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17.1.2012 Official
Journal
of
the
European
Union
L
14/1
II
(Non-legislative acts)
DECISIONS
COMMISSION DECISION
of 29 June 2011
on State aid granted by France to the Institut Franais du Pétrole (Case C 35/08 (ex NN 11/08))
(notified under document C(2011) 4483)
(Only the French text is authentic)
(Text with EEA relevance)
(2012/26/EU)
THE EUROPEAN COMMISSION,
Institut Franais du Pétrole ( 4 ), the French authorities
informed the Commission, by letter dated 18 July
2006, registered as received on 19 July 2006, that on
7 July 2006 the Institut Franais du Pétrole (‘IFP’), which
had formerly been a trade body (établissement professional)
Having regard to the Treaty on the Functioning of the European
within the meaning of the legislation known as Law
Union ( 1 ), and in particular the first subparagraph of
No 43-612 of 17 November 1943 on the management
Article 108(2) thereof,
of trade interests (loi sur la gestion des intérêts profes
sionnels), had now been converted into a publicly
owned industrial and commercial establishment (établis
sement public à caractère industriel et commercial — ‘EPIC’).
Having regard to the Agreement on the European Economic
This conversion was evidenced in two documents which
Area (
the French authorities enclosed with their letter: i) Decree

2 ), and in particular Article 62(1)(a) thereof,
No 2006-797 of 6 July 2006 establishing the consti
tution of the publicly owned establishment IFP (décret
portant statuts de l’établissement public IFP), and ii)
Article 95 of Programme Law No 2005-781 of 13 July
Having called on interested parties to submit their comments
2005 establishing the energy policy guidelines (loi de
pursuant to the provisions cited above ( 3 ),
programme fixant les orientations de la politique énergétique),
under which the Decree cited above had been issued.
Whereas:
(2) By
letters
dated
3
August
2007
and
7
May
2008,
the
Commission requested information from the French
authorities; they replied by letters dated 28 September
1 PROCEDURE
2007 and 26 June 2008 respectively.
(1) In
the
course
of
a
formal
investigation
in
State
aid
case
No C 51/05, concerning aid granted by France to the
( 1 ) OJ C 83, 30.3.2010, p. 47. With effect from 1 December 2009,
(3) On
16
July
2008,
in
a
previous
case,
the
Commission
Articles 87 and 88 of the EC Treaty have become Articles 107 and
adopted a decision on a first measure implemented by
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 decision, references to Articles 107 and 108
( 4 ) The Institut Franais du Pétrole has since been renamed the ‘Institut
of the TFEU should be understood as references to Articles 87 and
Franais du Pétrole nergies Nouvelles’, with effect from 13 July
88, respectively, of the EC Treaty where appropriate. A certain
2010. This name change was made by Article 81 of Law
number of changes in terminology have also been made by the
No 2010-788 of 12 July 2010 on national commitment to the
TFEU, such as the change from ‘Community’ to ‘Union’ and from
environment (loi portant engagement national pour l’environnement)
‘common market’ to ‘internal market’.
(the ‘Grenelle 2 Law’). (IFP press release of 13 July 2010, available
( 2 ) OJ L 1, 3.1.1994, p. 1.
at Internet site http://www.ifpenergiesnouvelles.fr/actualites/
( 3 ) OJ C 259, 11.10.2008, p. 12.
communiques-de-presse/, site consulted on 28 June 2011).

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L 14/2
EN
Official Journal of the European Union
17.1.2012
France to assist the IFP group (‘decision C 51/2005’) ( 5 ).
(9) By
letter
dated
6
May
2009,
the
Commission
In that decision, the Commission stressed that the
communicated to the French authorities all the
question of the existence of additional State aid, in the
comments made by UOP on the opening decision,
form of a potential unlimited State guarantee stemming
where necessary in a confidential version. It asked them
from the EPIC status of IFP, would be the subject of a
to send it their comments by 8 June 2009 at the latest.
separate investigation in another proceeding.
By letter dated 2 June 2009, the French authorities
requested that this time limit be extended until 22 June
2009, since, in their view, the comments submitted by
the third party required detailed and in-depth analysis
(4) This
second
proceeding
under
Article
108(2)
TFEU
was
and the consultation of several ministerial departments.
the subject of a Commission decision dated 16 July 2008
By letter dated 9 June 2009, the Commission agreed to
(‘the opening decision’) (
this extension until 22 June 2009. By letter dated

6 ), taken pursuant to Article 4(4)
of Council Regulation (EC) No 659/1999 of 22 March
22 June 2009, the French authorities forwarded their
1999 laying down detailed rules for the application of
observations on the comments made by UOP.
Article 93 of the EC Treaty ( 7 ) (‘the Procedural Regu
lation’), against the unlimited State guarantee from
which the IFP group was potentially benefiting.
(10) By
letter
dated
29
July
2009,
the
Commission
asked
the
French authorities for additional information, requesting
a reply by 24 August 2009. By letter dated 19 August
(5) The
Commission
published
the
opening
decision
in
the
2009, the French authorities asked for an extension until
Official Journal of the European Union on 11 October
7 September 2009, to which the Commission acceded by
2008, asking interested parties to submit their
letter dated 20 August 2009. The French authorities
comments on the measure.
finally provided the information requested by letter
dated 8 September 2009.
(6) The
Commission
received
observations
from
France
by
letter dated 14 October 2008.
(11) By
letter
dated
20
November
2009,
the
Commission
requested further information from the French
authorities, asking for a reply within twenty days. By
(7) By
letter
dated
6
November
2008,
registered
as
received
letter dated 14 December 2009, the French authorities
by the Commission on the same day, the legal advisers of
asked for an extension until 22 January 2010, which the
UOP Ltd (‘UOP’) informed the Commission that their
Commission granted by letter dated 18 December 2009.
client wished to comment on the measure. In view of
The French authorities finally supplied the information
the time needed for translation, they asked for extra time
requested by letter dated 13 January 2010.
until 30 November 2008 in which to send their
comments. By letter dated 7 November 2008, the
Commission accepted that this request was justified and
agreed to extend the deadline for UOP’s reply until
30 November 2008. By letter dated 28 November
(12) On 20 May 2010, a meeting organised by the
2008, registered as received by the Commission on the
Commission was held in Brussels to discuss with the
same day, UOP’s legal advisers forwarded their client’s
French authorities the consequences for the present
comments on the opening decision.
case of the decision adopted by the Commission on
26 January 2010 concerning State aid granted to La
Poste by State aid measure No C 56/07 (ex E 15/05)
(‘decision C 56/2007’) ( 8 ). La Poste was an entity
(8) In
the
same
letter
of
28
November
2008
UOP’s
legal
governed by public law which up to that time had a
advisers sought permission for their client to submit
status that could be deemed equivalent to that of an
additional comments in the course of the proceeding.
EPIC ( 9 ), and the case concerning it (the ‘La Poste case’
By letter dated 17 December 2008, the Commission
or the ‘postal case’) presented significant similarities with
acceded to this request, agreeing to extend the deadline
the measure at issue, so much so that the French
for UOP’s reply until 23 January 2009 to enable it to
authorities had put forward the same arguments,
submit any additional comments. By letter dated
23 January 2009, UOP’s legal advisers forwarded addi
( 8 ) OJ L 274, 19.10.2010, p. 1.
tional comments from their client.
( 9 ) On this question, see in particular recital 19 of decision C 56/2007.
Before its conversion into a public limited company in 2010, the
EPIC status of La Poste derived from a case-law classification: in a
( 5 ) Commission Decision 2009/157/EC of 16 July 2008 on the aid
judgment of 18 January 2001, the Court of Cassation (Second Civil
measure implemented by France for the IFP Group (C 51/05
Division) found that La Poste was to be deemed equivalent to an
(ex NN 84/05)) (OJ L 53, 26.2.2009, p. 13).
EPIC, thereby upholding the findings of a judgment of the Douai
( 6 ) Commission Decision of 16 July 2008 on State aid C 35/08 (ex NN
Court of Appeal of 22 October 1998. Moreover, in a report
11/08) – Unlimited State guarantee for the IFP – Invitation to submit
submitted to the French Senate in 2003, the Senate Economic
comments pursuant to Article 108(2) of the TFEU (OJ C 259,
Affairs Committee stated that it was common knowledge that,
11.10.2008, p. 12).
since the reform of 1990, the parent, La Poste, had a legal form
( 7 ) OJ L 83, 27.3.1999, p. 1.
similar to that of an EPIC.

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EN
17.1.2012 Official
Journal
of
the
European
Union
L
14/3
mutatis mutandis, in their comments on each of the two
of the public limited companies Axens, Beicip-Franlab
cases. On 4 June 2010, a list of additional questions was
and Prosernat, together with their parent, IFP, constituted
sent to France by e-mail, since the Commission wished to
an economic group (the ‘IFP group’) for purposes of
receive a written contribution from the French authorities
competition law.
on the various points covered during this meeting. On
16 July 2010, the French authorities supplied the
information requested.
(16) Axens
is
active
in
the
market
for
catalysts
and
tech
nologies for the refining and petrochemicals industries,
and in 2006, when the legal form of its parent changed,
its consolidated turnover was EUR 308,45 million. IFP
(13) By
letter
dated
29
September
2010,
the
Commission
and Axens are linked by two exclusive framework
asked the French authorities to transmit additional
licensing and product licensing agreements and an
information, requesting a reply within 20 days. By
industrial research agreement (
letter dated 7 October 2010, the French authorities

11 ). The subsidiary pays
the parent royalties under the licensing agreements and
asked for an extension until 26 November 2010; the
remuneration […] (*) for access to IFP’s research capacity.
Commission agreed by letter dated 8 October 2010.
The French authorities finally provided the information
requested by letter dated 26 November 2010.
(17) Beicip-Franlab specialises in the publication and
distribution of deposits exploration software and in
consultancy and advisory services. In 2006, its turnover
2 THE IFP GROUP
was EUR
42 million. An exclusive development,
marketing and use agreement, signed in 2003 for a
(14) As indicated by the Commission in the opening decision
period of ten years, provides that Beicip-Franlab
and in decision C 51/2005 ( 10 ), IFP performs three tasks:
[receives proposals from IFP relating to the results of
its research] (**) into the algorithms, models and method
ologies [constituting the outcome of the research of] (**)
IFP in the field of deposit exploration, and may request
permission from IFP to produce products on that basis.
— research and development in the fields of oil and gas
Beicip-Franlab covers all of the product development
prospecting and refining and petrochemicals tech
costs borne by IFP. In addition, Beicip-Franlab makes
nologies,
various additional payments […] (*) to cover main
tenance and rights of use. An amendment was signed
in 2005, which modifies the payment arrangements
while at the same time retaining the principle of total
coverage of development costs by Beicip-Franlab.
— the training of engineers and technicians, and
___________
( 11 ) This refers to:
(a) a ten-year exclusive framework licensing agreement under which
the subsidiary may use IFP’s present and future intellectual
property rights essentially in processes in its field of activity
to provide engineering services to customers in connection
— the provision of sector information and documen
with those processes and to transmit to them the right to use
tation.
the related technologies in the form of patent licence sub-grants;
(b) a ten-year exclusive product licensing agreement under which
the subsidiary may use IFP’s present and future technology in its
field of activity to manufacture and sell to its customers
catalysts, adsorbents, captation masses, equipment, and other
products and software developed by IFP; and
A contract of objectives with the State lays down the
(c) a ten-year industrial research agreement under which [IFP offers
broad lines of its work for five years at a time.
its subsidiary the results of its research in the field of refining
and petrochemicals in order that it may, if it so wishes, pursue
the research in a joint project with IFP and then exploit the said
results.] (**) Failing that, IFP can offer these results to another
enterprise. Each partner bears the costs of its participation in the
research project, and at project end IFP holds the ownership
rights to the products and processes while its subsidiary holds
(15) Furthermore, IFP directly and indirectly controls
the ownership rights to the industrialisation stages of the
commercial enterprises with which it has concluded
products and processes.
exclusive research and licensing agreements. On the
(*) To ensure that confidential information is not disclosed, parts of
basis of a body of consistent evidence, the details of
this text have been omitted. Those parts are indicated by three full
which are recalled in recital 137, the Commission
stops enclosed in square brackets and marked with an asterisk.
(**) To ensure that confidential information is not disclosed, parts of
considered in decision C 51/2005 that the combination
this text have been replaced. They paraphrase the concealed
information to ensure that the decision is comprehensible and
coherent. Those parts are indicated between square brackets and
( 10 ) See part 2.1 (‘The IFP Group’) in both the opening decision and
are followed by two asterisks.
decision C 51/2005.

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L 14/4
EN
Official Journal of the European Union
17.1.2012
(18) Prosernat
provides
consultancy
and
other
services
and
of 17 November 1943 on the management of trade
supplies gas treatment and sulphur recovery plants. In
interests, placed under the economic and financial super
2006, its turnover was EUR
49,9 million. On
vision of the French Government.
18 August 2003 IFP and Prosernat signed a framework
licensing agreement and an industrial research agreement,
with retroactive effect from 1 January 2002, for a period
of 10 years. Under these agreements, Prosernat has an
exclusive licence for the patents of IFP and [IFP offers it
(22) The
principle
that
IFP
was
to
be
converted
into
an
EPIC
the results of its] (**) research […] (*) in the field of gas
was laid down in Article 95 of Programme Law
treatment and sulphur recovery technologies. Prosernat
No 2005-781 of 13 July 2005 establishing the energy
pays its parent a fee out of the annual turnover for the
policy guidelines. The conversion became effective from
licence for the processes, and a fee on a case-by-case
the publication in the Journal Officiel de la République
basis for equipment. The IFP’s remuneration for
Franaise of Decree No 2006-797 of 6 July 2006 estab
Prosernat’s access to the results of the research work
lishing the constitution of the publicly owned estab
amounts to […] (*) % of Prosernat’s global annual
lishment IFP.
turnover.
(19) In accordance with Article 6 of decision C 51/2005, a
(23) From the date of its change of legal form, IFP, as en EPIC,
clause was inserted in 2009 in the exclusive agreements
became a legal person governed by public law ( 16 ).
governing the remuneration to IFP to be paid by its
subsidiaries Axens et Prosernat ( 12 ), so as to ensure that
IFP received a minimum variable remuneration, covering
at least 25 % of the costs of feasibility studies preparatory
to industrial research activities, 50 % of the costs of
(24) The
legal
implications
of
the
EPIC
form
are
explained
in
industrial research and, where appropriate, 75 % of the
detail in part 2 of decision C 56/2007 (‘Description of
costs of pre-competitive development activities, within
the measure’) and in part 3.2.1 of the opening decision,
the meaning of the Community framework for state
to which the Commission refers mutatis mutandis.
aid for research and development of 17 February 1996
(‘the 1996 R&D Framework’) ( 13 ), carried out by IFP in
the subsidiaries’ fields of activity ( 14 ).
4 REASONS FOR INITIATING THE FORMAL INVESTI
GATION PROCEDURE
(20) In accordance with the opening decision, the investi
gation of the measure should take account of the
(25) In the opening decision, the Commission began by
potential impact of the State guarantee arising from the
expressing doubts about the special arrangements
EPIC status of IFP on all the activities of the IFP group,
governing the bankruptcy of EPICs, which departed
including the publicly owned establishment IFP and its
from the ordinary law on such matters. It considered
three subsidiaries governed by private law ( 15 ).
that these were akin to an unlimited State guarantee
mechanism which mobilised public resources:
3 DESCRIPTION OF THE MEASURE
(21) Until
2006,
IFP
was
a
legal
person
governed
by
private
law, a trade body within the meaning of Law No 43-612
— EPICs, as legal entities governed by public law, are
not subject to insolvency and bankruptcy procedures,
by virtue of the general principle of the immunity
( 12 ) By letter dated 18 June 2009, the French authorities sent the
from seizure of the assets of legal entities governed
Commission a copy of the amendments to the contracts between
by public law, which has been recognised by the
IFP and its subsidiaries Axens and Prosernat in accordance with
Article 6 of decision C 51/2005. Concerning Axens, the
French courts, including the Court of Cassation ( 17 ),
amendment […] (*) was signed [in] (**) 2009 by […] (*) IFP and
since the late nineteenth century. For further details,
[…] (*) Axens. Concerning Prosernat, the amendment […] (*) was
the Commission refers to section 3.2.1.1 of the
signed [in] (**) 2009 by […] (*) IFP and […] (*) Prosernat.
opening decision, recitals 38 to 40 ( 18 ).
( 13 ) Communication from the Commission – Community framework
for State aid for research and development (OJ C 45, 17.2.1996,
p. 5).
( 16 ) In France, in addition to the public authorities proper, such as the
( 14 ) This minimum remuneration in fact limits the aid to each
State and the local authorities, there are two main categories of
subsidiary to a maximum of 75 % of the costs of feasibility
legal entities governed by public law, namely publicly owned estab
studies preparatory to industrial research activities, 50 % of the
lishments and public interest groups, introduced by the Law of
costs of industrial research and, where appropriate, 25 % of the
15 July 1982. Within publicly owned establishments, a distinction
costs of pre-competitive development activities.
of principle can be drawn between publicly owned administrative
( 15 ) Recital 18 of the opening decision states that the Commission
establishments (EPAs), which perform traditional administrative
intends to examine the effects of the conversion of IFP into an
tasks, and publicly owned industrial and commercial establishments
EPIC on the publicly owned establishment IFP and its subsidiaries,
(EPICs), which perform economic activities.
as a single market operator. Recital 36 of the opening decision
( 17 ) See judgment of 21 December 1987 (First Civil Division).
states that this single entity is considered to be a potential bene
( 18 ) The same arguments are developed at greater length in section 2.1
ficiary of the unlimited State guarantee.
of decision C 56/2007, recitals 20 to 22.

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17.1.2012 Official
Journal
of
the
European
Union
L
14/5
— EPICs are subject to the Law of 16 July 1980 and its
preliminary examination stage that in the case of the
implementing rules. These expressly identify the State
supply or purchase of goods or services involving a
as the authority responsible for covering the debts of
claim, the suppliers or customers concerned would
publicly owned establishments. They confer on it
grant terms to IFP that were better than those they
important prerogatives, such as the issuing of a
would have granted to an undertaking not benefiting
mandatory payment order and the creation of
from a State guarantee.
sufficient resources, and organise a principle of last-
resort State liability for the debts of legal entities
governed by public law. For further details, the
Commission refers to section 3.2.1.2 of the
(28) On the basis of the information available at the end of its
opening decision, recitals 41 to 45 ( 19 ).
preliminary examination, the Commission considered
that the unlimited nature of the guarantee, especially as
regards its duration, amount and scope, made it
extremely difficult to calculate the amount of the
— In the event of the winding up of an EPIC, the
market premium that IFP ought to pay the State for
general principle applies that its debts will be trans
such protection.
ferred to the State or to another public entity ( 20 ),
which means that creditors of an EPIC have an
assurance that they will not lose the money they
(29) Finally,
the
Commission
doubted
whether
the
aid
was
are owed by a publicly owned establishment. For
compatible with the internal market, particular because
further details, the Commission refers to section
it did not at first sight appear to be intended to facilitate
3.2.1.3 of the opening decision, recitals 46 to 51 ( 21 ).
the development of certain economic activities or
regions.
— EPICs may possibly also have preferential access to
Treasury imprest accounts. For further details, the
5 OBSERVATIONS AND PROPOSALS PUT FORWARD
Commission refers to section 3.2.1.4 of the
BY THE FRENCH AUTHORITIES
opening decision, recital 52 ( 22 ).
5.1 INITIAL OBSERVATIONS BY THE FRENCH AUTHORITIES
(30) Following
the
opening
decision
cited
above,
the
French
authorities submitted observations and proposals to the
(26) As explained in recitals 65 to 74 of the opening decision,
Commission by letter dated 14 October 2008. That letter
to which the Commission refers for more details, the
supplemented the observations and proposals set out in
clarifications to legislation and regulations proposed by
the previous letters from the French authorities ( 23 ) that
the French authorities did not at first sight seem
were summarised in the opening decision.
sufficient to assuage these doubts.
(31) In
their
observations
of
14
October
2008,
the
French
authorities pointed out, as a preliminary point, that the
(27) The
Commission
said
that
it
could
not
be
ruled
out
that
there might be a selective economic advantage, mainly
procedure against the IFP group had been initiated in
through funding terms considered more favourable, even
parallel to the postal case cited above; they said they
if IFP and its subsidiaries were not the subject of a
were therefore reiterating the same arguments mutatis
financial rating by an external rating agency. The IFP
mutandis as those they developed during the examination
group might also have been advantaged in its dealings
of that case ( 24 ). Despite these similarities, the French
with customers and suppliers in so far as they believed
authorities nevertheless wished to draw attention to the
their claims to be covered by a State guarantee.
specific features of IFP: it was a research organisation
Consequently, it could not be ruled out at the
assigned a three-fold task in the general interest (research,
training and documentation), with an overwhelming
majority of non-economic activities, and this justified
( 19 ) See also section 2.2 of decision C 56/2007, recitals 23 to 30.
the public funding granted to it. Moreover, they
( 20 ) Pursuant to Article 21 of the Decree of 6 July 2006, ‘In matters of
specified the reasons for its conversion into EPIC form,
financial management and accounting, the publicly owned estab
which they said was intended to ensure that IFP’s legal
lishment IFP is subject to the rules applicable to industrial and
commercial establishments.’ Even though the publicly owned estab
form was consistent with the nature of its activities and
lishment IFP does not have a public accountant, there is evidence to
its method of funding; relinquishing the form of trade
suggest that EPICs which do not have a public accountant would
body governed by private law would bring IFP closer to
also, in the event of their being closed down, have their debts
the public sphere.
transferred to the State or to another publicly owned establishment.
The Commission refers to the examples of Charbonnages de France
and ERAP, cited in recitals 49 and 50 of the opening decision,
( 23 ) See in particular. the letters from the French authorities dated
which show that where an EPIC is to be wound up — even an
18 July 2006, 30 January 2008 and 26 June 2008.
EPIC without a public accountant — a transfer of its rights and
( 24 ) The Commission emphasises that these arguments have already
obligations to another public entity or to the State is not only
been presented in section 3 (‘Observations and proposals by the
possible, but clearly expected by the market.
French authorities’) of decision C 56/2007. To simplify the presen
( 21 ) See also section 2.3 of decision C 56/2007, recitals 31 to 36.
tation, the Commission will therefore refer to that decision as often
( 22 ) See also section 2.4 of decision C 56/2007, recital 37.
as possible.

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(32) The
French
authorities
disputed
the
existence
of
State
aid,
were not expressly authorised by a finance act retain
since, in their opinion, two of the conditions laid down
their validity on the basis of respect for the constitu
in Article 107(1) TFEU were not met: the mechanism at
tionally protected rights of creditors.
issue did not involve any transfer of State resources
(5.1.1) and did not confer any advantage on IFP (5.1.2).
(38) Fourth,
France
considers
that
if
EPICs
enjoyed
a
State
guarantee, the change in their legal form would require
5.1.1 THERE IS NO GUARANTEE IMPUTABLE TO THE
the introduction of new measures to protect creditors’
STATE INVOLVING A TRANSFER OF STATE
rights. Since such a mechanism has never been
RESOURCES
introduced ( 30 ), France concludes conversely that EPICs
do not benefit from any State guarantee.
(33) According
to
the
French
authorities,
(A)
publicly
owned
establishments do not enjoy any guarantee because of
their legal form, and (B) the Commission’s argument in
the opening decision is flawed.
(39) Fifth,
the
French
authorities
refer
to
an
article
by
Mr
Labetoulle, a former president of the litigation division
of the Council of State, according to which ‘in law, there
is nothing automatic about the granting, enjoyment and
A. No unlimited State guarantee
scope of this guarantee [a State guarantee that applies

automatically to State-owned public establishments]’ ( 31 ).
(34) As explained in recitals 41 to 45 of decision C 56/2007,
to which the Commission refers mutatis mutandis, the
French authorities develop five pleas in law in support
B. Flawed Commission argument (
of their arguments.

32 )
(40) The
French
authorities
consider
that,
as
far
as
EPICs
are
concerned, (a) the reimbursement of individual claims is
not guaranteed, and (b) there is no assurance of the
(35) First,
no
legislation
or
decision
lays
down
the
principle
continued existence of the publicly owned establishment
that the State would, out of principle, indefinitely
or of its obligations.
guarantee the debts of EPICs.
a) The reimbursement of individual claims is not guaranteed
(36) Second,
the
Council of State has
found against the
existence of guarantees, in particular in its judgment in
(41) As explained in recitals 46 to 49 of decision C 56/2007,
Société de l’htel d’Albe (
to which the Commission refers mutatis mutandis, the

25 ) and in its two judgments in the
Campoloro case (
French authorities consider that the Law of 16 July

26 ).
1980 cannot serve as a basis for a guarantee. In the
light of the legislative history of the Law, an interpre
tation of the Campoloro decisions of 10 November
(37) Third, the Organic Law of 1 August 2001 governing the
1999 ( 33 ) and 18 November 2005
( 34 ), and the
Finance Act (the ‘LOLF’) lays down that only a provision
academic literature on the subject ( 35 ), France argues
of a finance act can create a guarantee (
that the Law of 16 July 1980 does not impose an obli

