France Telecom Vows To Appeal Illegal State Aid Ruling

by Ulrika Lomas, for LawAndTax-News.com, Brussels

20 July 2004

In a statement released on Friday, France Telecom vowed to appeal against an anticipated EC ruling that the firm must pay back around EUR1.1 billion in allegedly illegal state aid.

The European Commission believes that the firm received around EUR1 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.

Responding to what it referred to as "sustained and recurrent rumours and leaks", the French telecoms giant announced that it will "take action by all means to defend the interests of the group and its 1.4 million shareholders".

The statement went on to add that:

"It (France Telecom) reiterates that, in the case that a negative decision is taken by the Commission, it will appeal this decision in the Court of First Instance in Luxembourg, as well as measures taken to effect a decision to get France Telecom to pay back so-called state aid."

Reporting last week, the Financial Times suggested that even the EC's own lawyers are troubled by some of the assertions made with regard to France Telecom, not least with the attempt to place a monetary value on M. Mer's support for the firm.

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