Bouyges (Bouygues SA and Bouygues Télécom SA) and the Commission submitted two separate appeals asking the ECJ to set aside the General Court’s judgement that the French Government’s commitment to assist France Telecom by means of a €9bn line of credit did not amount to State Aid. The General Court’s judgement was given in response to the Commission’s initial decision that the intervention was State Aid.
The ECJ found that the General Court erred in law, both in its review of the Commission’s identification of the State intervention measure conferring State aid and in the examination of the links between the advantage identified and the commitment of State resources found by the Commission.
The General Court was wrong in holding that it was necessary to identify a reduction of the State budget or a sufficiently concrete economic risk of burdens on that budget, closely linked and corresponding to a specific advantage deriving either from the announcement of 4 December 2002 or from the shareholder loan offer.
It follows that the General Court wrongly required a close connection between the advantage and the commitment of State resources, which led it to exclude immediately the possibility that those State interventions might, depending on their links with one another and their effects, be regarded as a single intervention.
State intervention capable of both placing the undertakings which it applies to in a more favourable position than others and creating a sufficiently concrete risk of imposing an additional burden on the State in the future, may place a burden on the State’s resources. In particular, advantages given in the form of a State guarantee can entail an additional burden on the State.
Consequently, when determining the existence of State aid, the Commission must establish a sufficiently direct link between the advantage given to the beneficiary and a reduction of the State budget or a sufficiently concrete economic risk of burdens on that budget. However, contrary to what the General Court found, it is not necessary that such a reduction, or even such a risk, should correspond or be equivalent to that advantage, or that the advantage should have as its counterpoint such a reduction or such a risk, or be of the same nature as the commitment of State resources from which it derives.
For those reasons the ECJ set aside the judgment of the General Court and referred the two linked cases back to the General Court for judgment on the arguments raised before it by France and France Télécom on which it did not give a ruling. The Court of Justice, however, gave a final judgment itself on the arguments that were dealt with by the General Court.
In doing so, the ECJ noted that it is clear that the announcement of 4 December 2002 of an intention to support France Telecom was inseparable from the shareholder loan offered in the form of a €9 billion credit line which the announcement expressly mentions. Additionally, that announcement was made on the actual day the Commission was notified of the shareholder loan.
The Commission also rightly considered that the shareholder loan, announced and notified on 4 December 2002, conferred an advantage on France Télécom by enabling it ‘to increase its means of financing and to reassure the market as to its capacity to meet its maturities’.
On that issue it is highly relevant that between March and July 2002, Moody’s and S & P downgraded France Télécom’s rating for credit notes to the lowest investment grade, with a negative outlook, stating that this grade had been maintained only as a result of the comments from the French State. Moreover, from 9 December 2002 at the latest, the markets could consider that the intervention of the State had ensured France Télécom’s liquidity with respect to its debts for the following 12 months.
So far as the condition relating to the commitment of State resources is concerned, the ECJ found that the shareholder loan concerned the opening of a credit line of €9 billion. France Télécom did not actually sign the loan agreement sent to it but the ECJ found that the company could nevertheless have signed it at any time, thereby acquiring the right to obtain immediate payment of the sum of €9 billion.
Furthermore, France Télécom, in a presentation to investors on 5 December 2002, described the French State ‘back-up facility’ as immediately available, on the same day S & P announced that the French State would immediately grant a shareholder loan, it was indicated to the French National Assembly that the shareholder loan ‘has already been made available to France Télécom’, and Moody’s announced on 9 December 2002 that it was confirmed that ‘the €9 billion loan facility has been put in place’.
Having regard to the potential additional burden of €9 billion on the State’s resources, the Commission had rightly found in its initial decision that the announcement of a shareholder loan was an advantage granted through State resources.