HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN"EN
12.10.2012 Official
Journal
of
the
European
Union
L
279/1
II
(Non-legislative acts)
DECISIONS
COMMISSION DECISION
of 20 December 2011
on State aid C 25/08 (ex NN 23/08) reform of the arrangements for financing the retirement
pensions of civil servants working for France Télécom implemented by the French Republic in
favour of France Télécom
(notified under document C(2012) 9403)
(Only the French version is authentic)
(Text with EEA relevance)
(2012/540/EU)
THE EUROPEAN COMMISSION,
procedure laid down in Article 108(2) of the Treaty on
the Functioning of the European Union (TFEU) in respect
Having regard to the Treaty on the Functioning of the European
of this aid.
Union, and in particular the first subparagraph of Article 108(2)
thereof ( 1 ),
(4) The
French
Republic
presented
its
comments
on
18
July
Having regard to the Agreement on the European Economic
2008.
Area, and in particular Article 62(1)(a) thereof ( 2 ),
Having called on interested parties to submit their comments (
(5) The
Commission’s
decision
to
initiate
the
procedure
was

3 )
pursuant to the provisions cited above and having regard to
published in the Official Journal of the European Union ( 4 )
their comments,
and the Commission invited interested parties to submit
their comments.
Whereas:
1.
(6) On
22
September
2008,
the
Commission
received
PROCEDURE
comments from France Télécom and, after extending
(1) By
a
complaint
dated
4
October
2002,
supplemented
on
the deadline, it received comments from the
16 January 2003, the Commission received allegations
complainants and a telecommunications operator on 1
that the French Republic had implemented aid in
and 16 October 2008, respectively. The Commission
favour of France Télécom which reduced its financial
forwarded these to the French Republic, giving it the
charges in part, and notably those relating to the
opportunity to comment on them, and received
financing of retirement pensions. By letter dated
comments from the French Republic by letter dated
17 March 2004, the French Republic sent the
13 February 2009.
Commission the information it had requested concerning
the complaint.
(7) On
16
February
2009,
France
Télécom
presented
comments drawing the Commission’s attention to a
(2) By
letters
dated
2
April
2004
and
24
February
2006,
the
General Court judgment of 28 November 2008 (
complainants supplied additional information relating to

5 )
which, in its opinion, confirms its arguments. On
the complaint.
14 May 2009, the telecommunications operator
referred to in recital 6 presented supplementary
(3) By
letter
dated
20
May
2008,
the
Commission
informed
the French Republic of its decision to initiate the
information in relation to its comments during the
procedure, referring to a Commission decision dated
11 February 2009 ( 6 ) which, in its opinion, supports its
( 1 ) With effect from 1 December 2009, Articles 87 and 88 of the EC
comments.
Treaty have become Articles 107 and 108, respectively, of the Treaty
on the Functioning of the European Union (TFEU). The two sets of
provisions are, in substance, identical. For the purposes of this
( 4 ) See footnote 3.
decision, references to Articles 107 and 108 of the TFEU should
( 5 ) Judgment of 28 November 2008 in Joined Cases T-254/00,
be understood as references to Articles 87 and 88, respectively, of
T-270/00 and T-277/00 Hotel Cipriani and others v Commission
the EC Treaty where appropriate.
ECR II-3269.
( 2 ) OJ L 1, 3.1.1994, p. 3.
( 6 ) Commission Decision 2009/703/EC of 11 February 2009 on State
( 3 ) OJ C 213, 21.8.2008, p. 11.
aid C55/2007 granted to BT Plc (OJ L 242, 15.9.2009, p. 21).

---

L 279/2
EN
Official Journal of the European Union
12.10.2012
(8) Meetings
were
held
between
representatives
of
the
public operator with legal personality. Previously it was a
Commission and France Télécom at the request of the
Directorate-General of the Ministry of Postal and Tele
latter on 17 December 2009, 23 September 2010 and
communications Services. Through this same Law, full
12 October 2010. France Télécom submitted additional
ownership of the State’s movable and immovable assets
comments on 18 October 2010.
assigned to the departments within this Directorate-
General was transferred automatically and free of
(9) On
18
March
2010,
at
the
Commission’s
request,
the
charge to France Télécom.
French Republic provided clarifications and an update
of certain information contained in its initial observa
tions, to which it attached an outline of the initial obser
(14) Article
3
of
the
1990
Law
assigned
France
Télécom
a
vations.
mandate: (i) to provide all national and international
public telecommunications services; (ii) to establish,
(10) On 22 September 2010, the French authorities
develop and operate the public networks necessary for
forwarded further comments to the Commission and
supplying these services and to ensure their connection
requested a meeting, which was held on 22 October
to foreign networks; (iii) to provide all other telecom
2010. By letter of 28 October 2010, the Commission
munications services, installations and networks, and to
sent them the factual clarification referred to during the
establish networks distributing radio and television
meeting together with the supplementary comments
broadcasting services by cable.
made by France Télécom and invited the French
Republic to return any comments it may have. On
17 November 2010, the Commission sent the additional
(15) Pursuant to Article 29 of the 1990 Law, the staff of
clarifications requested by the French authorities on
France Télécom has a special status, adopted in
10 November 2010 to enable them to prepare their
accordance with to the Law on the rights and obligations
comments.
of civil servants (loi portant droits et obligations des
fonctionnaires) and the Law laying down the Staff Regu
(11) By
letter
of
9
December
2010,
supplemented
on
24
June
lations for the civil service (loi portant dispositions statu
2011, the French Republic submitted its supplementary
taires relatives à la fonction publique de l’Etat). The 1990
comments, together with an update of certain
Law permitted the employment of contract staff under
information contained in its initial comments. Meetings
collective agreements in the framework defined by a
were held with the French authorities on 28 June and
planning contract concluded between the State and the
4 July 2011. Further comments were presented on
undertaking. This provided for a 3 % cap on staff
7 October 2011.
numbers for this type of recruitment.
2. DETAILED DESCRIPTION OF THE AID
(16) Continuing
the
previous
budgetary
practice,
Article
30
of
(12) The
measures
covered
by
the
present
procedure
consist
the 1990 Law established the allocation of responsi
of the changes made in 1996 to France Télécom’s
bilities relating to financing the employees’ social
financing arrangements relating to the payment of the
benefits between the French State and France Télécom
retirement pensions of its staff members with civil
as follows:
servant status. The previous arrangements were
introduced in 1990 when France Télécom was founded
as a separate entity from the State administration. In
‘The active and retired staff of the Ministry of Postal and
practice, the 1990 Law maintained the existing system
Telecommunication Services and those of the public
for France Télécom’s social security contributions. A new
operators covered by the Staff Regulations for civil
scheme was introduced in 1996 when France Télécom
servants, and their beneficiaries, shall be entitled to
was set up as a public limited company, listed on the
benefits in kind under sickness, maternity and invalidity
stock exchange and opened up an increasing share of its
insurance, through the Mutuelle Générale des P.T.T. [a
capital on the one hand and exposed itself entirely to
French mutual benefit society], under the conditions
competition from the markets in which it operated in
stipulated in Book III and in Chapter II of Title I of
France and in the other Member States of the European
Book VII of the Social Security Code. However, the
Union on the other. For the most part, the scheme
part of the contribution for which the State is responsible
introduced in 1996 is still in force today.
under Article L. 712-9 shall be assumed by the public
operators for their civil servants.
2.1. The legal framework of the status of France
Télécom and its staff between 1990 and 1996
The payment and servicing of pensions granted under the
2.1.1. Status of France Télécom and situation of its staff
Civilian and Military Retirement Pensions Code to civil
between 1990 and 1996
servants at La Poste and France Télécom shall be effected
by the State. In return, the public operators shall be
(13) Pursuant
to
Law
No
90-568
of
2
July
1990
(hereinafter
‘the 1990 Law’) (
required to pay to the Public Treasury:

7 ), France Télécom was set up as a
( 7 ) Law No 90-568 of 2 July 1990 on the organisation of the public
a) The amount of the deduction made from the salary of
postal and telecommunications service (Loi n o 90-568 du 2 juillet
1990 relative à l’organisation du service public de la poste et des tele
the civil servant, the level being fixed by Article L. 61
communications), JORF No 157 of 8 July 1990, p. 8069.
of the Civilian and Military Retirement Pensions Code;

---

EN
12.10.2012 Official
Journal
of
the
European
Union
L
279/3
b) An additional contribution allowing full funding of
established by calculating the difference between the total
the pensions that have been and are to be awarded
amount of retirement pensions financed by the French
to their retired officials.
State and the share deducted from the salaries of civil
servants still in active service. France Télécom also
The charges resulting from applying the provisions of
participated in the ‘compensation’ and ‘over-compen
Article L. 134-1 of the Social Security Code to civil
sation’ schemes, providing for transfers designed to
servants at La Poste and France Télécom of are payable
ensure an equilibrium with the pension schemes for
in full by the public operators.
civil servants of other public bodies. The employee
contribution to the funding of civil servants’ retirement
A Council of State Decree shall determine, if necessary,
pensions was determined, pursuant to Article L 61 of the
the conditions for the application of these provisions.’
Civilian and Military Retirement Pensions Code, by with
holding a contribution from the civil servant’s salary, set
(17) Between
1991
and
1996,
pursuant
to
Article
30
of
the
at 7,85 % of the gross index-related salary.
1990 Law, the employer’s contribution (i.e. the additional
contribution referred to in Article 30, point (b), of the
(18) The payments by France Télécom rose from EUR
1990 Law in its original wording), which was payable by
920 million to EUR 1 151 million between 1991 and
France Télécom for the civil servants it employs was
1996 and were as follows:
Table 1
France Télécom employees’ and employer’s contributions 1991-96 ( 8 )
(million EUR)
1991 1992 1993 1994 1995 1996
A/Total pensions paid 939 983 1
070 1
079 1
173 1
214
a 1/employees’ contributions 195 201 217 213 229 238
a 2/employer’s contribution 743 782 853 866 944 976
B/Compensation and over-compensation 176 188 277 136 201 175
Total charges (A + B) 1
115 1
171 1
348 1
215 1
375 1
389
Total share from France Télécom (a2 + B) 920 970 1
131 1
002 1
146 1
151
(19) France
Télécom
recorded
the
pension-related
expenditure
Law. With effect from 31 December 1996, on the one
in the books on the basis of the contributions paid. On
hand it conferred on France Télécom the title of public
account of the certainty that this expenditure would
company subject to the laws and regulations applicable
increase, given the foreseeable trend in retirement
to public limited companies, in so far as they are not
pensions to be paid to its former civil servants, France
contrary to the law, and on the other hand, it transferred,
Télécom also entered in its accounts an annual provision
free of charge, the bulk of the assets, rights and
designed to spread the estimated effect of future increases
obligations of the legal entity governed by public law
in payments over a 30-year period. The total amount of
France Télécom to the public company France Télécom.
the provision thus set aside up to 1996 was FRF
23,4 billion (EUR 3,6 billion). According to the French
authorities, the French State, acting as its own insurer,
(21) The capital of the company France Télécom SA (‘France
for its part, did not set aside reserves for these
Télécom’) was established by decree at FRF 25 billion
pensions ( 9 ).
(EUR 3,8 billion) based on net assets recorded in the
balance sheet at 31 December 1995. The France
Télécom shares were admitted in October 1997 to the
2.1.2. The changes made to the status of France Télécom and
premier marché of the Paris Bourse and to the New York
the position of its civil service staff from 1996
Stock Exchange (NYSE). According to the annual report
for 1998, 63,6 % of France Télécom’s capital was held by
The status of the company France Télécom
the State, 31,2 % by private investors, 3,2 % by France
Télécom staff and 2 % by Deutsche Telekom. From
(20) Law
No
96-660
of
26
July
1996
( 10 ) (hereinafter ‘the
7 September 2004, with the transfer of 10,85 % of the
1996 Law’) amended certain provisions of the 1990
capital, the French State no longer held a majority stake.
Subsequently, this share continued to fall to reach
( 8 ) Figures rounded off.
26,65 % of the capital at 31 December 2008.
( 9 ) France Télécom, Annual report 1996, pp. 35, 60 and 64 and reply
However, with 26,65 % of the voting rights and in the
from the French authorities dated 17 March 2004, point 4(1) a).
absence of other significant shareholder groups, the
( 10 ) Law No 96-660 of 26 July 1996 on the national company France
Télécom (Loi n o 96-660 du 26 juillet 1996 relative à l’entreprise
French State appoints the Chief Executive Officer,
nationale France Télécom), JORF No 174 of 27 July 1996, p. 11398.
remains the principal shareholder of France Télécom

---

L 279/4
EN
Official Journal of the European Union
12.10.2012
and in practice can determine the outcome of share
This rate may be revised in the case of an adjustment
holder votes on questions requiring a simple major
to these charges. The arrangements for the deter
ity ( 11 ).
mination and payment to the State of the employer’s
contribution shall be established by Decree of the
Council of State;
The statuses and recruitment of staff of the company France
Télécom
d) (…), an exceptional flat-rate contribution, of which
(22) The change of status of France Télécom provided for by
the amount and the arrangements for payment shall
the 1996 Law also included various provisions relating to
be established by Finance Law before 31 December
its staff. According to this Law, the category of civil
1996.’
servants of France Télécom is attached to the national
company France Télécom and comes under its
management. The staff with civil servant status retained
this status and the guarantees attaching to it. The
(25) The 1996 Law also excluded France Télécom from the
conditions of employment of the civil servants working
scope of the general and specific compensation for old-
for France Télécom are identical to those of the civil
age provided for by the 1990 Law and resulting, for
service: they benefit from the guarantee of employment
France Télécom, in the payment of compensation and
and may be dismissed only on serious grounds, in the
over-compensation in addition to the employer’s
cases defined by law. As regards the recruitment of new
contribution, as shown in Table 1. Between 1991 and
staff, the 1996 Law allowed France Télécom to recruit
1996, the amounts paid in this respect accounted for
civil servants until 1 January 2002, whilst at the same
18 % of the pensions paid to the civil service staff.
time allowing it to recruit employees on a contract basis
under collective agreements.
(26) The
employer’s
contribution
in
full
discharge
of
liabilities,
introduced by the 1996 Law, replaces the additional
(23) At 31 December 1996, France Télécom employed
contribution provided for in point (b) of Article 30 of
165 200 persons, of whom 94,1 % were civil servants.
the 1990 Law. This contribution is based on a competi
In fact, without awaiting the deadline of 1 January 2002
tively fair rate based on equalisation of the levels of
established by the 1996 Law, France Télécom stopped
wage-related social security contributions and tax
recruiting civil servants from 1997. Consequently, the
payments from equal net salary. The method of equal
number of civil servants decreased by 47 % in 10
isation is based on a reconstruction of what the costs
years, from 133 434 civil servants in 1997 to 69 892
would be for a competitor with employees coming under
in 2007. This decline is distinctly steeper than that of the
the ordinary social security arrangements, including
total workforce of France Télécom (– 25 %), which stood
retirement pensions, providing them with a net wage
at 124 166 employees at 31 December 2007.
equal to that of the civil servants of France Télécom
with an identical employment structure.
The employer’s contributions for retirement pensions of the
company France Télécom
(27) The method excludes the contributions paid by
competitors to insure against the risks not common to
(24) Article 6 of the 1996 Law also amended Article 30 of
employees and civil servants, notably that of
the 1990 Law by adding two paragraphs c) and d) to the
unemployment and the claims of employees in the
original text. The Law requires France Télécom to pay to
event of the company going into receivership or
the Public Treasury, in return for the payment and
compulsory liquidation (hereinafter ‘wage guarantee
servicing by the State of pensions granted to civil
insurance’ or ‘WGI’). When the 1996 Law was passed,
servants working for France Télécom:
this difference between France Télécom and its
competitors did not go unnoticed by the legislator,
which pointed out that: ‘the combination of the
provisions of Article 6 allows France Télécom to be
‘c) (…), an employer’s contribution in full discharge of
relieved of the UNEDIC[French unemployment
liabilities, due from 1 January 1997, in proportion to
insurance scheme] contributions that its potential
the sums paid as salary subject to pension deduction.
competitors, for their part, pay’ ( 12 ).
The rate of the contribution in full discharge of
liabilities shall be calculated in such a way as to
equalise the levels of wage-related social security
contributions and tax payments between France
(28) The
employer’s
contribution
paid
by
France
Télécom,
Télécom and the other companies in the telecom
recalculated each year, is expressed as a percentage of
munications sector under the ordinary social security
the gross index-related salaries of the civil servants still
arrangements, for the risks that are common to
employees under ordinary law and to civil servants.
( 12 ) Senate, Report No 406 drawn up on behalf of the Committee on
Economic Affairs and the Plan on the national company France
( 11 ) Reference document 2008 France Télécom, lodged with the
Télécom Bill (projet de loi relatif à l’entreprise nationale France
Financial Markets Authority, p. 18.
Télécom) by Mr Gérard Larcher, p. 17.

