By Tom Fairless
BRUSSELS--France didn't violate European Union rules by offering
a EUR9 billion loan to France Telecom SA in 2002 when the company
was going through "a major crisis," the bloc's second highest court
ruled on Thursday.
The ruling is the latest twist in a lengthy legal battle over
Paris' efforts to support France Telecom in 2002, fought out
between the former French telecom monopoly, its competitor Bouygues
SA (EN.FR) and the EU's Brussels-based executive arm.
At issue is whether the French government breached EU rules that
forbid governments from providing aid to selected companies.
The government in Paris issued a series of statements in 2002 in
which it pledged to support France Telecom, in which it had a
majority shareholding, if the company encountered difficulties. The
statements were followed later that year by a proposal for a EUR9
billion shareholder loan.
The European Commission, which polices the bloc's state-aid
rules, ruled in 2004 that France's actions had violated EU law.
That decision was appealed at the General Court of the EU, the
bloc's second-highest, which annulled it in 2010, arguing that the
statements of the French authorities hadn't committed state
resources.
But the EU's top court, the Court of Justice, overturned the
General Court's decision in 2013, ruling that the loan had still
conferred an illegal advantage to France Telecom. Nevertheless, the
case was referred back to the General Court for a ruling on
arguments that it hadn't previously considered.
In Thursday's ruling, the General Court again sided with France,
arguing that the EU's executive arm hadn't correctly assessed
whether a "prudent private investor" would have acted in the same
way as the French state in offering the loan.
"Capital made available to a business by the state in
circumstances which correspond to normal market conditions cannot
be classified as state aid," the court said.
The ruling also said that the French government's statements in
2002 "did not in themselves anticipate the specific financial
support which was ultimately put in place" later that year.
Write to Tom Fairless at tom.fairless@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires