On 30 November 2016, the European Court of Justice
("ECJ") issued its second judgment in the case concerning
public statements made by the French authorities in support of
France Télécom ("FT" – now Orange)
and the offering of a shareholder loan to FT.
In 2002, FT, a public limited company, was facing serious
financial difficulties. Between July and October 2002, the French
Minister for Economic Affairs made several statements aimed at
assuring FT that it had the support of the French Authorities. In
the meantime, FT initiated a restructuring process. Subsequently,
in December 2002, the French state offered a shareholder loan in
the form of a credit line to FT. The offer was, however, neither
accepted nor acted upon.
By decision of 2 August 2004, the European Commission (the
"Commission") concluded that the credit line, placed in
the context of the public statements, constituted state aid
incompatible with EU law. The French government, FT and other
interested parties brought an action before the General Court
seeking annulment of the Commission's decision.
In a judgment of 21 May 2010, the General Court annulled the
Commission's decision on the ground that the measures at issue
did not involve a transfer of state resources, despite the
financial advantage thereby conferred on FT (see VBB on
Competition Law, Volume 2010, No. 5, available at
www.vbb.com). However, this judgment was set aside by the ECJ
on 19 March 2013 (see VBB on Competition Law, Volume 2013, No.
3, available at
www.vbb.com). According to the ECJ, the shareholder loan,
although unimplemented, entailed a transfer of state resources
insofar as the state budget was potentially burdened. The ECJ
referred the case back to the GC for judgment on the remaining
By judgment of 2 July 2015, the General Court again annulled the
Commission's decision, this time on the ground that the
Commission had not correctly applied the test of the prudent
private investor (see VBB on Competition Law, Volume 2015, No.
7, available at
www.vbb.com). Under this test, the Commission has to determine
whether a prudent private investor in the same position as the
French state would have acted in the same way. The General Court
concluded that the Commission applied the test neither to the
correct measures, i.e., the offering of the shareholder
loan rather than the previous public statements, nor to the correct
timeframe, i.e., December 2002 rather than July 2002.
This second judgment of the General Court was again appealed.
The Commission claimed that the General Court had (i) infringed the
obligation to state reasons, (ii) infringed Article 107(1) TFEU,
(iii) exceeded the limits of judicial review, and (iv) distorted
the Commission's decision. In its judgment of 30 November 2016,
the ECJ rejected each of the Commission's grounds of appeal and
upheld the General Court's judgment of 2 July 2015.
In particular, the ECJ confirmed that the prudent private
investor test should have been applied to the shareholder loan,
which was only granted in December 2002. By assessing the prudent
private investor criterion in relation to the situation as it
existed in July 2002, the Commission necessarily excluded from that
assessment relevant factors that occurred between July 2002 and
December 2002. On these grounds, the ECJ concluded that the
Commission failed to take account of all relevant factors for the
assessment of the state aid character of the measures.
In consequence of this second judgment of the ECJ in this case,
the Commission's decision of 2 August 2004 is definitively
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