---

EN
12.10.2012 Official
Journal
of
the
European
Union
L
279/5
working. The rate of this employer’s contribution
longer linked to the number of retired civil servants. The
averaged […] (*) % between 1997 and 2010 and was
transfer of costs to the State introduced by the 1996 Law
as indicated in Table 2, according to the observations
occurred when the forecasts used by the Senate showed a
of the French Republic:
significant increase in retirement costs from 2005, rising
from FRF 13 billion (EUR 1,98 billion) in 2007, to FRF
21,5 billion (EUR 3,3 billion) in 2017 and FRF 34 billion
Table 2
(EUR 6,1 billion) in 2027 ( 13 ).
Employer’s contribution in full discharge of liabilities paid
by France Télécom between 1997 and 2010
(31) The debates on the draft law at the National Assembly
and the Senate report a transfer of FRF 250 billion of
Year Rate
of
contribution Million
EUR
retirement costs to the State budget, that would not be
covered by FRF 100 billion in annual contributions and
1997 36,20
% 1
088,9
an exceptional contribution of FRF 40 billion, even with
the addition of the proceeds from the sale of a
1998 35,40
% 1
069,6
percentage of the company’s shares. The same debates
indicate a maximum estimated exceptional contribution
1999 36,70
% 1
108,5
of FRF 40 billion to reduce the new, heavy burden for
the State. This amount was determined with the advice of
bankers so as to be compatible with a debt-to-equity
2000 36,40
% 1
085,0
ratio of 150 % and to correspond to the retirement
pension provisions made by the company and to the
2001 37,00
% 1
088,6
additional cost for the State, over 10 years, and no
more than 10 years, resulting from the difference
2002 37,70
% 1
100,1
between the pensions paid and the contribution in full
discharge of liabilities levied henceforth ( 14 ).
2003 37,60
% 1
085,0
(32) The aim of compensating the State is recalled, not only
2004 […]
% 1
048,6
in the wording of Article 30 of the Law adopted by the
legislator and during the debates on the draft 1996 Law,
2005 […]
% 984,6
but also in the Annual Report of France Télécom for
1997, which reports on the ‘payment to the French
State of an exceptional contribution of 37,5 billion
2006 […]
% 957,6
francs relating to the future retirement of former civil
servants’ ( 15 ). The provisions made by France Télécom
2007 […]
% 917,6
enabled France Télécom to reduce the net financial
effort to be made, since it confined itself to paying, in
2008 […]
% 859,2
a single year, the additional cost of the reform to the
State for 10 years.
2009 […]
% 805,4
(33) In
this
way,
it
appears
that
the
provision
intended
to
2010 […]
% 744,5
spread the effect of future increases in contributions
resulting from the 1990 Law, set aside each year by
France Télécom for a total amount of FRF 23,4 billion
(29) The
end
to
the
recruitment
of
civil
servants
from
1997
(EUR 3,6 billion) in 1996, was taken into consideration
capped the staff of civil servants working for France
when calculating the amount of the exceptional
Télécom. Despite the retirement of a growing proportion
contribution (or compensating balance). The part of
of the staff of civil servants between 1991 and 2010, the
this contribution which did not correspond to the
table shows that the employer’s contribution of EUR
provisions set aside would cover this additional cost for
744 million paid by France Télécom in 2010 was EUR
a period of 10 years. Its amount was established taking
407 million less than the retirement pension costs that
into account the amount already set aside by the
the company paid to the French State before the entry
company as clearly emerges from the discussions at the
into force of the reform in 1996 and was equivalent to
time.
the only employer’s contribution that France Télécom
paid 20 years previously in 1991 (EUR 1 151 million
and EUR 743 million respectively, see Table 1).
(34) In fact, since the employer’s annual contribution
introduced by the 1996 Law is in full discharge of liabil
ities, France Télécom’s obligation has since been confined
(30) The
effect
therefore
of
the
reform
introduced
by
the
1996 Law is that the amount of France Télécom’s
contribution is falling in absolute value and is no
( 13 ) Senate, Report No 406 by Mr Gérard Larcher, cited above, p. 15.
( 14 ) National Assembly, Transcript of the debate of 26 June 1996, pp. 4
to 6 and 20. Senate, Transcript of the session of 10 June 1996,
(*) The figures or passages between square brackets […] are confidential
p. 6.
or protected as business secrets.
( 15 ) France Télécom, Annual Report 1996, p. 56.

---

L 279/6
EN
Official Journal of the European Union
12.10.2012
to the payment of this contribution, without any other
provided for by the Finance Act 1997, this period was
commitment to cover any future deficits either from the
shortened. As shown in Table 3, the cumulative amount
retirement pension scheme of its civil servant staff or
of the annual payments by the public body already
from other civil service schemes. The accounting
amounted to EUR 5,47 billion in 2010. The winding-
provision therefore was rendered redundant by the
up of the public body as a result of the transfer in full
1996 Law. The provision was credited to the profit
of the available resources was scheduled for 31 December
and loss account of France Télécom at 31 December
2011 ( 20 ). The Finance Act 2011 therefore provides for a
1996, at a value of FRF 17,5 billion (EUR 2,7 billion)
payment of EUR 243 million to the earmarked account
in the net result ( 16 ).
for pensions for that year, which should clear the
revenue of the public body ( 21 ).
(35) In addition, the amount of the exceptional flat-rate
contribution provided for by the 1996 Law in return
for the payment and servicing by the State of the
pensions awarded to the civil servant staff of France
(38) In
any
event,
the
amount
of
the
exceptional
contribution
of FRF 37,5
billion allocated to the public body
Télécom was fixed at FRF 37,5 billion (EUR 5,71 billion)
managing the exceptional contribution from France
by the Finance Act 1997. It was financed by an increase
Télécom in 1997 corresponds to the amount of the
in the company’s short-term and long-term debts ( 17 ) and
contribution, below FRF 40 billion, mentioned during
paid in several instalments between January and October
the discussion of the draft of the 1996 Law. Although
1997. The revenue from this exceptional contribution
it was paid to the State budget in 1997 and fed it each
allowed the deficit of the French public administrations
year for the payment of civilian and military pensions,
to be reduced to EUR 41,8 billion in 1997. Without it,
the amount of this contribution was set in order to offset
the deficit would have represented 3,7 % of GDP that
the additional cost to the State resulting from the appli
year.
cation of the 1996 Law.
(36) The
revenue
from
this
contribution
was
allocated
to
the
public body managing the exceptional contribution from
France Télécom (Etablissement Public de Gestion de la
(39) The wage share of the financing of the pension liabilities
Contribution Exceptionnelle de France Télécom) estab
for the civil servants, established pursuant to Article L 61
lished by the Finance Act 1997. The exceptional
of the Civilian and Military Retirement Pensions Code
contribution, together with any financial income it
since the foundation of the public operator France
generates, constitutes the sole income of this body. Its
Télécom in 1991, was not changed by the 1996 Law.
expenditure takes the form of an annual transfer to the
Moreover, the 1990 and 1996 Laws did not change the
State budget, which has been allocated as revenue since
pension arrangements for the ordinary employees of
2006 to the account earmarked for State civilian and
France Télécom, which are those of the ordinary social
military pensions. This payment was set at FRF
security rules for pension insurance, supplemented by the
1 billion (EUR 152,4 million) for 1997, and subsequently
complementary pension schemes AGIRC for executives
increased by 10 % per year, in the absence of a specific
and ARRCO for non-executives. Under this arrangement,
provision to the contrary in the Finance Act. The public
France Télécom and its ordinary employees assume
body will be wound up after the payment of its revenue
equivalent obligations to those of competing under
in full to the State ( 18 ).
takings with regard in particular to the payment of
contributions in full discharge of liabilities by the
employer.
(37) The application of the provisions of the Finance Act
( 20 ) In 2006, the annual payment by the public body was increased by
1997 establishing the annual payments resulted in the
EUR 1 billion for the working capital requirements of the
life-span of the public body being estimated at 17 years
earmarked accounts for pensions. Other derogations from the
in 1999, without further contributions to its funds ( 19 ).
10 % cap on the annual payment on account of financing needs
However, on account of the annual payments larger than
of the earmarked account, reflected in larger annual payments, have
been made since 2006, see Annex 37 on ‘Benefit and Pension
Schemes — Pensions’, No 1198 (Chapter II-2 B-3) to the Report
( 16 ) France Télécom, Annual Report 1996, pp. 35, 60 and 64.
before the National Assembly No 1127 on the Finance Bill for
( 17 ) France Télécom, Annual Report 1996, pp. 70 to 73. Note No 15 to
2008 by Gilles Carrez. Also see the Report by the Inspectorate
the accounts notes the increase in short-term and long-term debts,
General for Finance M2007-005-02, ‘The multiannual management
which rose from FRF 6,2 billion to FRF 30,8 billion and from FRF
of public finance’, April 2007, Annex VI, p. 9.
66,9 billion to FRF 74,2 billion respectively, i.e. a total increase of
( 21 ) Finance Law No 2010-1657 of 29 December 2010 for 2011 (Loi
FRF 31,8 billion during 1996. The increase in the company’s debts
n o 2010-1657 du 29 décembre 2010 de finances pour 2011),
in 1996, almost three quarters of which occurred through an
Statutory Statements Annex III, Earmarked Accounts, Pensions,
increase in short-term notes and commercial paper, is allocated
line 60, JORF No 0302 of 30 December 2010, page 23033. In
by the auditors to financing the exceptional contribution of FRF
Annex 37 on ‘Benefit and Pension Schemes — Pensions’, No 1198,
37,5 billion due to the State. The average interest rates applied to
the legislature provided in 2008 that a payment of EUR
the France Télécom debt at 31 December 1996 were 4,33 % for the
252 million would clear the available resources of the public
short term and 6,57 % for the short and long term.
body at 31 December 2011 on the basis of an annual payment
( 18 ) Article 46 of Finance Law No 96-1181 for 1997 (loi n o 96-1181 de
of EUR 626 million for 2010, whereas the actual payment was EUR
finances pour 1997), JORF No 304 of 31 December 1996, p. 19490.
635,8 million. This difference of EUR 10 million seems to explain
( 19 ) Report before the National Assembly No 3030 by Mr Philippe
the payment of EUR 243 million provided for in the 2011 Finance
Auberger on the Finance Bill for 1997, p. 453.
Act.

---

EN
12.10.2012 Official
Journal
of
the
European
Union
L
279/7
The estimates of the costs to the French State resulting from
40 billion) corresponds to the forecasts drawn up by the
the reform introduced by the 1996 Law
public body until 1996 to meet the future retirement
costs forecasted at that time, i.e. EUR 3,6 billion (FRF
(40) In
connection
with
the
reform
introduced
by
the
1996
23,4 billion) plus the difference of EUR 2,4 billion
Law, the firm of actuaries appointed as adviser to the
payable by the State between the employer’s and
French State estimated that the payment and servicing
employees’ contributions levied between 1997 and
by the State of the pensions granted to the civil service
2006, on the one hand, and the benefits to be paid,
staff working for and retired from France Télécom would
estimated in 1996 for the same 10-year period, on the
amount to FRF 242 billion (EUR 36,9 billion ( 22 )) in
other.
expected value at 1 January 1997 ( 23 ). This figure is
close to the rounded amount of FRF 250 billion
mentioned at the Senate. The employer’s contribution
(43) Furthermore, the information communicated by the
in full discharge of liabilities that France Télécom
French Republic and shown in Table 3 shows that, for
would pay in exchange was estimated, on the basis of
the period 1997 to 2010, the cumulated cost of
the same actuarial assumptions, at EUR 15,2 billion, to
pensions for the civil servant staff of France Télécom
which must be added the compensating balance or
to be financed by the French State as a result of the
exceptional contribution of EUR 5,7 billion paid in full
1996 reform reached EUR […] billion. The costs to be
in October 1997. The French authorities estimate the
financed by the State are defined as the balance between
value of the future employees’ contributions at EUR
the annual contributions of France Télécom and the civil
[…] billion, at the time of the entry into force of the
servants working there and the pensions paid to the
reform. The value of the net cost transferred by France
retired civil servant staff, year-on-year, with the
Télécom to the French State, as estimated in 1996,
deduction of the annual payments from the public
therefore amounted to EUR […] billion.
body managing the exceptional contribution from
France Télécom. Between 1997 and 2010, the trend in
the costs was as follows:
(41) For the 10-year period (1997 to 2006) mentioned during
the debates on the draft 1996 Law, the cumulated
amount of benefits to be paid estimated by the firm of
Table 3
actuaries appointed as adviser to the French State was
EUR […] billion. During this period, the total amount
Costs to the French State resulting from the 1996 reform
of benefits actually paid was almost identical, EUR […]
(1997-2010)
billion, i.e. a forecast difference of less than 0,83 % ( 24 ).
This confirms ex post the accuracy of the forecasts
(million EUR)
informing the discussions on the Law.
Annual payments
Contributions
by the public
(employer’s
body managing
and
the exceptional Benefits paid Costs to the
State
(42) On
the
basis
of
these
figures,
it
can
be
concluded
that
the
employees’)
contribution
amounts and their justification debated at the National
from France
Télécom
Assembly and the Senate to set the amount of the
compensating balance or exceptional contribution from
1997 […] 152,4 […] […]
France Télécom correspond to the proportions verified ex
post during the 10-year period mentioned in the debates
on the draft law. Indeed, the maximum amount of the
1998 […] 167,7 […] […]
exceptional contribution announced, EUR 6 billion (FRF
1999 […] 184,5 […] […]
( 22 ) The amount of EUR 36,9 billion (FRF 242 billion) corresponds to
the expected value of future commitments as at 1 January 1997. It
2000 […] 202,9 […] […]
is therefore different, and more appropriate for estimating the
measures in question than that of EUR 35,7
billion (FRF
234 billion) mentioned under point 24 of the decision to initiate
2001 […] 223,2 […] […]
the investigation procedure, which corresponds to the expected
value of future commitments as at 1 January 1996, i.e. before
the entry into force of the 1996 Law.
2002 […] 245,5 […] […]
( 23 ) Such a valuation, which covers the entire period up to the expiry of
the financial liabilities of the French State in relation to retired civil
servants and their beneficiaries, is necessarily based on a large
2003 […] 270,0 […] […]
number of assumptions concerning in particular, the marriage
rate, births and dates of retirement and death of the population
concerned, at the same time depending on the discount rate
2004 […] 297,1 […] […]
applied, i.e. 7 % in this case. The actuary JWA hired by the
French Government considered that this rate seemed high since,
after subtracting an inflation rate in the order of 2 %, a net
2005 […] 326,9 […] […]
discount rate of 5 % remained, ‘a value to be compared, for
example, to the maximum value of 3,5 % authorised under the
French Law for the discounted cash flow of annuities’. See JWA
2006 […] 1
359,5 […] […]
report, Annex 2 to the letter of the French authorities dated
17 March 2004, pp. 6 and 13 to 15.
( 24 ) Observations of the French Republic of 9 December 2010 and
2007 […] 395,4 […] […]
France Télécom (JWA report) of 18 October 2010.

