ComitØ des Etablissements de CrØdit
to shut down a branch). In conclusion, no proof has
been produced of
the existence of a public service
constraint on the non-closure of branches in rural areas
therefore not
before July 1991. This argument
admissible. No legal measure governed the management
of the CrØdit Mutuel network after 1 July 1991. The
French authorities
in
invoking the existence of public service constraints after
1991.

therefore have no grounds

is

(194) Following the criticism by the Commission consultant,
CrØdit Mutuel presented another evaluation orally at the
meeting of 7 February 2000 showing an amount that
was three times lower. This time CrØdit Mutuel assumes
that the rural branches have a Livret bleu activity that is
as important as that of the other branches, in relative
terms compared with their other activities. In fact, only
a marginal part of the activity of these agencies relates
to the Livret bleu, and this method involves allocating to
the Livret bleu the same share of
fixed costs as that
adopted for branches that dedicate a greater part of
their activity to the Livret bleu. This approach runs
counter to the construction of analytical accounts. That
is why Arthur Andersen did not use it. Similarly, the
Commission bases
itself on the analytical accounts
system and, in accordance with the request made by the
it accepted
French authorities on 7 January 2002,
exactly (cid:145)the share of costs corresponding to that of the
Livret bleu activity in branches(cid:146), and not the arbitrarily
higher costs as in the CrØdit Mutuel evaluation.

(195) CrØdit Mutuel also mentions, for the period 1991 to
1998, (cid:145)a considerable loss of earnings caused by quotas
placed on branches up to 1991(cid:146). The Commission
observes that
the legal system referred to does not
concern quotas but a control and that no proof of
quotas has been produced. Mindful of
that
CrØdit Mutuel had plenty of
time to restructure its
network after 1991, it is paradoxical, to say the least, to
blame the State for a delay of seven years in the
restructuring of the network. If CrØdit Mutuel recorded a
loss of earnings as a result of the late restructuring of its
this was clearly due to an
network (not proven),
independent management decision since it was not
subject to any control whatsoever.

the fact

(65) As has been noted, no legal obligation was established to maintain
branches in rural areas. Moreover, the Livret bleu activities were
marginal in relation to the total activities of these branches. Only
about [(cid:133)] of these costs were apparently already entered in the
Livret bleu analytical accounts system, which means that the CrØdit
Mutuel analytical accounts in rural areas wrongly affect the Livret
bleu [(cid:133)] costs arising from other activities.

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that

the importance of

(196) Lastly, it is not clear from the evolution of the CrØdit
Mutuel network that it underwent major restructuring
after July 1991, in other words after the removal of all
controls. CrØdit Mutuel kept a rural network of an
equivalent size even though it was not obliged to do so.
The comparison in the note of 7 January 2002 shows,
moreover,
the CrØdit Mutuel
rural network is quite relative. Compared with the
CrØdit Agricole (CrØdit Mutuel’s main competitor in
terms of private banking market position), CrØdit Mutuel
has a smaller share of branches in rural areas ([(cid:133)]
compared with [(cid:133)]), and in semi-rural areas
([(cid:133)]
compared with [(cid:133)]). CrØdit Mutuel enjoys a good
position on the private banking market, notably in rural
areas. The rural network is not a public service
constraint, but forms part of a corporate strategy.

(197) CrØdit Mutuel also invoked the fact that the quota of
total Codevi
funds (industrial development accounts)
transferred up to 1994 was higher for CrØdit Mutuel
than for other banks. While this is another tax-exempt
the Codevi accounts are distributed
savings account,
separately from the Livret bleu. No proof has been
produced to show that the nature of the contractual
arrangements between CrØdit Mutuel and the State
regarding the Codevi is linked precisely to the Livret bleu.

(b) P r o p o r t i o n a l i t y o f a i d t o c o s t s

a s s o c i a t e d w i t h t h e s e r v i c e s e n t r u s t e d
t o C r Ø d i t M u t u e l

(198) The above developments have enabled us to reach the
conclusion that CrØdit Mutuel obtained from the Livret
bleu system a cumulated non-capitalised profit of FRF
1 074 million, which exceeded the costs (including a
normal profit margin) of the task of distributing the
Livret bleu entrusted to it by the State, even before the
results from the Livret bleu for 1999 and 2000 are taken
into account.

