The European Commission on Tuesday ruled that France Telecom received illegal state aid between 1994 and 2002, which must be paid back to the state.
The Commission believes that the firm received around €1.1 billion in subsidies between 1994 and 2003 as a result of favourable rates and thresholds for the taxe professionelle levy. It has additionally suggested that the telecoms provider benefited from a less tangible form of aid when the then Finance Minister, Francis Mer pledged to maintain it as a going concern.
In a statement released this week, the EC announced that:
"The exemption from business tax which the France Télécom group enjoyed up to the end of 2002 constituted aid that was incompatible with the EC Treaty. France Télécom has to pay back to the state an amount estimated at between €800 million and €1.1 billion plus interest. In addition the shareholder’s advance made available to the operator in December 2002 contains aid components."
Pre-empting the EC verdict, France Telecom announced last Friday that it would appeal against any ruling which suggested that it had received illegal state aid, and stated its intention to "take action by all means to defend the interests of the group and its 1.4 million shareholders".
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