---

L 279/8
EN
Official Journal of the European Union
12.10.2012
(million EUR)
cations services ( 26 ). Directive 90/388/EEC provided for
Annual payments
liberalisation measures to be implemented by
Contributions
by the public
31 December 1990 regarding data communication and
(employer’s
body managing
voice telephony and data services for corporate networks
and
the exceptional Benefits paid Costs to the
State
and closed user groups. Commission Directive 96/19/EC
employees’)
contribution
from France
of 13 March 1996 amending Directive 90/388/EEC with
Télécom
regard to the implementation of full competition in tele
communications markets ( 27 ) aimed for full liberalisation
2008 […] 435,0 […] […]
of the telecommunications sector from 1 January 1998.
2009 […] 578,0 […] […]
(47) Law
No
96-659
of
26
July
1996
on
the
regulation
of
telecommunications (loi n o 96-659 du 26 juillet 1996
2010 […] 635,8 […] […]
relative à la réglementation des télécommunications) laid
down the conditions allowing full effect to be given to
the liberalisation of the sector by ending France
Total […] 5
473,9 […] […]
Télécom’s monopoly in fixed line telephony and data
transmission and organising charges and connections
with competitors. Even in other sectors, which are not
(44) On
account
of
the
provisions
of
the
Finance
Act
1997
subject to exclusive rights and have therefore been
which governs them, the amounts of the annual
competitive since 1987, such as the mobile telephony
payments of the public body managing the exceptional
market, France Télécom had clear leadership, with a
contribution from France Télécom paid in 1997 did not
market share falling from 53,3 % to 49,8 % between
correspond to the amounts of the benefits estimated or
1997 and 2002 ( 28 ). Law No 96-659 also assigned
actually paid to the retired staff of France Télécom or to
general economic interest tasks to France Télécom and
the amounts of the remaining costs to be financed by the
provided for the introduction of a fund to finance the
State and were not determined on the basis of these
associated obligations, with contributions from its
amounts. Examination of the amounts actually trans
competitors.
ferred confirms this dissociation. Despite the exceptional
contribution paid by France Télécom in 1997, Table 3
shows that the amounts of the benefits paid to retired
(48) Pursuant
to
the
provisions
cited
in
recitals
46
and
47,
civil servant staff of France Télécom exceeded annual
since 1988, France Télécom has had to cope with the
resources from 2004, with the exception of the
arrival of competitors — some partially owned by inter
year 2006.
national groups — on the goods and services markets on
which it was operating in France, some of which, such as
(45) Therefore the payments of annual contributions by
mobile telephony or international communications, have
France Télécom and the annual payments of the public
a trans-border element. This movement gathered pace
body managing the exceptional contribution are not
when the markets were liberalised from 1998.
allocated separately and ex ante to the benefits paid to
Moreover, France Télécom entered into alliances with
the retired staff of France Télécom in the earmarked
foreign operators, such as Deutsche Telekom and
account for pensions. In fact, the allocation of the excep
Sprint in 1996 (Global One), whilst multiplying its part
tional contribution solely to the financing of the benefits
nerships and participating interests from 1997 in Italy
in question since 1997, if it had been applied instead of
(Wind), the Netherlands (Casema) or by obtaining mobile
the system of payment of the amount plus 10 % per year
licences in Denmark and Portugal ( 29 ).
provided for in the Finance Act 1997, would have led to
the public body being wound up at the end of 2008,
rather than at the end of 2011 as planned, in view of the
(49) The
reform
of
the
financing
of
the
France
Télécom
amount not covered by the annual contributions, shown
retirement pensions therefore took place at the same
in Table 3. In any event, in either case, the amount of the
time as the liberalisation of the market at European
exceptional contribution would have been used up at
Union level. It therefore took effect on a market fully
31 December 2011.
open to competition where, moreover, France Télécom
entered into alliances and took significant stakes in other
2.2. The gradual, then total opening-up of the tele
Member States. In fact, the desire to promote the
communications markets
expansion of France Télécom on the European markets
outside France is the a backdrop to the 1996 Law and
(46) The reform of the financing of pensions of the civil
the opening of the undertaking to private capital, as
servant staff of France Télécom took place against the
shown in declarations during the discussion of the
backdrop of the total opening-up to competition of the
draft, which report ‘the ambitions nurtured by the
services markets on which France Télécom was operating.
French Government for its national champion, France
From 1988, the telecommunications sector has been
Télécom’ ( 30 ).
gradually liberalised by Commission Directive
88/301/EEC of 16 May 1988 on competition in the
( 26 ) OJ L 192, 24.7.1990, p. 10.
markets in telecommunications terminal equipment ( 25 )
( 27 ) OJ L 74, 22.3.1996, p. 13.
and by Commission Directive 90/388/EEC of 28 June
( 28 ) See France Télécom Annual Report 1997 and the Report of the
1990 on competition in the markets for telecommuni
Telecommunications Regulatory Authority for 1997 and 2002,
available at: http://www.arcep.fr/index.php?id=2105
( 29 ) France Télécom, Annual Report 1997.
( 25 ) OJ L 131, 27.5.1988, p. 73.
( 30 ) National Assembly, Transcript of the debate of 26 June 1996, p. 3.

---

EN
12.10.2012 Official
Journal
of
the
European
Union
L
279/9
(50) At
present,
France
Télécom
claims
to
be
the
leading
munications sector in France, the Commission noted
provider of broadband internet access and the third
that the rate of the contribution in full discharge of
largest mobile operator in Europe and among the
liabilities applied to France Télécom since 1997 is
world leaders for telecommunications services to multi
insufficient to put it on a level playing field with
nationals. Outside France, France Télécom is significantly
its competitors. This results from the fact that the
active via its subsidiaries, with prominent market
rate applied to France Télécom includes only the
positions in Spain, the United Kingdom, Poland,
contributions corresponding to the risks common
Slovakia, Belgium and Austria ( 31 ).
to ordinary employees and civil servants and, in
this regard, it excludes the contributions
corresponding to the risks that are not common,
3. REASONS FOR INITIATING THE PROCEDURE
such as unemployment and non-payment of wages
in the event of a firm going into receivership or
(51) In
its
decision
initiating
the
investigation
procedure,
the
compulsory liquidation;
Commission set out its preliminary assessment of the
measures introduced by the 1996 Law, comparing
them with the reference framework for France
(b) secondly, the Commission did not have sufficient
Télécom’s social security contributions and tax
information concerning the effects on competition
payments established by the 1990 Law. It considered
of reducing the cost of retirement pensions, in
that these measures would seem to confer, through
order to assess whether any positive effects
State resources, a selective advantage on France
exceeded the negative effects. To this end, the
Télécom liable to distort competition and affect trade
Commission also had to take into account the fact
between Member States and potentially constituting
that France Télécom had not yet repaid in full the
State aid within the meaning of Article 107(1) of the
unlawful and incompatible aid pursuant to the
TFEU.
Commission Decision of 2 August 2004 concerning
State aid implemented in France for France Télécom
(hereinafter: ‘Decision on the application of business
(52) The Commission also noted that, insofar as these
tax to France Télécom’) ( 33 ), a decision with which
measures constitute State aid, this aid was not notified
France failed to conform within the time limit
to the Commission prior to its implementation although
given, as established by the Court of Justice ( 34 ).
it was to be regarded as new aid according to case-law.
The French Republic had thus not complied with its
notification obligation under the Treaty and the
4. COMMENTS BY INTERESTED PARTIES
measure was therefore to be considered unlawful.
(55) The comments presented by interested parties are
summarised in Sections 4.1 to 4.3.
(53) The Commission concluded that on the basis of
Article 107(3)(c) of the TFEU that it was able to
examine whether the aid was compatible with the
4.1. France Télécom
internal market. The Commission also noted that the
same provision had permitted it to conclude that the
(56) In
its
comments,
which
it
considers
to
be
supplementary
aid granted to La Poste on the reform of the
to those submitted by the French Republic, France
arrangements for financing the retirement pensions of
Télécom considers that it suffering from chronic over
its civil servants was compatible with the internal
staffing linked to its former status as a public adminis
market ( 32 ) and that in view of the similarities between
tration and that, for the population concerned, it does
these two cases, it seemed appropriate in this case to
not have the same potential for fluidity of employment
carry out a similar analysis.
as its competitors. France Télécom has to bear very heavy
training costs amounting to EUR 180 million, equivalent
to 4,5 % of the total wage bill, compared to 2,9 % on
(54) In its preliminary analysis of the compatibility of the aid
average for French companies. France Télécom also
with the internal market, and notwithstanding the simi
alleges that its wage bill is about […] % higher,
larity with the reform of the arrangements for financing
excluding surcharges and bonuses. In addition, since it
the retirement pensions of La Poste, the Commission
cannot implement social plans, France Télécom financed
informed the French Republic of the following doubts:
the cost of measures associated with the departures of
civil servants, such as end-of-career leave, to an amount
exceeding EUR 8 billion between 1996 and 2006.
(a) Firstly, whilst emphasising that it was not in
possession of detailed information demonstrating
that the contribution rates paid by France Télécom
(57) Secondly,
France
Télécom
considers
that
the
retirement
are equal to those paid by private enterprises
pension costs borne between 1990 and 1996 were
governed by ordinary law operating in the telecom
abnormal and placed it at a structural disadvantage in
relation to its private-sector competitors, as referred to
( 31 ) See in this respect, 2008 France Télécom Reference Document,
lodged with the Financial Markets Authority, and in particular,
( 33 ) Commission Decision 2005/709/EC, notified under document
‘Description of the Activities’, pp. 25-122.
number C(2004) 3061 (OJ L 269, 14.10.2005, p. 30).
( 32 ) Commission Decision of 10 October 2007, in case C 43/2006 (OJ
( 34 ) Judgment of 18 October 2007 in Case C-441/06 Commission v
L 63, 7.3.2008, p. 16).
France ECR I-8887.

---

L 279/10
EN
Official Journal of the European Union
12.10.2012
in the Combus judgment ( 35 ), the reference framework for
(61) Furthermore,
the
figures
available
in
1996
would
seem
to
assessing whether these charges were normal or
contradict the argument that the amount of EUR
abnormal being the ordinary law arrangements applicable
5,7 billion was estimated at the time to correspond
to competitors. The principles laid down in the Combus
precisely with the additional cost to the State of the
judgment would appear to have been confirmed since by
applying the 1996 Law by compensating, year after
the Court in its Hotel Cipriani judgment ( 36 ). France
year, the lower annual costs paid by the public body,
Télécom disputes that the situation of a single operator,
even taking into account the charges to compensate
in this case itself, before and after the reform introduced
between retirement pension schemes from which
by the 1996 Law, constitutes an appropriate comparison
France Télécom was discharged in 1996
( 39 ). The
for assessing whether there is an economic advantage
amount of the exceptional contribution was intended
within the meaning of the case-law. In any event, if
as overall compensation for the French State on
the reference framework were to be reduced to France
account of the reform. It therefore needs to be taken
Télécom before and after the 1996 reform, the measure
into account when analysing the level playing field
could not be classified as selective since it would be
since its entry into force in 1997.
applied homogeneously within that framework.
(58) As
a
result,
the
measures
in
question
would
either
not
(62) Finally,
France
Télécom
considers
that,
since
without
the
constitute State aid within the meaning of the Treaty in
1996 reform, it would have suffered a significant
that they release France Télécom from an abnormal
competitive handicap on the markets which the Union
structural disadvantage or cannot be classified as a
aimed to liberalise and that the French authorities have
selective advantage constituting State aid.
now complied in full with the decision on the appli
cation of business tax to France Télécom ( 40 ), the
measure does not have a negative impact on
(59) Alternatively,
France
Télécom
considers
that
State
aid,
if
competition.
it were confirmed, would be compatible with the internal
market in accordance with the criteria established by the
Commission in its decision on the retirement pension
arrangements of La Poste (hereinafter: ‘La Poste deci
sion’) (
4.2. The complainants

37 ). In this regard, the specific nature of its arrange
ments, in that it pays a contribution calculated on the
(63) The
complainants
share
the
Commission’s
view
in
the
basis solely of the common risks, does not mean that
decision to initiate the procedure concerning the
France Télécom has been placed in a favourable situation
existence of State aid as defined in the Treaty in the
in relation to its competitors since 1996: apart from the
reduction of the retirement pension costs to be paid by
structural disadvantages associated with the status of the
France Télécom, introduced by the 1996 Law. According
civil servants it employs, France Télécom has had to pay
to the reasoning followed in that decision, concerning
a considerable amount associated with the 1996 reform,
which the complainants regret the lack of quantification,
the compatibility of which with the internal market
the amount of aid is EUR 12,3 billion and under no
needs to be analysed and, of EUR 5,7 billion, which far
circumstances less than EUR 9,9
billion
(
exceeds that which France Télécom would have had to

41 ). The
complainants consider that it is the effects of the
pay if its contribution had been subject to the risks that
measure, i.e. the reduction in the social security
are not common.
contributions normally assumed in the undertaking’s
budget, and not its object, i.e. the compensation of an
alleged disadvantage, that mean it is State aid. For that
(60) France
Télécom
considers
that,
in
its
La
Poste
deci
matter, there is no disadvantage in the employment of
sion ( 38 ), the Commission accepted that the amount of
civil servants by France Télécom, since the undertaking
an exceptional one-off contribution (EUR 2 billion), in
pays unemployment contributions and wage costs which
the context of a reform which came into effect after
are 13 % lower than those paid by its competitors and
the notification but before the Commission decision,
has at its disposal a stable and flexible staff, with regard
offsets the contributions corresponding to the non-
to reducing the total wage bill through early retirement
common risks, until the amount of the one-off
and reorientation to the civil service.
contribution has been exhausted. According to France
Télécom, there is nothing to justify the Commission
departing from this principle, since it cannot be
( 39 ) The continuation of the payments interrupted by the 1996 Law
would have led to a compensation charge of about […] % of the
assumed from the policy declarations at the time of the
pensions granted in 1997, falling […] % per year subsequently.
debate on the draft 1996 Law that the amount of the
Comments of France Télécom dated 18 October 2010, table p. 4.
flat-rate contribution of France Télécom was set by the
( 40 ) See footnote 33.
French legislature so as to maintain the status quo for 10
( 41 ) The amount is calculated by subtracting from the total net present
years.
value of the debt of France Télécom for the retirement pensions of
its civil servants (EUR 38,1 billion), the discounted amount of the
employer’s contributions in full discharge of liabilities from 1996
( 35 ) Judgment of 16 March 2004 in Case T-157/01 Danske
(– EUR 15,2 billion), the flat-rate contribution determined in 1996
Busvognmaend v Commission (‘Combus’), ECR II-917, point 57.
(– EUR 5,7 billion) and the contributions of the employees
( 36 ) Judgment of 28 November 2008 in Joined Cases T-254/00,
concerned (– EUR 4,9 billion, not discounted), i.e. in total EUR
T-270/00 and T-277/00 Hotel Cipriani and others v Commission
12,3 billion or, at the very least, EUR 9,9 billion if the total
ECR II-3269, points 181, 185, 186, 189, 192 and 193.
discounted liability of France Télécom for retirement pensions of
( 37 ) See footnote 32.
its civil servants was estimated at EUR 35,7 billion, as indicated in
( 38 ) See footnote 32.
the decision initiating the procedure.

---

EN
12.10.2012 Official
Journal
of
the
European
Union L
279/11
(64) According
to
the
complainants,
State
aid
thus
defined
(67) As regards the aid resulting from the disappearance of
would be incompatible with the internal market. In
the repayment to the State of the pensions granted, the
fact, the considerable competitive advantage procured
operator considers that the analysis of the competitive
by France Télécom was all the more detrimental as the
balance carried out by the Commission in its La Poste
reduction in costs was unnecessary to avoid jeopardising
decision should lead it to conclude, on the contrary, that
its financial structure: relieved of a pension debt with a
it is incompatible. This analysis should be based on the
net value of EUR 9,9 billion at least in 1996 and no
facts that have occurred since 1996 and not, as in the La
longer having to enter this cost in its balance sheet or
Poste decision, hypothetically for the future.
the notes to the accounts, France Télécom then increased
its debt considerably, with a net financial debt of EUR
44 billion on average between 1997 and 2007. Then, the
aid releasing France Télécom from retirement pension
(68) According
to
this
operator,
on
several
of
the
markets
on
costs inherited from the monopoly enabled the inter
which it operates, France Télécom holds market power
national expansion of the undertaking to be financed,
which can be assimilated to a dominant position. As a
whilst strengthening its position in France, where it
result, it is subject to ex-ante regulatory obligations on
benefited from substantial advantages as a monopoly,
the wholesale markets for high and very high speed
of which the costs were merely fair compensation..
broadband and for the origin and termination of calls
on fixed lines. In its decision of 16 July 2003 relating to
proceedings under Article 82 of the EC Treaty in the case
COMP-38.233, the Commission established and imposed
a penalty for an infringement of Article 102 of the TFEU
(65) Moreover,
the
unlawful
and
incompatible
aid
not
repaid
on the part of France Télécom via its subsidiary Wana
in the past would preclude the operating aid at issue
doo ( 43 ). Since the undertaking is financially sound in
from being declared compatible, in view of their cumu
particular through the acquisition of Orange, Retevisión
lative effect. Finally, the absence of a level playing field
and AMENA.
from the 1996 reform on account of the non-payment
of contributions corresponding to the risks of
unemployment and non-payment of wages in the event
of the firm going into receivership makes it impossible
(69) Finally, the operator asks the Commission to quantify
for the reform to be compatible with the rules of the
precisely the amount of aid at issue and, pursuant to
Treaty. The pension liability of France Télécom should be
the Deggendorf case-law (
calculated by an independent expert and France should

44 ), to refuse to accept the
compatibility of the measures in question with the
undertake to ensure the financial neutrality of the
internal market until the unlawful aid from the past
arrangements, in particular by providing mechanisms
has been repaid.
for adjusting the employer’s contribution and the
compensation balance of EUR 5,7 billion in the event
of variation in the costs.
5. COMMENTS OF THE FRENCH REPUBLIC
(70) The
French
Republic
considers
that
the
changes
made
in
1996 to the arrangements for financing the retirement
4.3. The telecommunications operator
pensions of civil servants of the French State working for
France Télécom do not contain any elements of State aid.
(66) The
telecommunications
operator
endorses
and
supports
the preliminary analysis set out in the Commission’s
In any event, the 1996 reform is compatible with the
decision initiating the procedure, regarding as new,
internal market, in particular, through the transposition
unlawful State aid the amendments introduced by the
to this case of the reasoning followed by the Commission
1996 Law with a view to substituting the annual
in its La Poste decision ( 45 ).
contributions in full discharge of liabilities by France
Télécom for the payments of pensions actually made
by the State, with the deduction of the contributions
paid by the employees still working with the status of
5.1. Concerning the existence of State aid
civil servant. The same would also apply, according to
this operator, to the social security contributions
(71) According
to
the
French
Republic,
the
1990
Law
placed
corresponding to the risks not common with the
France Télécom in an abnormal situation departing from
ordinary employees paid by France Télécom’s
the ordinary arrangements according to which under
competitors but which France Télécom has not paid at
takings pay an employer’s contribution in full discharge
least since 1996 for its civil service staff and for its staff
of liabilities, proportional to the total wage bill and not
governed by ordinary law. Moreover, contrary to the case
linked to the level of pensions granted. The cost assumed
which was the subject of the La Poste decision (
by France Télécom is in this way abnormal, since the

42 ), the
calculation of the employer’s contribution from France
financial deficit from the arrangements for the
Télécom did not, and still does not, include these
contributions, which would make it impossible to
( 43 ) Text available at http://ec.europa.eu/competition/elojade/isef/case_
declare the aid compatible.
details.cfm?proc_code=1_38233
( 44 ) Judgment of 6 October 2011 in case C-421/10 Deggendorf, not yet
published in the ECR.
( 42 ) See footnote 32.
( 45 ) See footnote 32.

---

L 279/12
EN
Official Journal of the European Union
12.10.2012
population concerned was certain and set to become
disadvantage in relation to its private competitors ( 47 ).
intolerable, given the inevitable reduction in the
This interpretation is also regarded as being in
number of civil servants still working and the associated
conformity with the Commission’s practice ( 48 ).
increase in the number of pensioners.
(75) Finally,
more
generally,
the
French
Republic
does
not
consider it relevant to include in the present procedure
the compensation and over-compensation mechanisms
(72) The 1996 reform is claimed to have aligned the
financing of the pensions with ordinary law, without
under which France Télécom paid the costs between
having the effect of placing the undertaking in a more
1991 and 1996 (see Table 1) to determine the
favourable competitive situation, since the contribution
existence of aid or the date on which an advantage
of France Télécom is calculated annually so as to align
resulting from the reform introduced by the 1996 Law,
the level of social security contributions and tax
which contains no provision to this effect, arose. The
payments with those of its competitors in the telecom
payment of such costs also resulted from a scheme
munications sector. However, not taking into account
departing from the ordinary arrangements in which the
contributions corresponding to the risks not common
pensions scheme applicable to France Télécom was
to ordinary employees and civil servants in the calcu
considered as an autonomous scheme, which was no
lation of the contribution in accordance with the
longer the case from 1997.
competitively fair rate is justified on account of the
status of the latter, which rules out, for example the
risk of unemployment apart from in exceptional cases
of dismissal or removal from post.
(76) With this reservation, the French Republic has refined the
estimate, supplied by France Télécom and referred to
under recital 61, of the costs which the undertaking
has no longer paid from 1997. On the basis of a real
reconstruction for 2008 to 2010, retropolated by
applying a conversion factor, the French Republic
(73) The
French
Republic
considers
that
the
situation
of
the
considers that the costs that would have been paid by
competitors of the undertaking in France must constitute
France Télécom in this capacity are EUR 165 million less
the reference framework for determining whether the
than those calculated by the undertaking.
costs payable by France Télécom are normal or
abnormal. In the present case, taking account of the
exorbitant, derogating from ordinary law, inequitable
and unsustainable burden imposed on France Télécom
5.2. Concerning the compatibility of possible State
by the 1990 Law, its abolition and the alignment with
aid with the internal market
the situation of competitors provided for in the 1996
reform simply re-established the normal conditions of
(77) In
any
event,
the
French
Republic
considers
that
if
the
competition. For that matter, France Télécom has not
1996 reform relating to France Télécom were to
been compensated for the disadvantages suffered under
constitute State aid, this should be declared compatible
these arrangements, whereas, as emphasised in its
with the internal market, in accordance with the analysis
comments, it still has to cope with structural disadvan
followed by the Commission in its La Poste decision ( 49 ).
tages, additional costs and inflexibilities on account of
The 1996 reform releases France Télécom from a
the status applicable to the civil servants it employs as
structural burden which was affecting its competitiveness
regards financial measures associated with departure or
in a market in the process of liberalisation and its
return to the public administration, vocational training
contributions are henceforth calculated on the basis of
measures or higher wage cost. Consequently, the current
a competitively fair rate for the common risks.
arrangements resulting from the reform confer no
advantage on France Télécom and therefore contain no
element of State aid within the meaning of the Treaty.
(78) The
fact
that
the
contribution
paid
by
France
Télécom
since 1997 does not include the risks not common to
private sector employees would not preclude compati
bility with the internal market. In this regard, Table 4,
derived from information provided by the French
(74) This interpretation is based on the general principles
Republic, illustrates the difference between the
derived by the Union courts according to which, since
contribution paid by France Télécom and what it
only measures which lighten the burdens normally
would have paid if the non-common risks had been
assumed in an undertaking’s budget constitute State
included in the calculation, minus the benefits self-
aid, a law which makes it possible to prevent an under
insured by France Télécom and other levies that put
taking’s budget being burdened by a cost which, under
more of a strain on it than its competitors.
normal circumstances, would not have existed, does not
constitute State aid ( 46 ). This would also be the case of
measures relieving a public competitor from a structural
( 47 ) Judgment of 16 March 2004 in Case T-157/01 Danske
Busvognmaend v Commission (‘Combus’) ECR II-917.
( 48 ) Commission decision of 25 July 1995, Sabena/Swissair — Aid
( 46 ) Judgment of 23 March 2006 in Case C-237/04 Enirisorse ECR
aspect.
I-2843.
( 49 ) See footnote 32.

---

EN
12.10.2012 Official
Journal
of
the
European
Union L
279/13
Table 4
appears that the amount of this balance compensation
currently exceeds the amount resulting from the
Employer’s contribution from France Télécom between
difference between the rate set by the 1996 reform and
1997 and 2010 calculated on the basis of the
the adjusted rate indicated in Table 4 and that the
competitively fair rate applied (TEC) and a competitively
amount of the balance compensation will never be
fair rate adjusted to integrate the non-common risks (TEC*)
used up in full by the divergence in rates. Under these
circumstances, the doubts expressed by the Commission
Year TEC
EUR
in its decision initiating the procedure regarding the
million
TEC*
EUR
million
TEC-TEC*
absence of a true level playing field between France
Télécom and its competitors would be resolved.
1997 36,2
% 1
088,9 48,1
% 1
446,9 –
358,0
1998 35,4
% 1
069,6 47,1
% 1
423,1 –
353,5
(81) For the French Republic, the reform of the arrangements
1999 36,7
% 1
108,5 48,4
% 1
460,3 –
351,8
for financing the retirement pensions of civil servants
working for La Poste, introduced in 2006 and inspired
2000 36,4
% 1
085,0 48,0
% 1
429,3 –
344,3
by that of France Télécom in 1996, is perfectly
comparable with the latter, with regard to the key
aspects. In view of this parallelism, there is no justifi
2001 37,0
% 1
088,6 47,9
% 1
407,9 –
319,3
cation for the Commission to diverge from the
precedent set with La Poste. In particular, the
2002 37,7
% 1
100,1 43,5
% 1
267,9 –
167,8
Commission should accept that the exceptional flat-rate
contribution imposed on France Télécom is taken into
2003 37,6
% 1
085,0 45,0
% 1
298,5 –
213,5
consideration in the analysis of the level playing field
arising from the reform, considering it de facto as an
2004 […]
% 1
048,6 […]
% […] […]
advance on the payment of the contributions associated
with the non-common risks.
2005 […]
% 984,6 […]
% […] […]
2006 […]
% 957,6 […]
% […] […]
(82) On the other hand, the debates at the National Assembly
and the Senate referring at the time to a 10-year period
2007 […]
% 917,6 […]
% […] […]
of financial cover for the reform apparently arose from
ad hoc statements. Such reasoning is not to be found in
2008 […]
% 859,2 […]
% […] […]
either the explanatory memorandums to the draft laws or
the acts in question or the texts adopted to implement
2009 […]
% 805,4 […]
% […] […]
them. The legislature’s intention in 1996 was apparently
to set the costs for France Télécom retirement pensions
at a level equivalent to that of the competitors and not to
2010 […]
% 744,5 […]
% […] […]
render the reform void for a 10-year period, as would
appear from the reasoning that the Commission could
adopt if it relies on out-of-context declarations.
(79) The
French
Republic
considers
that,
since
1997
and
until
2043, the discounted value of the contributions actually
paid and to be paid by France Télécom is EUR
13,5 billion. A competitively fair rate adjusted to take
(83) The
parliamentary
work
seems
to
indicate
unequivocally
into account the non-common risks in the calculation,
that the amount of the contribution was fixed as a flat
minus the contributions imposed on France Télécom and
rate, without any link to the burden that the State will in
not on its competitors, would lead to a higher annual
fact have to assume. Likewise, in its Decision No 96-385
contribution for the same period, i.e. EUR 16,7 billion.
DC of 30 December 1996, the Constitutional Council
Whilst considering the inclusion of these risks as irrel
pointed out that the flat-rate contribution of FRF
evant, the French authorities calculated that the difference
37,5 billion was justified by the State financing of the
(EUR 3,2 billion) would be largely offset by the excep
retirement pensions of the civil servants, without consti
tional flat-rate contribution of EUR 5,7 billion paid by
tuting compensation, whereas, on the other hand, the
France Télécom in 1997.
payments to the State budget would not be earmarked
for a specific expenditure and would contribute to the
general conditions for the balance of this budget, in
accordance with Article 18 of the Ordinance of
(80) In
the
French
Republic’s
opinion,
it
can
be
considered,
as
2 January 1959 on the Organic Law relating to
in the La Poste decision
( 50 ), that this flat-rate
Finance Bills (ordonnance organique du 2 janvier 1959
contribution can be assimilated to a balance compen
relative aux lois de finances).
sation that could offset the payment of the contributions
associated with an adjusted rate including the
contributions for non-common risks. In this case, it
(84) For the French Republic, the precise amount of the
( 50 ) See footnote 32.
exceptional contribution was established by the Finance

---

L 279/14
EN
Official Journal of the European Union
12.10.2012
Act 1997, taking account not of a 10-year period during
and anticipated contributions did not exceed EUR
which this contribution would be used to ‘repay’ the
500 million until 2005, i.e. 9 years later and EUR
State, but on the contrary, depending on the effect on
1 billion 12 years later. On average for 1996, the rate
the balance-sheet structure of France Télécom, which was
on 15-year fungible French Treasury bonds (hereinafter
to remain tolerable. Its amount would not be gauged
‘OATs’) stood at 6,9 %. For its part, France Télécom
using the logic of compensation of costs to the State,
floated bond issues between November 1991 and
but taking account of the contributive capacity of the
November 1997 at the comparable average rate of 7 %.
undertaking.
(88) Finally, the sequestration of the amounts demanded by
(85) The way in which this contribution was managed
the Commission in application of its decision on the
dissociated from the retirement benefits actually paid
application of business tax to France Télécom ( 52 ), then
since 1997 confirms its flat-rate nature. In this way,
the payment of these amounts, should lead to the
the figures supplied by the French Republic show that,
Commission to consider its decision to have been
between 1997 and 2006, the pensions paid to the civil
executed, in accordance with its 2007 Notice on the
servants of France Télécom via the account earmarked
subject ( 53 ). Consequently, there is no cause to examine
for pensions amounted to EUR […] billion, while the
the cumulated effect of these aids.
public body managing the exceptional contribution of
France Télécom transferred an amount of EUR 3,4 billion
to that account. For the same period, the balance not
6. ASSESSMENT OF THE AID
financed by contributions paid amounted to EUR
1,2 billion. Moreover, in 1997, it was estimated that
6.1. Existence of aid within the meaning of
this fund would exist for 17 to 25 years, without any
Article 107(1) of the TFEU
relation to the 10-year period on which the Commission
(89) Article
107(1) of the TFEU provides that: ‘Save as
bases the reasoning that it appears to wish to adopt.
otherwise provided in the Treaties, any aid granted by
a Member State or through State resources in any form
whatsoever which distorts or threatens to distort
(86) The French
Republic considers that France Télécom
competition by favouring certain undertakings or the
would have been evicted from the market without the
production of certain goods shall, in so far as it affects
reform, with contribution rates reaching 77 % of the
trade between Member States, be incompatible with the
gross index-related salary in 2010 and provisioning in
internal market.’
its accounts for retirement liabilities for the civil servants
working for it. The reform was therefore a decisive stage
in adapting to the liberalisation of the market, in
(90) The application of the cumulative conditions of this
accordance with a Union objective, adapted to this and
Article to the facts of the case is examined in Sections
limited to the minimum necessary. Without this reform,
6.1.1 to 6.1.5.
France Télécom would have left the market and could
not have made the necessary investments, in particular to
allow unbundled access to the local loop, without ruling
6.1.1. Aid granted by the State through State resources
out a potential risk of bankruptcy, so the reform would
not have had a negative impact on competitors.
(91) The 1990 Law and the 1996 Law originate from the
French State. They provide for the measure by which
France Télécom pays the Public Treasury compensation
(87) In addition, according to the French Republic, the reform
for the payment and servicing of the pensions granted to
of the arrangements for financing the retirement
the civil servants of France Télécom made by the State.
pensions of France Télécom and, in particular, the
Since, pursuant to the 1996 Law, the compensation paid
imposition of the payment of an exceptional
by France Télécom to the Public Treasury is less than in
contribution, did not cost the State between 1997 and
the original wording of the 1990 Law, the aid is granted
2006 but in fact generated net revenue exceeding EUR
to France Télécom with the resources of the French State.
9,1 billion for the French State, according to the
estimates of the French authorities ( 51 ). If a calculation
of the return on the exceptional contribution were to
6.1.2. Favouring certain undertakings
be made, the French Republic considers that a discount
rate of 7 % should be applied. Hence, the principle of an
(92) The provisions of the 1990 Law defined the
exceptional contribution was established as early as
arrangements applicable to France Télécom, a public
1996. The investment horizon should be long since
operator with legal personality. The 1996 Law on the
the expected differences between benefits to be paid
national company France Télécom amends these
arrangements with provisions applicable to France
Télécom in accordance with the conditions it defines
( 51 ) It is claimed that this sum of EUR 9,1 billion covers the amount of
only for this company.
the balancing cash adjustment of EUR 5,7 billion plus EUR
3,4 billion surplus. This surplus results from the difference
between the real cost of the reform for the State in the period,
( 52 ) See footnote 33.
estimated at EUR 2,37 billion, on the one hand, and EUR
( 53 ) Notice from the Commission ‘Towards an effective implementation
4,9 billion in interest on the balancing cash adjustment invested
of Commission decisions ordering Member States to recover
at a rate of 7 % plus EUR 840 million in addition from corporate
unlawful and incompatible State aid’ (2007/C 272/05) (OJ C 272,
tax revenue on the lower annual contributions of France Télécom.
15.11.2007, p. 4).

---

EN
12.10.2012 Official
Journal
of
the
European
Union L
279/15
(93) The object of the arrangements introduced by the 1990
France Télécom, who are covered by the general status of
Law is to determine a specific compensation for the
civil servants of the French State and not by the ordinary
principles and amounts of the employer’s contribution
law on social security benefits.
for the pensions paid by France Télécom to the French
State. Therefore the compensation payable by France
Télécom in accordance with the 1990 Law in its
original wording, which was applied between 1991 and
(97) Even in the absence of the payment of compensation by
1996, in the same way as the different compensation
France Télécom, the French State would still be bound to
introduced by the 1996 Law, which has been applied
honour its pension commitments to the civil servant staff
since 1997, is a specific measure which concerns only
concerned, unless it amended these commitments unilat
France Télécom, thereby fulfilling the condition of selec
erally. On the contrary, making available State-trained
tivity, contrary France Télécom’s argument.
civil servants to France Télécom with no compensation
for pensions paid or to be paid would confer a clear
advantage on the latter.
6.1.3. Economic advantage distorting or threatening to distort
competition
(98) Since France Télécom’s competitors do not employ staff
with civil servant status for whom the French State
(94) It
should
be
determined
whether
the
measures
estab
would be under a similar financial obligation, the logic
lishing the amount of compensation in question favour
of the arrangements for funding pensions and the
France Télécom. The question of whether the
payment of compensation for France Télécom introduced
amendments introduced in Article 30 of the 1990 Law
by the law is not transferable to them. This is shown by
by the 1996 Law constitute aid because they confer an
the fact that, since the status of the staff employed by the
economic advantage on France Télécom must be seen in
competitors differs with regard to the risks of non-
the light of the nature and the overall structure of the
payment of wages covered by the ordinary law on
pensions arrangements in question and the effects this
social security benefits, the French authorities appear to
has had on France Télécom, and not the causes or
consider that the payment of social security contributions
objectives of the amendments. The objective pursued
to cover the risk is justified in their case. However, it is
by amending the 1990 Law is not therefore relevant,
precisely this status that the French Republic is using to
in principle, for assessing its effects, contrary to the
consider that the inclusion of the risks not common to
French Republic’s argument.
the civil servants and the ordinary employees in the
calculation of the compensation paid by France
Télécom to the State pursuant to the 1996 Law is not
justified.
The logic of the pension arrangements applicable
(95) The funding by the State of the payment and servicing of
(99) Therefore,
as
regards
the
costs
paid
on
account
of
the
the pensions granted to the civil servants of France
employment of their ordinary staff, these undertakings
Télécom results from the application of the Civilian
are not in a comparable situation in fact or in law to
and Military Retirement Pensions Code, which alone
that of France Télécom as regards its civil servant staff,
applies to the former civil servants in question. Neither
contrary to the arguments of the French Republic and
the 1990 Law nor the 1996 Law changed the status of
France Télécom presented in their comments.
these civil servants or the principle of the State funding
the payment of their pension. This funding seems to arise
from the principle whereby employees with civil servant
status serve the common good independently and in the
(100) Likewise, the compensation arrangements applied to
public interest. This is not the case where these civil
France Télécom cannot be compared with the
servants work for an undertaking providing a paid-for
arrangements defined for other public bodies with
service, with the aim of serving the interests and
employees with civil servant status, such as the Paris
benefit of this undertaking, in competition with other
Mint or the National Forestry Office, which can be
undertakings which provide the same services.
categorised as undertakings for some of their activities
within the meaning of Article 107(1) of the TFEU, or
other public industrial and commercial undertakings,
such as EDF or GDF in the past. EDF or GDF had
specific retirement pension schemes, which were not
(96) In
this
perspective,
the
payment
of
compensation
to
the
aligned with the civil service scheme. Moreover, EDF
State, provided for by the 1990 Law, both in its original
and GDF have since been affiliated to the general
wording and after the amendments introduced by the
scheme, even though it should be emphasised that the
1996 Law, constitutes an exception to the principle of
Commission concluded that no State aid existed solely
funding by the French State. This exception is justified by
on condition that affiliation is financially neutral for the
the nature and overall structure of the arrangements
State ( 54 ), which is not so regarding the 1996 reform in
applicable to the pensions of the civil servants
the present case.
employed by France Télécom. In fact, the French State
is obliged to effect the payment and servicing of the
( 54 ) Commission Decision of 16 December 2003 on the State aid
pensions granted, under the Civilian and Military
granted by France to EDF and the electricity and gas industries
Retirement Pensions Code, to the civil servants of
(C(2003) 4637 fin), Article 2 (OJ L 49, 22.2.2005, p. 9).

---

L 279/16
EN
Official Journal of the European Union
12.10.2012
(101) On the other hand, the compensation scheme in favour
since 31 December 1996, France Télécom pays the State
of the State for the payment of the pensions of civil
less compensation than it would have paid if the Law
servants working at La Poste, before the amendments
had not been passed. In addition, on account of the fact
described and approved under certain conditions by the
that the employer’s contribution introduced by this Law
Commission in its La Poste decision, was also that of a
is in full discharge of liabilities, France Télécom
national company comparable to a public industrial and
immediately wrote back at 31 December 1996 the
commercial undertaking and remained, pursuant to the
provision earmarked in these accounts for the payment
1990 Law in its original wording, similar to that of
of its future liabilities. Hence the burden from which
France Télécom, in that it provided for the annual
France Télécom was released was neither new, since the
repayment to the State of the pensions granted to the
1990 Law adopted the previous budgetary practice, nor
retired civil servants and the payment of the costs
unforeseeable, since the undertaking set aside provisions
provided for in Article L-134 of the Social Security Code.
for this purpose, nor did it derogate from ordinary social
security arrangements since these do not apply to the
compensation paid by France Télécom.
(102) Even if it seems that La Poste is not in competition with
France Télécom, which the advantages granted to the
latter could distort or threaten to distort, the fact
remains that the logic and provisions of the retirement
scheme for the civil servants of France Télécom before
(105) From its entry into force, the 1996 Law transferred to
the 1996 reform were the same as those of the
the French State liability for the annual contribution ulti
comparable scheme applied to La Poste at the same
mately covering in full the cost of funding the pensions
time. Moreover, the Commission considered in its La
of the staff concerned. The amount of aid granted in this
Poste decision that the reform of the scheme applicable
way by the 1996 Law can be calculated, since its entry
to La Poste constituted State aid, contrary to the
into force, by the annual difference between the compen
arguments put forward by the French Republic in
sation consisting of the contribution in full discharge of
respect of France Télécom. More generally, to assess the
liabilities paid by France Télécom to the French State and
situation of France Télécom, the reference situation is
the costs that it would have paid pursuant to the 1990
that of a public or private undertaking employing civil
Law, indicated in Table 1, if this Law had not been
servant staff who have retained their status. Such under
amended, minus the amount of the flat-rate contribution
takings would be in the same reference situation as
paid in 1997.
France Télécom. It is therefore in terms of this
reference scheme that the existence of State aid in
favour of France Télécom can be assessed.
(106) It can be seen from the estimates supplied by the French
Republic and set out in recital 40 that, at the time of the
The financial advantages
1996 reform and until the foreseen expiry of the
financial liabilities resulting from the burden assumed
(103) Likewise, it cannot be argued that a measure does not
by the French State, the French authorities were able to
confer an advantage on an undertaking, France Télécom
estimate this total amount of net new costs until 2043,
in the present case, through the mere fact that it is in
the date on which the financial liabilities of the State in
compensation for a certain disadvantage that this under
relation to the retired civil servants or their beneficiaries
taking allegedly suffered in the past, contrary to the
would end, at EUR […] billion. The present value of the
assertions of the French Republic and France Télécom.
net cost amounted to EUR […] billion in 1996, after
The Commission also recently dismissed the argument of
deduction of the annual contributions by France
a historic telecommunications operator, a competitor of
Télécom (EUR 15,2 billion), those of the employees
France Télécom, according to which specific social
(EUR […] billion) and the exceptional flat-rate
benefits in the form of pensions comparable to those
contribution of EUR 5,7 billion.
of the civil service inherited from the past and different
from those under ordinary law for part of the staff justify
measures for the reduction of the social security costs
associated with the pensions for this category of staff
incurred by the operator ( 55 ). In this respect, as the
(107) Moreover, it should be noted that the amounts estimated
French authorities emphasised during the discussions
at the time of the 1996 reform represent an approxi
on the draft, the 1996 Law imposed a new, substantial
mation of the actual amount ( 56 ). The amounts of
burden on the French State for the payment and
compensation provided for which are payable by
servicing of the pensions granted to the civil servants
France Télécom in the form of annual contributions,
of France Télécom. At the same time, the 1996 Law
like the balance compensation of EUR 5,7 billion paid
therefore had the effect of reducing the compensation
that France Télécom had always paid.
( 56 ) This approximation remains valid only in so far as the many
underlying assumptions are confirmed by the facts. In addition,
the discount rate of 7 % used for the France Télécom pensions is
(104) On account of the detailed rules for calculating the rate
well above, for example, that of 3 % which the French Republic
of the employer’s contribution provided for by the Law,
applied — admittedly retrospectively in this case — in the case of
the reform of the pension scheme of the electricity and gas
industries which was the subject of the Commission decision of
( 55 ) Commission Decision 2009/703/EC of 11 February 2009
16 December 2003 (Commission Decision of 16 December 2003
concerning the State aid C 55/07 to BT Plc, point 80 (OJ L 242,
on the State aid granted by France to EDF and the electricity and
15.9.2009, p. 21).
gas industries (C(2003) 4637 fin) cited above.

---

EN
12.10.2012 Official
Journal
of
the
European
Union L
279/17
in 1997, had neither the object or the effect of seeking
analyses as disadvantages, are normal costs in the
budgetary neutrality for the French State. If that had been
budget of an undertaking, and it has not been estab
the case, subject to the appropriate nature of the actuarial
lished that they do not improve staff recruitment and
calculation assumptions, the costs and receipts would
productivity compared to competitors.
have been equal for the period as a whole and,
consequently, there would have been no economic
advantage for France Télécom.
— Moreover, although it is true that France Télécom
does not have the option of adjusting its total wage
(108) The French authorities were aware that the ‘transfer of
bill by implementing a social plan to cut the
the pension costs for the civil servants of France Télécom
workforce regarding the staff concerned, it is
to the general State budget’ was ‘a new and heavy burden
doubtful that such a plan targeting employees with
for the State’ that the exceptional flat-rate contribution or
civil servant status only on the grounds of this status,
the proceeds of the sale of part of the shares in the
could validly be implemented, whereas the stop on
undertaking held by the State would only cover in
the recruitment of civil servants in 1997 and the
part. The debates mentioned in recital 31 show that
recourse to ordinary employees offered it certain
the French State did not seek in 1996 to offset in full
possibilities for flexibility of adjustment of its total
the new burden it was assuming for the future but, on
wage bill.
the contrary, sought to assume a new burden and for ‘the
interests of the undertaking to be taken into account first
— Finally, although it is true that the undertaking
in this matter’.
devotes a substantial budget to encouraging early
retirement by the staff in question, the fact remains
(109) It is obvious that, even with different actuarial
that the incentive and the interest for the undertaking
assumptions from those used by the French State to
to introduce such a measure would have been less
estimate the new burden it was assuming and notwith
without the passing on to the French State of
standing the exceptional flat-rate contribution paid in
financial liabilities assumed by France Télécom,
1997, the reform granted a substantial economic
provided for by the 1996 Law. The mechanism in
advantage in the form of lower employer pension
this way allows the encouragement of early
contributions. Since the flat-rate contribution or balance
retirement and therefore funding at an earlier stage
compensation did not allow the charges transferred to
by the State for the staff concerned. Without the
the French State to be covered in full but, at the very
1996 Law, France Télécom would have continued
most, to be reduced, and in view of the proportions in
to provide this funding.
question, the actuarial calculation used at the time and
the accuracy of the estimates resulting from it for the
period up to 2043 as a whole cannot be confirmed as
(112) In the absence of a link to the question of whether or
appropriate.
not an economic advantage exists resulting from the
measures in question, taking into consideration
(110) Moreover, the financial advantages resulting from the
competitive advantages drawn by France Télécom from
lower contributions by France Télécom cannot be
its former monopoly, invoked by the complainants,
compared with the alleged disadvantages arising from
would appear to be equally baseless. The alleged
the employment of civil service staff, as France
advantages and disadvantages are in fact unrelated to
Télécom argues, supported by the French Republic. In
the question of levelling the conditions of competition
fact, the 1996 Law did not, in any case, increase these
on the telecommunications markets with regard to social
alleged disadvantages, since it did not lead to the
security costs.
recruitment of additional civil servants. In addition, by
discharging France Télécom from a part of its financial
liabilities, the objective of the 1996 Law was not to
(113) Only the exceptional flat-rate contribution provided for
compensate for an alleged disadvantage associated with
by the 1996 Law immediately placed a cost burden on
wages or, according to the words of France Télécom, the
France Télécom in relation to the reference situation
lesser fluidity of employment of civil service staff.
already identified. The payment of the flat-rate
contribution reduced the amount of aid from which
(111) It is therefore for the sake of completeness that it is
France Télécom has benefited and will benefit until the
necessary to respond to the arguments concerning the
expiry of the financial burden assumed by the French
alleged disadvantages caused by the employment of civil
State in the place of France Télécom pursuant to the
servants, invoked by the French Republic and France
1996 Law. Without prejudice to the accuracy of the
Télécom.
actuarial methods used by the French Government at
the time, without this flat-rate contribution, the amount
— Firstly, France Télécom, on the eve of the full
of the burden from which France Télécom would have
opening-up of the French market to competition,
been relieved would have amounted to EUR 18,9 billion
had a trained, competent body of staff, without
and not EUR […] billion, in 1996 net value.
which, if it had had to be replaced entirely, its
market position could not have been maintained,
The effect of distorting or threatening to distort competition
which France Télécom omits to point out in its
written submissions.
(114) The 1996 Law therefore permitted and still permits
France Télécom to have increased financial resources at
— In addition, the amount of the wages and the
its disposal to operate on the markets in which it is
investment in staff training that France Télécom
active. On account of the 1996 Law, these resources

---

L 279/18
EN
Official Journal of the European Union
12.10.2012
were therefore greater than those at France Télécom’s
6.1.5. Conclusion on the existence of aid within the meaning
disposal under the 1990 Law in its original wording.
of Article 107(1) of the TFEU
The telecommunications services markets on which
France Télécom operated and operates throughout
(119) It ensues from the above that, by reducing the compen
French territory and in other Member States have been
sation consisting of the employer’s contribution to be
gradually opened up to competition through the
paid to the State for the retirement pension expenses
progressive disappearance of exclusive or special rights
provided for by the 1990 Law in its original wording
from 1988, then, with the exception of specific deroga
and by substituting for this the compensation provided
tions, totally from 1998. There was total opening-up to
for by the 1996 Law, in so far as the latter compensation
competition in France in 2002. The removal of the legal
is lower than that previously applied, the French
barriers was accompanied by the entry of other operators
Republic, through its resources, has granted aid to
with which France Télécom was and is in competition,
France Télécom which distorts or threatens to distort
even before the legislative measures of 1990 and 1996
competition and affects trade between Member States
which are the subject of the present decision.
within the meaning of Article 107(1) of the TFEU at
the time of the transfer of the costs instituted by the
1996 Law.
(115) Released from the obligation to set aside provisions for
the future retirement costs of its civil service staff and
(120) Consequently, it is necessary to examine whether this aid
subject to a lower annual contribution level, France
can be declared compatible with the internal market.
Télécom’s balance sheet was relieved of liabilities and
costs, thereby increasing its attractiveness to raise
capital, which placed it in a more favourable situation
than before the 1996 reform. Released from a burden
6.2. Alternative legal bases for compatibility of the
incurred from its historical French market, France
aid
Télécom was in this way able to develop more easily
on the markets of other Member States newly opened
(121) The Commission notes that France did not refer to
to competition, which it in fact did, as shown in recitals
Article 106(2) of the TFEU as a basis for the compati
48 to 50.
bility of the measures en question.
(122) The derogations provided for in Article 107(2) of the
(116) As a result, relieving the burden of France Télécom
TFEU concerning aid having a social character, granted
arising from the method of calculating the compensation
to individual consumers, aid to make good the damage
to pay to the French State for funding the pensions of
caused by natural disasters or exceptional occurrences
the civil service staff distorts or threatens to distort
and aid granted to certain areas of the Federal Republic
competition between France Télécom and these new
of Germany, are obviously irrelevant in the present case.
operators in France and in the other Member States
where France Télécom is present.
(123) As for the derogations provided for in Article 107(3) of
the TFEU, the Commission finds that the aid in question
6.1.4. Effect on trade between Member States
is not intended to promote the economic development of
areas where the standard of living is abnormally low or
(117) The markets on which France Télécom operates in France
where there is serious underemployment, that it is not a
have been opened up gradually to competition since
project of common European interest and does not aim
1988 and, as a result, are largely open to trade
to remedy a serious disturbance in the French economy.
between Member States. Directive 96/19/EC aimed for
It is not intended either to promote culture and heritage
total liberalisation of the telecommunications sector
conservation.
from 1 January 1998. Operators whose capital is held
in part by undertakings of Member States other than
France have in this way become established there.
Some of these markets concern international communi
(124) It therefore appears that only Article 107(3)(c) of the
cations between Member States. Likewise, via subsidiaries,
TFEU could be applied to assess the compatibility of
France Télécom provides electronic communications
this measure.
services in other Member States, and notably Spain,
Belgium and the United Kingdom.
6.3. Compatibility of the aid in terms of
Article 107(3)(c) of the TFEU
(118) Under these conditions, a measure which reduces the
(125) Under Article 107(3)(c) of the TFEU: ‘The following may
general operating costs of France Télécom, and thereby
be considered to be compatible with the internal market:
releases resources which become available to that under
[…] aid to facilitate the development of certain economic
taking to invest or to improve its commercial offers in
activities or of certain economic areas, where such aid
France or to establish in other Member States, could
does not adversely affect trading conditions to an extent
affect trade between Member States.
contrary to the common interest […]’.

---

EN
12.10.2012 Official
Journal
of
the
European
Union L
279/19
(126) For aid to be considered compatible with the internal
related social security contributions and tax payments,
market on the grounds that it facilitates the development
between France Télécom and the other undertakings in
of economic activities or certain economic areas, it must
the telecommunications sector coming under the
improve the way in which the economic activity is
ordinary social security arrangements. The means used,
carried out. Aid is compatible within the meaning of
i.e. an aid measure targeting directly and exclusively the
Article 107(3)(c) only if it does not adversely affect
way in which the employer’s contributions of France
trading conditions to an extent contrary to the
Télécom are established seems an appropriate way of
common interest. In its assessment, the Commission
achieving the objective.
puts particular emphasis on the criteria of necessity
and proportionality ( 57 ).
(131) An aid measure which aims to reduce the current social
security costs of France Télécom, assumed at a time
(127) By way of a preliminary remark and in view of the
when the bulk of its activities were covered by a
doubts raised by the Commission in its decision to
monopoly and the provision of a service did not
initiate the procedure, it should be noted that the
require efficient economic behaviour, may contribute, in
French Republic collected from France Télécom a satis
a different competitive environment, to improving the
factory amount corresponding to the recovery of the aid
way in which the services formerly covered by the
required by the Commission in its decision on appli
monopoly are supplied, provided that the allocation of
cation of the business tax to France Télécom ( 58 ). The
the financial resources by the competing undertakings to
Commission considers, after confirmation of the
their respective social security costs does not introduce
judgment of the General Court dismissing the action
any bias in a merit-based competition process.
for annulment of this decision by the Court of
Admittedly, reservations are expressed below on the
Justice ( 59 ), that the French Republic has taken the
appropriateness of certain provisions of the Law to
necessary measures to fulfil the obligations arising from
achieve the objective it sets. However, neither its
this decision. Since the due recovery of the aid paid
legitimacy nor its conformity with the common interest
through the application of the business tax eliminates
objective of developing competitive electronic communi
the economic advantage enjoyed by France Télécom in
cations services markets, thereby contributing to tech
this respect, there is no need to examine the effects of
nological progress and rapid economic growth in this
any cumulation with the aid which is the subject of the
activity, could be doubted.
present procedure.
6.3.2. Necessity for the aid measure
(128) For the rest, it should be noted straight away that,
contrary to investment costs, the social costs of an
(132) The capping of the civil service staff working for France
undertaking are recurrent operating costs and that aid
Télécom, brought about by the ban on recruitment after
reducing them is aid for the operation of the under
1 January 2002 provided for by the 1996 Law, would
taking, the compatibility of which with the internal
have had the inevitable consequence of a considerable
market must, according to the Court of Justice case-
increase in the burden of retirement pensions imposed
law, be assessed very restrictively by the Commission.
on France Télécom in proportion to the civil servant staff
still working. Deprived in this way of the possibility of
recruiting civil servants, which is understandable for that
6.3.1. Conformity of the aid measure with an objective of
matter given the henceforth competitive nature of the
common interest
provision of the services in question, France Télécom
would have had to shoulder an excessive burden to
(129) In the present case, the aid implemented since 1997 can
pay the retirement pensions for the staff concerned in
be considered as being intended to facilitate the devel
relation to that which its competitors had and still have
opment of the economic activity of supplying electronic
to pay. It should therefore be noted that the
communications services, in the context of the full
commitments in exchange to be paid to the French
liberalisation of these markets. In fact, the 1996 Law
State provided for by the original provisions of the
was adopted hand in hand with Law No 96-659 of
1990 Law concerned not only the civil servant staff
26 July 1996 on the regulation of telecommunications
working on competitive markets in 1990 and afterwards,
(loi n o 96-659 du 26 juillet 1996 de réglementation des
but also the civil servants of the Directorate-General of
télécommunications), which transposed the obligations
the Ministry of Postal and Telecommunications Services
arising for France from Union law and, in particular
who had retired in 1990.
from Directive 96/19/EC.
(133) For illustration, the contribution rate which would have
(130) In this respect, the general objective aimed for by the
resulted for France Télécom from retaining the provisions
1996 Law regarding the payment of financial compen
of the 1990 Law would have been 77 % of the gross
sation to the French State is to align the levels of wage-
index-related salaries of the civil service staff working in
2010, according to the French Republic. This rate is to
( 57 ) Judgment of 7 June 2001 in Case T-187/99 Agrana Zucker und
be compared to a rate of […] % which would allow a
Strke AG v Commission ECR II-1587, point 74.
totally level playing field for the common and non-
( 58 ) See footnote 33.
common risks between France Télécom and its
( 59 ) Judgment of 30 November 2009 in Joined Cases T-427/04 and
competitors. In absolute value, the difference would
T-17/05 French Republic and France Télécom SA v Commission ECR
II-4315. Judgment of 8 December 2011 in Case T-81/10 France
represent an additional cost of about EUR […] million
Télécom v Commission (not yet published).
per year in relation to the contribution rate ensuring the

---

L 279/20
EN
Official Journal of the European Union
12.10.2012
level playing field. In addition, in the absence of
non-dominant undertaking, have as their object precisely
including in the Law the fact that the employer’s
to ensure that the position of France Télécom inherited
contributions are henceforth in full discharge of liabil
from its former monopoly is not more damaging to
ities, France Télécom would have had to continue to
competition. These ad hoc regulatory instruments,
meet significantly higher provisioning needs in relation
designed and applied consistently by the national regu
to the provisions of EUR 3,6 billion already set aside in
latory and competition authorities and by the Commis
1996.
sion ( 61 ), are a more targeted and effective remedy to the
persisting effects of the advantages derived by France
Télécom from its former monopoly, invoked by the
complainants.
(134) In this respect, the considerations of the complainants
concerning the fact that France Télécom was able to
assume a far larger financial debt from 1996 than the
burden from which the French State had relieved it are
not relevant as they are unrelated to the question
(137) Consequently the State aid which is the subject of the
present procedure appears, in principle, necessary to
examined. Even if the increase in the financial debt
attain an objective of common interest by improving
assumed by France Télécom since 1996 and the
the conditions of competition relating to the retirement
amounts in question now seem to rule out the risk of
costs and, therefore, the provision of electronic
bankruptcy of the undertaking referred to by the French
communications services.
Republic if the arrangements provided for by the 1990
Law had continued, the aid measure seems to be
necessary in the future to allow France Télécom to be
able to compete on the markets concerned on the basis
of merit, without being handicapped by the burden of
6.3.3. Proportionality of the aid measure
social security costs inherited from the past which its
competitors do not have to bear.
(138) It must be concluded that the financial compensation in
favour of the State introduced by the 1990 Law for the
payment and servicing of the pensions is specific to
France Télécom and sui generis. The principle of total
(135) The considerations of the complainants and the telecom
repayment provided for by the original 1990 Law has
munications operator on the relevance of an overall
been replaced by different arrangements for determining
balance with a view to assessing the need for aid in
the amount of the compensation to be paid to the State
the light of the other advantages derived by France
from 1996. Several options for determining the amount
Télécom from its past monopoly are unfounded in this
of the employer’s contribution to be paid by France
case. It is true that, since 1996, France Télécom’s position
Télécom, ranging to full funding by the State without
on a number of the services markets in which it operates
repayment, were theoretically possible. This compen
in France remains dominant, especially on account of
sation has been calculated since 1997 by referring to
network effects inherent in the communications
certain costs borne by the competing undertakings in
markets. Likewise, France Télécom has increased its
the sector. For the purposes of determining whether
presence on the markets of other Member States by
the aid is proportionate for achieving the objective, it
acquiring significant positions there, especially in
is therefore appropriate to examine the objective and
Poland and Spain. The fact remains that, as emphasised
justified nature of the reference to establish the amount
indirectly by the telecommunications operator in its
of the compensation adopted in the 1996 Law.
comments, as a result of its dominant position within
the meaning of Article 102 of the TFEU or its significant
market power within the meaning of the regulations
applicable to electronic communications in the
(139) It should be noted straight away that, in the procedures
Union ( 60 ), France Télécom is subject to specific asym
relating to reductions in retirement costs for civil servant
metric obligations which are not imposed on the
staff of former monopoly operators in the telecommuni
competing undertakings with lesser market power.
cations sector, OTE in Greece and BT Plc in the United
Kingdom, the Commission checked in particular whether
these undertakings were subject to equivalent social
security costs to those of their competitors to decide
(136) These obligations, for example regarding access to its
the respective compatibility and incompatibility with
network, cost-orientation of prices or refraining from
the internal market pursuant to Article 107(3)(c) of the
commercial behaviour which would be permitted to a
( 61 ) As regards the regulations of the French regulator of electronic
( 60 ) Directive 2002/21/EC of the European Parliament and of the
communications, ARCEP, the positions of the Commission in
Council of 7 March 2002 on a common regulatory framework
relation to the plans notified since 2003 are available at: http://
for electronic communications networks and services (Framework
circa.europa.eu/Public/irc/infso/ecctf/library?l=/commissionsdecisions
Directive) (OJ L 108, 24.4.2002, p. 33); Directive 2002/19/EC of
&vm=detailed&sb=Title.
the European Parliament and of the Council of 7 March 2002 on
The Commission decision of 16 July 2003 in Case COMP-38.233
access to, and interconnection of, electronic communications
imposing a penalty for abuse of a dominant position on Wanadoo,
networks and associated facilities (Access Directive) (OJ L 108,
a subsidiary of France Télécom at the time, is available at: http://ec.
24.4.2002, p. 7); Commission Directive 2002/77/EC of
europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_
16 September 2002 on competition in the markets for electronic
38233. The appeal against the judgment of the Court of First
communications networks and services (OJ L 249, 17.9.2002,
Instance was dismissed on 2 April 2009 by the Court of Justice,
p. 21).
in Case C-202/07 P France Télécom v Commission ECR I-2369.

---

EN
12.10.2012 Official
Journal
of
the
European
Union L
279/21
TFEU of the State aid granted to the operators in ques
1996 and which had become redundant. The provisions
tion ( 62 ). The Commission finds that in the present case,
written back by the State had been set aside by France
the contributions in full discharge of liabilities paid each
Télécom to defray the cost of future retirements and this
year by France Télécom and provided for by the 1996
write-back eliminates the effects of aid for the period of
Law do not enable it to be ensured that the social
payment of the retirements which they are intended to
charges levied are equivalent to those of its competitors.
cover.
The competitively fair rate (hereinafter: ‘TEC’) is not
achieved.
(144) However, the 1996 Law refers to a one-off exceptional
(140) However, the French Republic and France Télécom rely
contribution, without the applicable provisions, either of
on the exceptional flat-rate contribution of EUR
the Finance Law or of the subsequent Decrees, deter
5,7 billion paid in 1997 by France Télécom under the
mining an amount arising from the provisions, which
1996 Law. The amount of this flat-rate contribution was
should have been deducted from the burden transferred
established in 1996 so as to compensate, for a period of
to the State for the duration of this period. Article 6 of
10 years of application of the 1996 Law, the additional
the 1996 Law clearly specifies that the exceptional flat-
cost foreseen at the time for the State, also taking into
rate contribution is paid in return for the funding by the
account the accounting provisions that France Télécom
State of the pensions granted to the civil service staff. The
had set aside and that the undertaking could write back
amount of this exceptional contribution must therefore
in the financial year 1996-97. The exceptional flat-rate
be included in its entirety in the analysis of the reform.
contribution is subdivided into two components:
— firstly, an amount of EUR 3,6 billion corresponding
(145) As France Télécom, through the payment of this excep
to the provisions set aside by France Télécom up to
tional flat-rate contribution, covered the cost of the
1996 in order to defray the future retirement costs of
retirement pensions of the civil servants in telecommuni
the civil servants foreseen at the time;
cations and the cost of the compensation between
arrangements for a period of about 15 years, the
effects of the aid were neutralised. France Télécom, by
— secondly, an amount of EUR 2,1 billion (hereinafter:
paying this exceptional contribution, therefore neutralised
the ‘additional amount’), corresponding to both the
the effects of the aid during this period. Consequently, it
forecasts of the public authorities and in fact to the
is justified that, during this period, France Télécom is not
net social security costs for paying the pensions
obliged to fulfil the conditions of compatibility of this
which the State would have to defray over a period
aid, and therefore that it does not pay the annual
of 10 years, between 1997 and 2006, on account of
contribution necessary to ensure a competitively fair
the transfer of the cost of the pensions of the civil
rate including the non-common risks in respect of the
servants in telecommunications.
private-law employees.

(141) The flat-rate sum of EUR 5,7 billion was never intended
(146) It is appropriate to return in detail to the stages of this
to compensate for the absence of the competitively fair
reasoning.
rate between France Télécom and its competitors, so it
would not be justified to weigh this sum against the
annual contributions in full discharge of liabilities
which were not paid by France Télécom when they
The competitively fair rate is not achieved
would have been necessary to attain a competitively
fair rate.
(147) The fact remains that the annual levies in full discharge
of liabilities paid by France Télécom since the 1996
reform do not permit a competitively fair rate to be
(142) On the other hand, an examination of the parliamentary
achieved, as emphasised in the decision to initiate the
debates shows that the additional amount of EUR
procedure. This results from the fact that the rate
2,1 billion was intended to cover this transfer of costs
applied to France Télécom includes only the
from 1997 to 2006 and, in fact, to eliminate the effects
contributions corresponding to the common risks of
of aid for a 10-year period. In this way, the net financial
private-sector employees and civil servants and, as a
effort by France Télécom corresponding to this additional
result, excludes the contributions corresponding to the
amount consisted in financing, for a 10-year period, the
non-common risks, such as unemployment or non-
additional cost of the reform for the French State.
payment of wages in the event of the firm going into
receivership or compulsory liquidation.
(143) Moreover, the exceptional contribution includes the
write-back of the accounting provisions set aside until
(148) It therefore results from Table 4 that not taking the non-
common risks into account in the calculation of the
( 62 ) Commission Decision 2008/722/EC of 10 May 2007 on State aid
contribution to be paid by France Télécom is reflected
C 2/2006 planned for OTE, point 137 (OJ L 243, 11.9.2008, p. 7).
in a considerable difference between the compensation
Commission decision 2009/703/EC of 11 February 2009 on State
aid C 55/2007 granted to BT Plc, cited above, points 72, 81-82
paid by France Télécom to the State and what it would
and 98.
pay if the contribution rate were calculated to ensure an

---

L 279/22
EN
Official Journal of the European Union
12.10.2012
entirely level playing field with the bases for the calcu
certain social security contributions and tax payments
lation of the costs paid by competitors. Consequently, the
have not been integrated into the basis of assessment
aid measure resulting from the Law does not comply
for calculating the annual contribution.
with the principle of proportionality. For it to comply
with this principle and in order to attain the legitimate
objective stated of improving the conditions of
It is not justified to compare the insufficiency of the rate of the
competition by equalising the calculation methods
contribution in full discharge of liabilities applied to France
relating to the costs borne by the undertakings
Telecom since 1997 and the exceptional flat-rate contribution
operating on the telecommunications markets
paid to the State by France Télécom
concerned in France, the aid granted to France Télécom
pursuant to the 1996 Law should have equalised, and
(152) Likewise, contrary to the claims of the French Republic
should effectively in future equalise, these costs by
and France Télécom, it is not justified to take into
including those relating to the risks not common to
consideration the amount of the exceptional flat-rate
the two categories of staff.
contribution of EUR 5,7 billion already paid by France
Télécom in 1997 to compare it with the insufficiency of
the rate of the contribution in full discharge of liabilities
(149) In this respect, France’s argument that the civil servants
applied to France Télécom.
are not exposed to certain risks and, that as a result, it is
not justified to pay a contribution for these risks, cannot
be accepted. Firstly, it is pursuant to State measures that
(153) As a preliminary point, the Commission wishes to recall
these risks would not arise, so there is no justification for
that, in each situation, it has to establish whether the
France Télécom to draw a pecuniary advantage. For
conditions of application of the derogation provided
example, it is by virtue of the commitment by the
for in Article 107(3)(c) of the TFEU have been fulfilled,
French State to the civil servants still working at France
without being bound by its earlier decision-making
Télécom and on account of the fact that the French State
practice, assuming that is established ( 63 ).
is its own insurer that the risk of non-payment of wages
in the event of the firm going into receivership would
not arise. However, the possibility of France Télécom
(154) In any event, the reform examined here displays clear
filing for bankruptcy, just like a competitor, cannot be
differences, in several respects, from the reform referred
ruled out. In both cases, it is not a matter of an
to in the La Poste decision ( 64 ), which the French auth
advantage supplied to the undertaking, but directly to
orities attempt to rely on.
its employees. The guarantee of the payment of wages
takes effect after the undertaking has ceased to exist.
However, a competing undertaking will have to pay
contributions to guarantee the risk of non-payment of
(155) In fact, contrary to the reform as foreseen by the La
wages after its disappearance, in contrast to France
Poste decision invoked by the French Republic and
Télécom. It is therefore not justified to give the latter
France Télécom, the reform of the arrangements for
an advantage, in the form of a lower contribution or,
financing the retirement pensions of the civil servant
in fact, an exclusion of this risk from the method of
staff of France Télécom occurred on the eve of the
calculating the contributions of France Télécom.
opening-up, at Union level, of the markets where

France Télécom could operate.
(150) Then, more fundamentally, the objective itself of the
(156) Moreover, it appears that France Télécom took advantage
reform introduced in 1996, which does not seem to
of this liberalisation by establishing itself in the markets
have been brought to its logical conclusion, is to
of other Member States, thanks not only to its change of
equalise the conditions of competition with regard to
status into a public limited company, but also, in part,
tax and social security payments between all the
from the elimination of retirement pension commitments
competitors of the sector, irrespective of the status of
from its balance sheet and the lower future potential
their staff and the existence of an actual obligation for
charges resulting from the reform. This reduction in its
France Télécom to affiliate with and subscribe to the
balance-sheet commitments enabled France Télécom to
competent management bodies. It is precisely this logic
boost its solvency and borrowing capacity. The debt
of equalisation of the conditions of competition which
figures, supplied by the complainants in their
would be liable to make the measure examined
comments and not contested by the French Republic
compatible with the internal market. Whether or not
regarding the amounts, show that the net financial debt
the staff of France Télécom are exposed to such risks is
of France Télécom rose from EUR 19,2 billion in 1997
not therefore relevant under this logic.
to EUR 83 billion in 2002.
(151) In conclusion, a reduction in the funding of the pensions
(157) It is true that a dedicated investment policy for expansion
with a transfer of the net burden to the State would
on the markets of other Member States, made possible by
respect the principle of proportionality only if it
the liberalisation, may be at the origin of this very
allowed a level playing field. However, France Télécom
has not been placed in a situation which is fully
( 63 ) See in particular the General Court judgment of 15 June 2005 in
equivalent to that of the undertakings in the sector as
Case T-171/02 Regione autonoma Sardegna v Commission, point 177.
regards wage-based social security contributions, since
( 64 ) See footnote 32.

---

EN
12.10.2012 Official
Journal
of
the
European
Union L
279/23
substantial increase in financial debt. Nonetheless, raising
immediately in an additional annual cost of approxi
the necessary funds was rendered possible in part by
mately EUR […] million for La Poste ( 67 ).
reduction in retirement costs for a net amount of EUR
[…] billion transferred to the French State in 1996. As a
result, the comments of the telecommunications operator
claiming that the aid enabled France Télécom to finance
(161) It has not therefore been established that the situation of
its international expansion (comments set out in recital
the two undertakings under the effect of the law
68), albeit indirectly, are not without foundation.
applicable before the respective reforms and,
consequently, the competitive impact of these reforms,
was similar. The facts point to the contrary. As a result,
an examination coming to similar conclusions in both
(158) On the other hand, the group of postal markets on
cases is not justified.
which the French La Poste can operate in the Union is
not yet entirely open to competition and would only
have to be in 2012, i.e. six years after the reform of
financing the pensions of La Poste ( 65 ). The effect of
(162) Furthermore, in the case of the La Poste decision, there
restricting competition of the aid granted to France
were sufficient reasons to consider that the exceptional
Télécom on markets which have been fully opened up
flat-rate contribution could be reallocated in the future as
is therefore greater than that of the aid to La Poste.
an advance on the payment of the contributions linked
Complete parallelism in the conditions necessary for
to the adjusted competitively fair rate. Such reasons are
compatibility of the aid is not therefore required, since
lacking in the present case. In fact, the condition
the competitive situations are separate on markets for
imposing the reallocation of the exceptional contribution
which the priority in opening-up at Union level and
by La Poste was established after the Commission had
the contribution to the competitiveness of its economy
initiated the formal investigation procedure, calling into
were also different. As a result, the common interest
question the underestimation of the contribution in full
criterion referred to in Article 107(3)(c) of the TFEU
discharge of liabilities necessary to attain a competitively
need not necessarily be assessed in an identical fashion
fair rate.
in the two cases in point.
(163) To a large extent, and even though the French authorities
did not recognise it explicitly, the allocation of the excep
(159) In addition, the financial situation of La Poste and,
consequently, its capacity for expansion on external
tional flat-rate contribution in question in the La Poste
markets or for reinforcement on the French market
decision was therefore the result of negotiations between
were not comparable to those of France Télécom. As
the Commission and the Member State with a view to
emphasised in the La Poste decision, without the
ensuring the payment of a contribution in full discharge
reform of 2006, on account of the changeover to new
of liabilities ensuring a competitively fair rate. In these
accounting standards, La Poste had to enter into its
negotiations, the starting point of the French authorities
accounts a provision for the State liability which it
expressed in their notification of 23 June 2006, after the
hitherto entered as an off-balance-sheet item for an
first contacts on the file in December 2005, was that the
amount of EUR 76 billion (
exceptional contribution for La Poste provided for was

66 ). However, unlike La
Poste, France Télécom set aside accounting provisions
not necessary from the point of view of the level playing
in its accounts to meet its future liabilities in the
field, contrary to the envisaged draft reform of the annual
absence of the reform, which means that the financial
contribution.
situations of each undertaking were objectively different.
(164) In this way, the Commission decision did not confirm a
reform which had entered into force, as France Télécom
(160) Likewise, the absence of reform for France Télécom and
seems to maintain. In fact, the notification and the
the continuation of the arrangements introduced by the
decision to initiate the procedure of 12 October 2006
1990 Law would have been reflected in an increase in
preceded the establishment of the amount of the excep
the retirement pension costs which would become
tional contribution by Law No 2006-1771 of
significant from 2005-07 according to the forecasts of
30 December 2006 (Amending Finance Act 2006).
the time set out in recital 30, which is corroborated ex
These negotiations concerned several aspects of the
post by the results shown in Table 3. At the time of the
reform and in particular, the taking into account of the
reform, the continuation of the arrangements established
advantage which the notified reform could have repre
by the Law applicable to La Poste was reflected
sented in the past, the scope of the contribution rate
envisaged and the terms for taking into account the
( 65 ) Directive 2008/6/EC of the European Parliament and of the Council
specific nature of the La Banque Postale in relation to
of 20 February 2008 amending Directive 97/67/EC with regard to
the postal activities and the staff allocated. These negoti
the full accomplishment of the internal market of Community
ations continued and it is only in their comments of
postal services (OJ L 52, 27.2.2008, p. 3). Some of the markets
8 June 2007 that the French authorities accepted the
have been opened up since 30 December 2010.
( 66 ) La Poste Decision, cited above in footnote 32, points 35-36 and
167, 169.
( 67 ) La Poste Decision, cited above in footnote 32, point 169.

---

L 279/24
EN
Official Journal of the European Union
12.10.2012
terms of allocation of the exceptional contribution under
(169) The burden for France Télécom represented by the flat-
an overall agreement relating to the reform, in this way
rate contribution was paid as general revenue to the State
going back on their position notified on the subject of
budget, assigned to the public body responsible for its
the exceptional contribution and the method of calcu
management and used. Under these circumstances, the
lating the future annual contributions.
Commission cannot therefore, in whole or in part, real
locate fictitiously and retrospectively the exceptional flat-
rate contribution already used for a purpose totally
(165) On the other hand, contrary to the provisions of the
divorced from that assigned to it by the French auth
Finance Act 1997 setting up the public body managing
orities and not provided for by the Law, i.e. compen
the contribution of France Télécom, which provided for
sation of not taking into account risks not common to
inflexible rules concerning the annual repayments to the
ordinary employees and civil servants. This flat-rate
State, the public body managing the contribution of La
contribution was not therefore introduced in anticipation
Poste did not have specific rules imposed on it (
of full equalisation, under different legislative and regu

68 ). Since
it was an exceptional contribution to be paid and was
latory arrangements, of the annual charges of France
not earmarked, the Commission was able to consider
Télécom with those of its competitors.
that the French Republic could have reduced the
amount and at the same time increased the annual
contribution rate of La Poste.
(170) For the same reasons, on account of the rules for the
management and repayment to the budget provided for
in the Finance Law since 1997 and implemented up to
now, the allegations and calculations of the French
(166) Moreover, it must be noted that the terms of the 1996
Republic intended to show that the 1996 reform has
Law define the parameters for the calculation of the
ended now with considerable surplus revenue for the
annual contribution paid regularly to the State in
State cannot be accepted.
return for the pensions of the civil service staff,

without there being any question of taking into
account the risks not common to civil servants and
ordinary employees. In this respect, the Court and the
(171) In fact, taking into account the terms for the
Court of Justice specified, with regard to the business tax
management and use of France Télécom’s exceptional
payable by France Télécom, that a reduction in charges
flat-rate contribution by the competent public body, as
could not be offset by a different specific charge, in
laid down in a Finance Act and the figures for the actual
particular where the Member State, the French Republic
repayments since 1997 forwarded by the French
in this case, has failed to demonstrate that earlier charges
Republic, described in recitals 36 and 37 and in Table
were introduced in anticipation of a reduced tax burden
3, it has to be concluded that the revenue which the
in the future under different arrangements (
French Republic tries to claim, with an investment

69 ).
producing interest at the rate of 7 %, has never existed.
(167) The Commission cannot disregard the fact that the
[…]. In addition, the allegation does not reflect the actual
purpose of the specific flat-rate contribution already
behaviour of the French authorities. In view of the
paid in 1997 was, as expressly established by Article 6
management rules established in the Finance Acts
of the 1996 Law, to compensate the French State in part
passed since it was set up, this public body has not
for the financial burden it was assuming on account of
generated such revenue, which for that matter was not
the 1996 Law.
foreseen and did not generate interest. On the contrary,
the resources of the body were to have been drawn down
in full as at 31 December 2011. They would have been
(168) In addition, it is inferred from the content of the Senate
drawn down earlier if they had been allocated to
report cited in recital 27 that, in adopting the principle
financing the 1996 reform — which the French
of the exceptional contribution, the legislator did not
Republic challenges incidentally — even by including in
seek to take into consideration, and still less to
them the higher revenues from corporation tax, as
compensate for, the difference between the annual
argued by the French authorities. Also, taking into
contributions of France Télécom and the relatively
account higher revenue from corporation tax is
higher contributions of the competitors. On the
unlawful, as it leads to confusion of the different roles
contrary, the legislator deliberately imposed on France
of the State. The combination of these different roles
Télécom the payment of annual costs not covering the
proposed by the French authorities cannot be accepted
risks which are not common to the two categories of
and a distinction should be maintained between on the
staff (civil servant and non-civil servant) and did not
one hand the State granting aid to France Télécom by
establish a link between this choice and the levying of
financing the payment of the retirement pensions of the
the exceptional contribution paid in 1997.
civil servants, in order to develop a merit-based
competition process, and on the other hand, the State
( 68 ) See Annex 37 on ‘Benefit and Pension Schemes — Pensions’, No
as shareholder of France Télécom and, ultimately, the
1198 (Chapter II-2 B-3) of the Report before the National Assembly
State as a public authority exercising its power to raise
No 1127 on the Finance Bill for 2008 by Gilles Carrez.
taxes.
( 69 ) Judgment of 30 November 2009 in Joined Cases T-427/04 and
T-17/05 French Republic and France Télécom SA v Commission ECR
II-4315, points 215 and 217. The Court of Justice dismissed the
appeal against this judgment (Judgment of 8 December 2011 in
(172) In addition, it should be noted that the application made
Case C-81/10 P France Télécom, see in particular points 43 et seq.).
by the French Republic and France Télécom to take into

---

EN
12.10.2012 Official
Journal
of
the
European
Union L
279/25
consideration the exceptional contribution when
(176) For the same reasons, the Commission cannot accept the
examining the compatibility of the reform is in contra
complainants’ comments calling for the introduction of
diction with the comments the French Republic made in
mechanisms to adjust the exceptional flat-rate
its letter of 17 March 2004, according to which ‘the
contribution paid in 1997 and the annual employer’s
exceptional flat-rate contribution provided for by
contribution from France Télécom to ensure the
Article 6 of the Law of 26 July 1996 could not
financial neutrality of the reform. This would also
therefore be seen as compensation for an alleged ‘advan
amount to a new calculation and a retrospective fictitious
tage’. The analysis of its amount is all the less relevant in
reallocation in whole or in part of the exceptional flat-
the light of the State aid rules’ since this amount was ‘an
rate contribution paid to the State budget in 1997.
extraordinary contribution in favour of its sole share
Likewise, the mechanism proposed would amount to
holder [the French State], which can be assimilated to
introducing an ex-post control, year after year, the
an extraordinary dividend distributed before any
purpose of which would not be to ensure the propor
opening-up of the capital to private investors’.
tionality of the aid granted, although reduced by the
exceptional flat-rate contribution, in 1997, but to
eliminate any aid under the reform.
(173) The reasoning underlying the argument put forward at
the time by the French Republic shows a certain
economic and financial logic. It is reasonable, for a
(177) On the other hand, it is worth examining whether the
sole shareholder, on the eve of the opening-up of the
payment of the exceptional contribution can be taken
capital to other investors, to absorb, for its benefit alone
into account in the assessment of the compatibility of
and as far as possible, the funds available in the under
the aid measure with the internal market by retaining the
taking before the opening-up of the capital, provided that
justification of this payment as established by the 1996
this does not compromise the attractiveness of the
Law.
investment. This last aspect was taken into consideration
in the financial parameters imposed on the opening
balance of France Télécom, from which the exceptional
It is justified not to require from France Télécom the payment
flat-rate contribution results indirectly, as mentioned
of an additional contribution ensuring a competitively fair rate
before Parliament in 1996. Consequently, it was
for the period 1997-2010
perfectly consistent on the part of a prudent single share
holder State to draw out the largest possible amount in
(178) Under the 1996 Law, the exceptional flat-rate
extraordinary dividend, according to the terms of the
contribution in 1997 was paid in return for the
French Republic, rather than to leave the funds in the
financing of the pensions by the French State. Under
undertaking, from which after opening-up the capital in
these conditions, the effects of its imposition on the
1997, it would draw at most its pro rata in the capital
overall financial equilibrium of the reform introduced
maintained.
by the 1996 Law as applied so far must be taken into

consideration. It is appropriate to take into account the
time during which the cost of the retirement pensions
was covered by the exceptional flat-rate contribution.
(174) The validity of this reasoning put forward at the time by
the French Republic, which called for the analysis of the
amount of the balance compensation of EUR 5,7 billion
(179) Since it is a matter of comparing financial flows for
not to be taken into account in any way for the
France Télécom spread over a period of time, i.e. the
assessment of the reform in the light of the State aid
payment of the exceptional contribution in 1997 and
rules, is also corroborated by its comments during the
the reduced annual charges resulting from the 1996
procedure. In fact, by declaring that the gauging of the
Law since then, discounting to present value is necessary.
amount of the balance compensation was undertaken in
During 1997, several exceptional contribution payments
terms not of the estimated cost of the reform for the
were staggered up to October 1997, even though the
State or the advantages which France Télécom would
financing of this by the loan in fact postponed the
draw, but of the contributive capacity of the undertaking,
financial burden for France Télécom. On the other
the French Republic points out that the imposition of a
hand, payments of the contribution in full discharge of
balance compensation would result more from the
liabilities were made from the start of 1997. The
behaviour of a prudent single shareholder than that of
discount rate must in principle be that resulting from
a regulatory State concerned about the balance of the
the Commission notice applicable on the subject ( 70 ), a
retirement pension costs it was assuming under the
rate which, for illustration, amounted to 5,53 % in
reform.
October 1997. It should be examined whether it is
appropriate in this case to use a different rate from
that in the applicable notice and in this way to depart
(175) If such reasoning were to be accepted, the Commission
from the rules, communicated to the Member States, that
should not, as requested at the time by the French
the Commission has set itself and that it must apply save
Republic, take into account the exceptional flat-rate
in properly justified circumstances.
contribution in the analysis of the compatibility of the
reform with the State aid rules. As a result, only the
( 70 ) Commission notice on the method for setting the reference and
reduction in the annual contributions of France
discount rates (OJ C 232, 10.8.1996, p. 10) and Commission
Télécom to below the level of those of the competitors,
notice on current State aid recovery interest rates and reference/
discount rates for 15 Member States applicable as from 1 January
called for by the reform since 1997, should be taken into
2005 and historic recovery interest rates and reference/discount
account.
rates applicable from 1 August 1997 (OJ C 88, 12.4.2005, p. 5).

---

L 279/26
EN
Official Journal of the European Union
12.10.2012
(180) In this respect, the choice of the rate of 7 % used by the
choice would not take account of the fact that the
actuary of the French Government to discount the
analysis is being carried out from the point of view of
financial flows from the 1996 reform until 2043
France Télécom ( 72 ).
would not be justified, […], on account of the fact that
the present analysis covers a shorter period owing to the
schedule of financial payments established. The rate of
7 % is also far above the average of 4,4 % of annual
(182) Finally, in this regard, the reference rate of 7 % for the
bond loans of France Télécom between 1991 and 1997
discount rates for the period 1997-2010 applied by the
put forward by the French Republic covers a six-year
French Republic in its comments on the decision to
period well before the facts. In this case, the fact is
initiate the procedure or at the discount rate of […] %
that France Télécom financed the exceptional flat-rate
adopted for 1998 in the reform of the arrangements for
contribution in 1996 through mainly short-term issues
financing retirement pensions of La Poste ( 71 ).
and, to a far lesser extent, through bond issues. A
discount rate resulting from the interest rates paid by
France Télécom on the new debts contracted in 1996
(181) The rates of around 7 % for 15-year OATs for 1996 put
forward by the French Republic cannot be accepted
would amount to 4,8 % on the basis of its balance
either. The rate needs to be established in 1997 and
sheet at 31 December 1996 ( 73 ). Such a rate is adjusted
not for the average of 1996. In addition, a term of 15
to the materiality of the real financial costs incurred by
years is too long in the light of the scale of the annual
France Télécom at the time to finance the exceptional
payment flows which the exceptional flat-rate
contribution. However, it seems appropriate not to
contribution should theoretically have had to cover
make the discount rate depend on the choice made by
during the period, for which the interest alone would
the undertaking at the time, but to use the objective
not have sufficed. Alternatively, the choice of a
reference rate adopted by the Commission in its Notice
composite rate constructed on the basis of different
on discount rates ( 74 ).
rates for optimisation of the investment of the excep
tional flat-rate contribution to comply with the
schedule of flows brought about by the 1996 reform
(183) All in all, it is not appropriate in this case to use a
from the point of view of the French State could be
different reference rate to that resulting from the
considered. Apart from the fact that such a rate, at
Commission notice applicable on the subject and in
around 5,50 %, would not differ significantly from the
this way to depart from the rules, communicated to
Commission’s reference rate for October 1997, the
the Member States, that the Commission has set itself.
Table 5
Financial flows resulting from the 1996 reform for France Télécom (1997-2011)
(million EUR)
Compensation
Annual
Advantage FT
Balance
Balance
Year
Pensions paid
and over-
compensation 1
Interest
compensation
(A)
compensation contributions
(D)
January
(F)
31 Dec.
(B)
(C)
(A + B – C) (*)
(E)
(E + F – D)
1997 (**) […] […] […] 122,3 5
716,8 184,4 5
777,9
1998 […] […] […] 188,2 5
777,9 319,5 5
909,2
1999 […] […] […] 189,8 5
909,2 326,8 6
046,2
2000 […] […] […] 298,3 6
046,2 334,4 6
082,2
2001 […] […] […] 302,9 6
082,2 336,3 6
115,6
2002 […] […] […] 305,9 6
115,6 338,2 6
148,0
( 71 ) La Poste decision, cited above under footnote 32.
( 72 ) This approach would consist in fictitious investment of parts of the amount of the exceptional contribution in
financial instruments with different maturities (e.g. x % at 1 year, y % at 3 years, z % at 10 years), according to the
schedules of flows to be paid (the annual balance of benefits not covered by the contributions). For the 2nd half of
1997, the average rate on 10-year OATs stood at 5,49 %, the rates for shorter maturities being below this value.
( 73 ) See footnote 17. The discount rate reflects the average interest rate at 31 December 1996 for the short-term and
long-term debts of France Télécom, weighted by the respective amounts of new short-term and long-term debts
contracted in 1996, that the auditors allocate mainly to the financing of the payment of the exceptional contribution
to the French State. Almost three quarters (72 %) of this increase resulted from short-term instruments (Treasury
notes and commercial paper), on which the average rate for the year stood at 4,33 % at 31 December 1996.
( 74 ) See footnote 69.

---

EN
12.10.2012 Official
Journal
of
the
European
Union L
279/27
(million EUR)
Compensation
Annual
Advantage FT
Balance
Balance
Year
Pensions paid
and over-
compensation 1
Interest
compensation
(A)
compensation contributions
(D)
January
(F)
31 Dec.
(B)
(C)
(A + B – C) (*)
(E)
(E + F – D)
2003 […] […] […] 364,7 6
148,0 340,0 6
123,3
2004 […] […] […] 477,4 6
123,3 338,6 5
984,5
2005 […] […] […] 619,1 5
984,5 330,9 5
696,3
2006 […] […] […] 744,4 5
696,3 315,0 5
266,9
2007 […] […] […] 909,9 5
266,9 291,3 4
648,2
2008 […] […] […] 1
101,0 4
648,2 257,0 3
804,3
2009 […] […] […] 1
255,8 3
804,3 210,4 2
758,9
2010 […] […] […] 1
386,6 2
758,9 152,6 1
524,8
2011
[…] […] […] 1
497,5 1
524,8 84,3 111,6
(est.)
(*) This column reflects the reduced annual contribution of France Télécom under the 1996 Law, deducting from the employer’s and
employees’ contributions paid the cost of the benefits granted and the cost of compensation and over-compensation that France
Télécom would have continued to pay in the absence of the reform, as estimated by France Télécom, and corrected by the calculations
of the French Republic, reducing the burden by EUR 165 million for the period 1997-2010.
(**) For the year 1997 when the payments of the exceptional contribution were split into tranches until October, the equivalent date of
payment calculated by the French Republic is 4 June 1997. The interest is calculated at that date.
(184) Capitalised at the discount rate of 5,53 %, taking into
is appropriate for the precise date to be decided by the
consideration the balance compensation should
French Republic on the basis of the final dates for the
compensate up to the 1st quarter of 2012 ( 75 ) the
payments made, the final amounts of the benefits paid
reduction in annual costs from which France Télécom
and the lower contributions and other advantages for
benefited as a result of the implementation of the
France Télécom resulting from the 1996 Law, following
1996 reform.
the calculation principles indicated in Table 5.
(185) Furthermore, the schedule for this compensation, which
neutralises the effects of the reform, coincided
(187) On the other hand, after neutralisation of the effects of
furthermore, to within a few months, with the
the exceptional contribution and the drawdown in full of
resources of the public body responsible for managing
the resources paid to the State, the aid granted in 1996
the exceptional contribution of France Télécom actually
to France Telecom will have full effect by conferring an
being exhausted, which was scheduled for 31 December
advantage on France Télécom in relation to its
2011. The flow analysis is supported by the fact that, in
competitors. The aid will then be justifiable only by
any case, the exceptional contribution will have been in
subjecting France Télécom to the payment of a
fact drawn down in full. As a result, no amounts would
contribution in full discharge of liabilities, calculated at
remain that were not repaid to the State budget that it
a rate ensuring a true level playing field. Hence, if the
would be possible to reallocate otherwise than as
provisions of the 1990 Law, as amended by the 1996
provided for by the Finance Law applicable.
Law and the secondary regulatory provisions applicable,
in that they provide that the rate of the contribution in
full discharge of liabilities is calculated so as to equalise
the levels of wage-based social security contributions and
(186) It is therefore justified that, on account of the payment of
tax payments between France Télécom and the other
this exceptional contribution in 1997, France Télécom is
undertakings in the telecommunications sector subject
not required to pay an annual contribution supplement
to the ordinary social security arrangements, by
for the period between 1 January 1997 and a date after
limiting the calculation to the risks which are common
31 December 2010 which still has to be determined
to the ordinary employees and the State civil servants,
precisely. In fact, in so far as, in Table 5, the figures
were to remain unchanged, the aid granted to France
for 2011 and those for the cost of compensation and
Télécom until the expiry of the financial obligations
over-compensation result from estimates, in particular, it
assumed by the French State instead of France Télécom
pursuant to the 1996 Law would not comply with the
( 75 ) This is an approximate estimate.
principle of proportionality.

---

L 279/28
EN
Official Journal of the European Union
12.10.2012
(188) To fulfil the criterion of conformity with the common
(193) Consequently, the annual determination of the rate
interest provided for in Article 107(3)(c) of the TFEU, the
creating a level playing field by the French Republic
compatibility of the aid therefore requires compliance
will have to follow the principles, assessment basis and
with the conditions accompanying the present decision.
methods of calculation of the contribution in full
discharge of liabilities which appear in the comments
referred to in recital 191. In particular, the adjusted
7. CONDITIONS OF COMPATIBILITY FOR THE FUTURE
rate will integrate both the unemployment contributions
and the insurance guaranteeing wage claims and the
(189) Consequently, it is necessary for the French Republic to
contributions or specific charges not paid by the
amend the legislative and regulatory provisions applicable
competitors of France Télécom, such as the 1 % solidarity
for establishing, calculating and levying the contribution
and the cash benefits for absence from work self-insured
in full discharge of liabilities to be paid by France
by France Télécom.
Télécom so as to equalise the levels of wage-based
social security contributions and tax payments between
France Télécom and the other undertakings of the tele
(194) This de facto equalisation will ensure a level playing field
communications sector subject to the ordinary social
between France Télécom and its competitors and will
security arrangements. In addition, it is appropriate that
guarantee proportionality and compatibility with the
the calculation methods and parameters are established
internal market of aid implemented in 1996.
transparently and objectively and can be subject to
control and appeals.
8. CONCLUSIONS
(195) The Commission concludes that the French Republic
(190) The French Republic should also, when calculating the
unlawfully implemented State aid introduced by the
rate of the contribution in full discharge of liabilities,
1996 reform of the arrangements for financing
equalise in fact the levels of wage-based social security
retirement pensions of the civil servants working for
contributions and tax payments between France Télécom
France Télécom in breach, since its entry into force, of
and the other undertakings of the telecommunications
Article 108(3) of the TFEU.
sector subject to the ordinary social security arrange
ments, also taking account of the risks not common to
the ordinary employees and the civil servants employed
(196) The implementation of this aid since 1997 has allowed a
by France Télécom.
reduction in the annual social security costs incurred by
France Télécom. However, this effect was neutralised, at
least until 2010, by the payment of the exceptional flat-
rate contribution provided for by that reform. This
(191) In the comments of the French Republic, set out in
neutralisation justifies the fact that the conditions
further detail in its updated Annexes III and V, the
which would create a genuine level playing field for
French authorities have produced estimates of what the
France Télécom and its competitors regarding these
rate of the contribution in full discharge of liabilities to
charges and which would render this aid compatible
be paid by France Télécom from 1997 (see Table 4)
with the internal market should be applied from a date
would be if the non-common risks had been integrated
after 31 December 2010 still to be set.
into the calculation method (hereinafter: the ‘adjusted
rate’). The adjusted rate includes both the contributions
for unemployment and insurance guaranteeing wage
(197) Consequently, in so far as and provided that the French
claims, which are added to it, and the specific
Republic takes into consideration, in the calculation of
contributions which the competitors of France Télécom
the contribution in full discharge of liabilities payable by
do not pay, such as the 1 % solidarity and the cash
France Télécom, the levels of wage-based social security
benefits for absence from work self-insured by France
contributions and tax payments between France Télécom
Télécom, which are subtracted from it. The result is a
and the other undertakings of the telecommunications
rate about 7 % higher than the rate in fact applied at
sector covered by the ordinary social security arrange
present.
ments, taking into account the risks which are
common and not common to ordinary employees and
civil servants, the reform introduced by the 1996 Law
(192) Such a rate ensures a genuine level playing field
can be declared compatible with the internal market
compared to the only partial equality introduced by the
pursuant to Article 107(3)(c) of the TFEU. The French
1996 Law, whilst taking account of the specific social
Republic is therefore required to take the measures,
costs of France Télécom. The Commission does not
notably of a legislative and regulatory nature, necessary
therefore dispute the principles, assessment basis and
to fulfil the condition mentioned in the present recital,
methods of calculation applied by the French Republic
to establish a rate of contribution in full discharge of
HAS ADOPTED THIS DECISION:
liabilities adjusted to equalise the levels of wage-based
social security contributions and tax payments between
France Télécom and the other undertakings of the tele
Article 1
communications sector subject to the ordinary social
security arrangements, as indicated in the updated
The State aid resulting from the reduction of the compensation
comments of the French Republic and described and
to be paid to the State for the payment and servicing of the
detailed in Annexes III and V to these comments.
pensions granted, pursuant to the Civilian and Military

---

EN
12.10.2012 Official
Journal
of
the
European
Union L
279/29
Retirement Pensions Code, to the civil servants of France
Decision, a detailed description of the measures that it proposes
Télécom pursuant to Law No 96-660 of 26 July 1996 on the
to take and that it has already taken to comply with it. It shall
national company France Télécom amending Law No 90-568 of
inform the Commission in particular:
2 July 1990 on the organisation of the public postal and tele
communications service shall be compatible with the internal
market on the conditions provided for in Article 2.
(a) of the state of progress in the amendments to the legislative
and regulatory provisions referred to in Article 2;
Article 2
The employer’s contribution in full discharge of liabilities,
(b) of the final amounts of compensation and contributions for
payable by France Télécom under Article 30, point (c) of Law
the year 2011 and of those provided for, where appropriate,
No 90-568 of 2 July 1990 on the organisation of the public
for 2012, in the light, in particular, of any balance from the
postal and telecommunications service, shall be calculated and
capitalised amounts of the exceptional contribution;
levied so as to equalise the levels of all the wage-based social
security contributions and tax payments between France
Télécom and the other undertakings of the telecommunications
sector covered by the ordinary social security arrangements.
(c) of the amounts of the employer’s contribution in full
discharge of liabilities, calculated in accordance with the
terms specified in Article 2 for the future instalments,
To fulfil this condition, no later than within seven months of
pending the amendment of the legislation;
the notification of the present decision, the French Republic:
(d) of the payments of the employer’s contribution made after
(a) shall amend Article 30 of Law No 90-568 of 2 July 1990
the amounts of the exceptional contribution introduced by
on the organisation of the public postal and telecommuni
Law No 96-660 of 26 July 1996 capitalised at the discount
cations service and the regulatory or other texts adopted to
rate resulting from the application of the Commission
implement it so that the bases for calculating and levying
notice on the method for setting the reference and
the employer’s contribution in full discharge of liabilities,
discount rates applicable in this case have ceased to
payable by France Télécom, are not confined solely to the
neutralise the effects of the 1996 reform.
risks common to ordinary employees and civil servants, but
also include the non-common risks;
2. The
French
Republic
shall
keep
the
Commission
informed
(b) shall levy on France Télécom, from the day on which the
of the progress in the national measures taken to implement
amounts of the exceptional contribution introduced by Law
this decision. It shall forward immediately, on request by the
No 96-660 of 26 July 1996 capitalised at the discount rate
Commission, any information on the measures already taken or
resulting from the application of the Commission notice on
planned to comply with this decision.
the method for setting the reference and discount rates
applicable in this case equal the amount of the
contributions and costs that France Télécom would have
continued to pay under Article 30 of Law No 90-568 of
Article 4
2 July 1990 in its initial wording, an employer’s
This decision is addressed to the French Republic.
contribution with full discharge of liabilities calculated
according to the terms specified in point (a), taking into
account the risks that are common and not common to
ordinary employees and civil servants.
Done at Brussels, 20 December 2011.
Article 3
For the Commission
1. The French Republic shall communicate to the
Joaquín ALMUNIA
Commission, within two months of notification of this
Vice-President

---

Document Outline

• �

---