(199) The Commission underlines the fact that the derogation
provided by the Treaty under Article 86(2) must be
applied rigorously and on an exceptional basis. That is
in fact the interpretation of the Court which states that
this provision lays down the conditions
in which
undertakings entrusted with the operation of services of
general economic interest may exceptionally not be
strict
subject

the Treaty (66). This

to the rules of

(66) Case C-159/94 Commission v France [1997] ECRI-5815, paragraph

48.

all

appears

in
to
circumstances
situation in which there

application
be
is
incompatible with a
over-compensation of costs that arise from a service of
general
is no
justification.

for which there

economic

interest

(200)

It may therefore be concluded that
the derogation
provided by Article 86(2) is not applicable in a case of
excess compensation, as in this case, and that the net
profit drawn from operating the Livret bleu has the
character of State aid that
is incompatible with the
Treaty.

5.3. The question of legitimate confidence

(201) The Commission considers

that

invoking legitimate
confidence would not in this case allow CrØdit Mutuel
and the French authorities to be regarded as exempt
from the normal rules of competition. The continuous
exchanges of correspondence during the investigation
from 1991 on and the many evaluations conducted
from the time the proceedings were opened rule out the
recognition of legitimate confidence in this case based
on the complaint lodged. These exchanges clearly show
that the French authorities and CrØdit Mutuel were fully
informed of the existence of a problem of compatibility
with the rules of competition at least as from 1991.

VI. CONCLUSION

(202) The granting to CrØdit Mutuel of

right of
distribution of the Livret bleu contains State aid within
the meaning of Article 87(1) of the Treaty. This aid is
not eligible for any of the derogations provided for in
Article 87(2) and (3) of the Treaty.

the

(203) The derogation provided for in Article 86(2) of

the
Treaty can be only partly applied since, as demonstrated
by the audit conducted on behalf of the Commission,
the compensation granted during the period is not
strictly limited to the excess costs relating to the general
economic interest service which may be taken into
account. As
the only possible derogation
permitting the exemption of the measures in question
from the obligations
rules of
competition, notably the prohibition under Article
87(1), the result is that the fraction of State resources
granted to CrØdit Mutuel which exceeds the net costs of
managing and collecting the Livret bleu, mindful of a

laid down in the

this was

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profitability margin,

normal
excess
compensation of the costs of the public service and
therefore constitutes State aid that is incompatible with
the common market,

constitutes

authorities must
the
Commission reference rate up to the date of recovery of the
incompatible aid.

then capitalise

amounts

these

at

HAS ADOPTED THIS DECISION:

Article 1

The measures

1.
for CrØdit Mutuel
taken by France
involving the collection and management of regulated savings
under
is
incompatible with the common market.

the Livret bleu system comprise State aid that

2.
The aid is not eligible for any derogation under Articles
87(2) and (3) of the Treaty. It may be partly eligible for the
derogation provided for in Article 86(2) of the Treaty, insofar
as it is essential for the performance of the general economic
interest task entrusted to CrØdit Mutuel by the State. The aid
exceeding the cost of collecting and managing the Livret bleu
cannot be regarded as compatible with the general interest.

2.
France shall modify the rate of commission for the Livret
bleu savings paid by the Caisse des DØp(cid:244)ts et Consignations to
CrØdit Mutuel with a view to eliminating in future all aid that
exceeds the management and collection costs that may be
taken into account.

The French authorities

shall ask CrØdit Mutuel
3.
introduce and publish separate accounts for the Livret bleu.

to

4.
The French authorities shall send to the Commission the
bank’s annual report and a three-year report on the Livret bleu
accounts.

5.
The Commission shall conduct any checks it deems
appropriate to verify that the aid to CrØdit Mutuel is strictly in
proportion with the general economic interest task entrusted
to it. It shall,
if it deems necessary, mandate consultants to
audit the Livret bleu’s analytical accounts.

Article 2

Article 3

shall

France

recover

from CrØdit Mutuel

1.
aid
incompatible with the common market granted to it since 1
January 1991. The amount of the incompatible aid over the
the
period 1991 to 1998 is determined by capitalising at
Commission reference rate the following annual flows:

the

(in FRF million)

France shall
inform the Commission, within two months of
notification of this Decision, of the measures it has taken to
comply with it.

Article 4

1991

1992

1993

1994

1995

1996

1997

1998

This Decision is addressed to the French Republic.

Flows

1 096

505

301 ﬂ471 ﬂ135

ﬂ87 ﬂ156

20

The result of the Livret bleu analytical accounts for the years
1999 and 2000, which the French authorities are required to
evaluate
according to the method adopted by Arthur
Andersen, and given the corrections made by the Commission
consultant, must be added to this amount. The French

Done at Brussels, 15 January 2002.

For the Commission

Mario MONTI

Member of the Commission