27 ), and the
Council of State explicitly confirmed this in its 2006
gation on the State to commit its own resources. The
annual report (
expression ‘y pourvoit’ (‘shall do so’) in Article 1 confers

28 ). According to the expert called upon
by the French authorities in the postal case cited
on the State only a power of ‘substitution’ for the
above ( 29 ), therefore, it has been legally impossible to
give an implied guarantee since the full entry into force
( 30 ) The French authorities emphasise that an express guarantee had to
of the Organic Law governing the Finance Act on
be granted when the Administration of Posts and Telecommuni
1 January 2005. Debts contracted since 1 January
cations was converted into an independent legal person in 1991,
whereas that would not have been necessary if the new La Poste, as
2005 are therefore not covered by an implied guarantee.
an establishment equivalent to an EPIC, had enjoyed a State
As for debts incurred before 1 January 2005, the expert
guarantee by virtue of its legal form. Likewise, express guarantees
takes the view that, in the absence of a court judgment, it
have been granted to ERAP and the French Development Agency
is impossible to determine whether it might be held that
(Agence Franaise du Développement), which are both EPICs.
implied guarantees given before 1 January 2005 which
( 31 ) D. Labetoulle, ‘La responsabilité des AAI dotées de la personnalité
morale: coup d’arrêt à l’idée de “garantie de l’tat” ’, RJEP/CJEG
No 635, October 2006.
( 25 ) Council of State judgment, Société de l’htel d’Albe, 1 April 1938,
( 32 ) See the observations submitted by the French authorities in the
reported in Receuil, p. 341.
postal case on 23 January 2008.
( 26 ) Council of State judgments in the Campoloro case (10 November
( 33 ) Council of State, Société de gestion du port de Campoloro,
1999 and 18 November 2005). See recital 59 of the opening
10 November 1999, reported in Recueil p. 3409
decision.
( 34 ) Council of State, Société de gestion du port de Campoloro,
( 27 ) See the observations submitted by the French authorities in the
18 November 2005.
postal case on 23 January 2008 and 27 October 2009, to which
( 35 ) P. Bon, ‘Le Préfet face à l’inexécution par une collectivité territoriale
they have referred mutatis mutandis in the present IFP case.
d’un jugement la condamnant pécuniairement’, RFDA, March-April
( 28 ) See 2006 Council of State report, p. 69.
2006, p. 341. C. Landais & F. Lenica, ‘Le pouvoir de substitution du
( 29 ) See the observations submitted by the French authorities on
préfet en cas d’inexécution de la chose jugée par les collectivités
27 October 2009 in connection with decision C 56/2007.
territoriales’, AJDA, 23 January 2006, p. 137.

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17.1.2012 Official
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Union
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14/7
executive of the person whom it replaces, in the exercise
the possibility of bankruptcy, and has not established
of which it is a matter of principle that the substitute has
that IFP cannot go bankrupt, nor that insolvency
the same powers as the person replaced. When acting as
proceedings are impossible: the Law of 1985 is merely
a substitute, therefore, the State may exercise only the
a procedural law, and the fact that EPICs lie outside its
powers of that executive, which do not include access to
scope does not mean that administration, winding-up or
the State budget, and the granting of an exceptional
ad hoc bankruptcy proceedings cannot be brought
subsidy is outside the scope of the power of substitution.
against them.
(44) Moreover,
as
explained
in
recitals
57
to
67
of
decision
(42) Furthermore, as indicated in recitals 50 to 53 of decision
C 56/2007, to which the Commission refers mutatis
C 56/2007, to which the Commission refers mutatis
mutandis, the French authorities maintain that the appli
mutandis, the French authorities maintain that the State
cation of the ‘procedure’ introduced by the Law of
cannot incur strict liability solely on the ground of a lack
16 July 1980, rather than the collective procedure
of assets. According to the French authorities, any
under ordinary law, does not confer any advantage on
guarantee requires the guarantor to accept the fact of
the creditor. To assess whether the application of a
the guarantee. Where liability arises out of responsibility
specific procedure in the event of insolvency confers an
for a fault or, in the case of strict liability, for the conse
advantage on the entity subject to the procedure as
quences of one’s own actions, there can be no question
compared with undertakings subject to commercial law,
of a guarantee. According to France, the liability of the
they challenge the need to fulfil the criteria of
State cannot be incurred on the sole ground that the
publicity ( 37 ) and equivalence ( 38 ) referred to by the
prefect or supervising authority was unable to take any
Commission in recital 81 of the opening decision ( 39 ),
measures that could allow the claim to be repaid because
but they use these same criteria to analyse the
of the financial and asset situation of the publicly owned
procedure established by the Law of 16 July 1980. As
establishment. There is no fault: inaction on the part of
regards the publicity criterion, they consider that the
the prefect or the supervising authority is not necessarily
procedure is correctly identified by the rating agencies
a fault. The French authorities recognise that when imple
as applicable in the event of the insolvency of an EPIC;
menting the procedure laid down by the Law of 16 July
as regards the equivalence criterion, they draw a
1980 the representative of the State is subject to the
distinction depending on whether or not there is a
requirement of continuity of the public service, but
requirement for continuity of the public service, at the
consider that even if a court were to order that a
same time noting that the financial situation of IFP and
creditor be compensated, such compensation would
its subsidiaries makes it unlikely that IFP might be short
merely place the creditor in the same position that he
of assets, since available funds and investments at the end
would have been in under ordinary law, because under
of 2007 (EUR 150,3 million) represented approximately
ordinary law the asset would have been sold and the
five times the amount of borrowings and financial
body of creditors would have received the corresponding
liabilities (EUR 25,2 million):
sum. There is therefore be no advantage to the creditor.
(a) If there is no requirement for continuity of the public
service, in the event of lack of assets of the publicly
b) The continued existence of IFP or of its obligations is not
owned establishment, application of the procedure
guaranteed
introduced by the Law of 1980 would not place
the creditors in a more favourable position than if
(43) As explained in recitals 54 to 56 of decision C 56/2007,
the procedure under ordinary law had been applied:
to which the Commission refers mutatis mutandis, the
they would recover the same amount as the creditors
French authorities consider that the inapplicability to
of an entity subject to commercial law, i.e. the
legal persons governed by public law of the adminis
proceeds from the sale of the assets, and would no
tration and winding-up procedures provided for under
longer have any redress at the end of the
ordinary law does not exclude the possibility of the
bankruptcy of an EPIC or prevent bankruptcy
proceedings being brought against it. They challenge
( 37 ) The procedure which would be followed in the event of the
insolvency of IFP should be defined and publicised.
the Commission’s analysis, which is based on its Notice
( 38 ) This procedure should be either the private-law procedure or a
on State aid in the form of guarantees (‘the Guarantees
procedure which confers on the creditors of the publicly owned
Notice’) ( 36 ), and consider that in the case in point the
establishment IFP rights no greater than those they would have had
Commission has not demonstrated the existence of ‘more
under commercial law.
favourable funding terms’ attributable to the exclusion of
( 39 ) According to the French authorities, compliance with these criteria
is sufficient, albeit not necessary, to rule out the existence of any
advantage. In their opinion, it would be counter-intuitive to regard
( 36 ) Commission Notice on the application of Articles 87 and 88 of the
the alleged existence of a doubt about the procedure applicable in
EC Treaty to State aid in the form of guarantees, OJ C 71,
the event of insolvency to be reflected in more favourable funding
11.3.2000, p. 14.
terms.

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L 14/8
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Official Journal of the European Union
17.1.2012
procedure ( 40 ), since, according to France, the State
of the public service). The creditors would therefore
cannot be held liable solely on the ground of lack
potentially be reinstated in the same situation as that
of assets. Only two aspects would be different:
which would have resulted from the application of
ordinary law. The French authorities conclude that
the procedure introduced by the Law of 16 July
1980 does not confer any advantage over the
procedure under ordinary law and that there is
therefore no justification for subjecting IFP directly
— The absence of a single procedure for all
to a procedure such as that which applies under
creditors: unlike the procedure under private
ordinary law.
law, whereby claims are processed en masse
and creditors are satisfied in decreasing order of
priority and pro rata from the amounts available,
the procedure introduced by the Law of 16 July
1980 requires creditors to take action to protect
their rights. The approach of the Law of 16 July
(45) In the opening decision, in particular in recital 82, the
1980 is ‘first come, first served’.
Commission referred specifically to the French consoli
dating instruction No 02-060-M95 of 18 July 2002, on
the financial and accounting regulation of national
publicly owned industrial and commercial estab
lishments, and to the guide to the financial organisation
of the creation, conversion and abolition of national
— It is the representative of the State who, under the
publicly owned establishments and of public interest
supervision of the administrative court (moni
groups (Guide sur l’organisation financière des créations, trans
toring for gross negligence as established by the
formations et suppressions des établissements publics nationaux
Council of State in the Campoloro judgment cited
et des groupements d’intérêt) of 14 November 2006; as
above), takes on the role equivalent to that of the
explained in recital 68 of decision C 56/2007, to
liquidator and court-appointed administrator.
which the Commission refers mutatis mutandis, the
French authorities contend that the instruments in
question are neither applicable nor transferable to IFP.
(b) In the event that the continuity of the public service
has to be guaranteed, the French authorities admit
that the representative of the State, when exercising
(46) Concerning
the
recapitalisation
of
IFP’s
subsidiaries,
the
the powers conferred by the Law of 16 July 1980,
French authorities take the view firstly that the question
could decide not to sell certain assets needed to
raised in recital 80 of the opening decision should be
perform a public service task. This failure to sell
considered not in order to establish the existence of any
certain assets would then be reflected, if the State
State guarantee, but rather in order to measure the
did not pay compensation, in lower proceeds from
potential effects of such a guarantee, which could place
the assets and a corresponding reduction in the
IFP and its subsidiaries in a preferential situation on
amounts recoverable by creditors. According to the
account of the easier terms for recapitalisation. They
French authorities, such a procedure would not
argue that the Commission’s argument is based on two
confer on IFP’s creditors rights greater than those
incorrect ideas:
they would have had under commercial law.
However, the French authorities admit that, in such
an event, the State might incur strict liability, and
would have to compensate creditors for the loss
they had suffered (not exceeding the market value
of the assets retained by the State for the continuity
— On the one hand, the Commission commits an error
in its reasoning regarding any support that IFP could
provide to its subsidiaries through an intra-group
( 40 ) According to France, in such circumstances, the undertaking would
transfer, since the conditions on which the parent
initially be required to open negotiations with its creditors in order
of a group can support one of its subsidiaries in
to establish a plan for rescheduling liabilities. Next, if the plan were
judged unsatisfactory or if it did not bring the financial difficulties
difficulty are strictly regulated by company law,
to an end, and in the absence of a new agreement with creditors,
even if it is a legal person governed by public
the creditors – or some of them – could refer the case to the
law ( 41 ), and are totally unrelated to the concept of
competent court to obtain a judgment against the debtor and
undertaking within the meaning of competition law.
therefore have their claim recognised. The procedure introduced
by the Law of 16 July 1980 would then be implemented. Where
necessary, the procedure could result in the supervising authority
( 41 ) Pursuant to Article L. 225-248 of the Commercial Code, if a
stepping into the shoes of the executive of IFP to take the decisions
company’s equity capital falls below half of its share capital, the
needed for the payment of its debts using IFP’s resources. According
general meeting must record this and decide whether the company
to the French authorities, if the procedure introduced by the Law of
should be prematurely dissolved. If it is decided to continue the
16 July 1980 were to founder for lack of assets at IFP, and if the
activity of the company, the company must, no later than the end
supervising authority were therefore faced with an impossible task,
of the second financial year after that in which the losses were
not having any more assets to sell in order to generate the
recorded, reconstitute its equity to a value at least equivalent to
resources needed to pay the amount due, the procedure provided
half the share capital, and reduce the share capital if the equity
for by the Law of 16 July 1980 would be terminated.
has not been reconstituted otherwise.

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17.1.2012 Official
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— On the other hand, the French authorities deny that
bankruptcy or insolvency proceedings. In any event,
the EPIC status of IFP, with any possible State
they say, the Commission has not proved this, but
guarantee that such a status might imply, enables it
provided evidence to show only that IFP’s status
to recapitalise its subsidiaries more easily than group
would not allow the application of one specific
parent companies with a legal form governed by
procedure (namely the procedure introduced by the
private law. According to the French authorities, the
Law of 25 January 1985).
fact that a company temporarily bears the losses of
one of its subsidiaries is part of the normal operation
of a group, as the European Union court has already
recognised ( 42 ), and the intervention of a public
investor acting according to the same rules of
— Secondly, the French authorities deny that the fact
conduct as a private investor is not considered to
that under the law and its own constitution a body
contain State aid elements within the meaning of
cannot be made the subject of bankruptcy or
Article 107(1) TFEU ( 43 ). This is the case in particular
insolvency proceedings automatically secures it
for IFP, which has the legal possibility (and not the
more favourable funding terms on the market. In
obligation) to recapitalise a subsidiary in difficulties
order to conclude that an enterprise is receiving aid
according to the same assessment criteria as any
in the form of a guarantee, the Commission must
prudent investor. Finally, the French authorities
first, in application of point 1.2 of the Guarantees
deny that EPICs have any possibility at all of ‘direct
Notice cited above, demonstrate that it dos indeed
access’ to ‘Treasury imprest accounts’. They say that
receive more favourable funding terms.
the budgetary mechanism of the ‘financial assistance
account’, regulated by Article 24 of the Organic Law
governing the Finance Act, provides for the consti
tution of appropriations accounts, capped by the
Finance Act, which allow the State to grant advance
(49) The
French authorities
contend that in the opening
payments to various bodies, if it wishes and if it is
decision, when examining potential advantages to IFP’s
able to do so (in particular in the light of European
subsidiaries arising out of the existence of an unlimited
Union law). According to the French authorities,
guarantee for their parent EPIC, the Commission disre
EPICs have not got ‘direct access’ to these accounts.
garded its own decision-making practice. They say the
Commission’s line of reasoning contradicts the
approach it took at the time of the creation of La
Banque Postale ( 44 ). Like IFP’s subsidiaries, La Banque
5.1.2 NO ADVANTAGE IS CONFERRED ON IFP OR ITS
Postale was a public limited company wholly owned by
SUBSIDIARIES
an entity similar to an EPIC. Leaving aside the
commitments given by France in that case, the
(47) The
French
authorities
consider,
first,
that
it
cannot
be
concluded from the Guarantees Notice cited above that
Commission took the view that the legal status of
an advantage exists in the present case; second, that an
public limited company under ordinary law was by
extension to IFP’s subsidiaries, which are public limited
itself sufficient to rule out the possibility of an
companies under ordinary law, of any advantages from
unlimited guarantee to the subsidiary. Following the
which IFP might benefit on account of its EPIC status
same reasoning, according to the French authorities, it
would be in contradiction with the Commission’s
must be held that IFP’s subsidiaries, which likewise
decision-making practice; and third, that no proof has
have the legal form of public limited company under
been given of an actual economic advantage to IFP and
ordinary law, do not benefit from any unlimited
its subsidiaries in the present case.
guarantee conferred by the status of EPIC.

(48) The French authorities consider that the Commission
misinterprets point 1.2 of the Guarantees Notice cited
(50) Finally, the French authorities contend that the
above, which provides that ‘The Commission also
Commission has not demonstrated the existence of an
regards as aid in the form of a guarantee the more
actual economic advantage to IFP and its subsidiaries, and
favourable funding terms obtained by enterprises whose
in the opening decision merely refers to funding terms
legal form rules out bankruptcy or other insolvency
‘considered’ more favourable, without providing actual
procedures or provides an explicit State guarantee or
proof. European Union case-law requires the Commission
coverage of losses by the State’:
to show that IFP’s EPIC status has in fact enabled it to
obtain more favourable funding terms ( 45 ). The French
authorities say that in the course of the procedure they
— Firstly, the French authorities deny that IFP, as an
( 44 ) European Commission, 21 December 2005, State aid measure
EPIC, possesses a legal status which rules out any
No N 531/2005 – France – Measures relating to the creation and
operation of Banque Postale.
( 45 ) Court of First Instance in Case T-68/03 Olympiaki Aeroporia Ypiresies
( 42 ) Court of Justice in Case C-303/88 Italy v Commission [1991] ECR
AE v Commission, not yet reported in the ECR; to the same effect
I-1433, paragraph 21.
see also Court of First Instance in Case T-266/02 Deutsche Post AG
( 43 ) See in particular Court of Justice in Case C-482/99 France v
v. Commission, not yet reported in the ECR, paragraph 92:
Commission (Stardust Marine) [2002] ECR I-4397, paragraphs 68
‘Moreover, the Commission must check whether the beneficiary
to 83.
of aid has received an actual advantage’.

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Official Journal of the European Union
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provided evidence to show that IFP’s EPIC status had not
— incorporation of a reference spelling out the absence
procured and would not procure any financial advantage
of a guarantee in IFP’s contracts involving a claim;
to IFP and its subsidiaries; in particular, the conversion of
IFP was carried out with due regard for a general
principle of continuity, especially in terms of its
activity, organisation, accounting and financial regime
— incorporation of a reference spelling out the absence
(resources and accounting and financial rules) and tax
of a guarantee in the financing contracts of IFP’s
treatment.
subsidiaries.
(51) The
French
authorities
consider
that
the
factors
above
5.2.1 CLARIFICATION OF THE DECREE IMPLEMENTING THE
demonstrate that:
LAW OF 16 JULY 1980
(54) As specified in recitals 94 to 96 of decision C 56/2007,
— the financial situation of IFP and its subsidiaries is
to which the Commission refers mutatis mutandis, the
sound, which makes the question of possible bank
French authorities propose clarifying the interpretation
ruptcy and consequently last-resort State intervention
of the Law of 16 July 1980 by amending the fourth
irrelevant;
subparagraph of Article 3(1) of the Decree implementing
the Law ( 46 ). The proposed amendment is intended, they
say, to dispel any misgivings concerning the scope of the
expression ‘shall do so’ (y pourvoit) in the organisation of
— the terms for the short-term funding of IFP and its
the supervisory power conferred on the prefect or on the
subsidiaries are different for each of these entities,
supervising authority; the prefect or supervising authority
and result from specific negotiations conducted on
would now have to release resources from the budget of
a one-to-one basis with their respective banks;
the regional or local authority or the establishment
concerned ( 47 ). According to the French authorities, this
proposal would prevent the representative of the State,
— the relations that IFP and its subsidiaries maintain
when exercising his supervisory power, from increasing
with their suppliers and customers do not give rise
the resources of the authority or establishment concerned
to preferential conditions resulting from an expec
by means of a subsidy from the State or an injection of
tation on the part of these suppliers and customers
public resources.
of a State guarantee.
5.2.2 INCORPORATION OF A REFERENCE SPELLING OUT
(52) The French authorities conclude from this that:
THE ABSENCE OF A GUARANTEE IN IFP’S
CONTRACTS INVOLVING A CLAIM
— the analysis set out by the Commission in its opening
(55) As
explained
in
recitals
97
to
100
of
decision
C
56/2007
decision is questionable: IFP and its subsidiaries do
cited above, to which the Commission refers mutatis
not enjoy any State guarantee;
mutandis, the French authorities challenge the
Commission’s view ( 48 ) that the State can be held liable
solely on the grounds of the insolvency of IFP. However,
they put forward a proposal based on the plea of
— the Commission has not demonstrated the existence
accepted risk (l’exception de risque accepté, see the
of an advantage to IFP and its subsidiaries deriving
from IFP’s EPIC status;
( 46 ) Decree No 81-501. When the French authorities made their
proposal, the implementing decree was Decree No 81-501 of
12 May 1981 implementing the Law of 16 July 1980 on
— the Commission has not, therefore, demonstrated the
penalties imposed in administrative cases and compliance with
judgments by legal persons governed by public law and on the
existence of State aid to IFP and its subsidiaries.
Reports and Studies Section of the Council of State.
( 47 ) As amended, the provision in the Decree would read:
‘If the notice given has had no effect by the time these deadlines
expire, the representative of the State or the authority responsible
5.2 PROPOSALS BY THE FRENCH AUTHORITIES
for supervision shall enter the expenditure in the budget of the
defaulting authority or publicly owned establishment. The represen
(53) Nonetheless,
in
order
to
dispel
any
doubts
on
the
part
of
tative of the State or the authority responsible for supervision shall,
the Commission, the French authorities have indicated
as appropriate, release the necessary resources from the budget of the
that they are willing to implement the following
defaulting authority or establishment, either by reducing the appro
measures if the Commission agrees to close the
priations allocated to other expenditures and still available or by
procedure by a decision finding that no aid is involved,
increasing resources’ (the amendment is shown in italic).
(
in accordance with Article 7(2) of the Procedural Regu

48 ) The French authorities refer to recital 68 of the opening decision, in
which the Commission takes the view that the proposal by the
lation cited above:
French authorities to amend the Decree implementing the Law of
16 July 1980 ‘does not exclude the possibility that, where the resources of
the publicly owned establishment IFP are exhausted, the creditor who has
not obtained repayment of his claim under application of the Law of
— clarification of the Decree implementing the Law of
16 July 1980 could bring legal action to render the State liable on the
16 July 1980;
basis of a breach of the principle of equality before public burdens’.

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Union L
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judgments of the Council of State in Sille ( 49 ) and
strict liability solely on the grounds of IFP’s the lack of
Meunier ( 50 )) under which, as they suggested in the
assets, the French authorities have provided additional
postal case, IFP’s creditors would be officially informed
information to address these misgivings:
that their claim does not enjoy a State guarantee and
that, in the event of insolvency, the State will not be
obliged to substitute itself for the undertaking financially
(a)
The French authorities consider that the
to pay the claim. Consequently, the parties concerned
Commission’s first objection would seem to say
would be exposing themselves to risk in full knowledge
that even if there is no actual provision to this
of the facts, and could not claim any right to compen
effect in the national law of a Member State, the
sation. The French authorities therefore undertake, jointly
mere risk of a change in the case-law, i.e. a change
with IFP, to include the following statement in the
in national law, is enough to create State aid. The
financing contract for each transaction (for all
Commission cannot argue that there is State aid
instruments covered by a contract):
because of a possible change in the law, which in
this case is highly improbable, the plea of accepted
risk being a general principle of public law that has
been confirmed by case-law on many occasions, has
‘The issue/programme/loan does not enjoy any form of direct or
never been contradicted, and has been widely
indirect State guarantee. In the event of insolvency, the State
commented.
would not be obliged to act as financial substitute for IFP for
payment of the claim.’
(b) Concerning the second objection, the French
authorities recognise that statute law and regulations
take precedence over contracts, and that a disputed
clause can always be annulled. However, they
(56) As
explained
in
recital
101
of
decision
C
56/2007
cited
consider that the objection does not in fact refer to
above, to which the Commission refers mutatis mutandis,
any higher-ranking text, that it is not substantiated,
the French authorities have also noted the misgivings set
and therefore has no weight.
out by the Commission in recital 71 of the opening
decision, which indicated that the plea of accepted risk
was a rule established by case-law that could develop;
(c) Finally, as regards the third objection, the French
that it was based on secondary law instruments which
authorities consider that it is based on a mere
could be annulled in the event of conflict; and, finally,
supposition of a possible belief or expectation
that the proposal of the French authorities did not cover
among suppliers that their claims enjoy a State
all possible scenarios, since debts could be not only
guarantee, a supposition which cannot by itself
financial but also commercial or other forms of debt
serve to demonstrate the existence of an advantage,
again.
but must be corroborated by information establishing
that IFP and its subsidiaries have actually benefited
from an economic advantage of this kind.
(57) As specified in recitals 102 to 104 of decision
C 56/2007, to which the Commission refers mutatis
(58) Nevertheless,
as specified in recital 106 of decision
mutandis, after reiterating their opposition in principle
C 56/2007, to which the Commission refers mutatis
to the Commission’s position that the State may incur
mutandis, the French authorities indicate that they are
willing to extend their proposal to include a statement
concerning the absence of a guarantee to include all
( 49 ) Council of State, Sille, 16 November 1998: ‘First, as the judges in the
contracts involving a claim, so as to explicitly rule out
court of first instance decided, while the public authorities can be held
liable, even without fault, on the grounds of the principle of the equality of
any risk that the State might incur strict liability on the
citizens before public burdens, where a measure lawfully adopted has the
basis solely of the insolvency of IFP.
effect of causing a special loss of a certain degree of gravity to a natural or
legal person, that does not hold true in this case, because Mr Sille, in his
capacity as a real-estate professional, could not be unaware of the risks
5.2.3 INCORPORATION OF A REFERENCE SPELLING OUT
necessarily involved in the execution of a building project such as that
THE ABSENCE OF A GUARANTEE IN THE
projected, in respect of which it was necessary, in particular, to amend the
FINANCING CONTRACTS OF IFP’S SUBSIDIARIES
provisions of the land-use plan and obtain the agreement of the local
AXENS, BEICIP-FRANLAB AND PROSERNAT
council. Mr Sille should have contemplated the possibility that if the
findings of the public enquiry were negative or if the project encountered
hostility it might be abandoned by the local authority. Having taken the
(59) To supplement the proposed mechanism, the French
risk in full knowledge of the facts, he cannot to any purpose maintain that
authorities make an additional proposal to the
he has suffered an abnormal loss and that the local authority must bear
Commission, similar to that made on the creation of
the substantial consequences for him arising from the shelving of the
La Banque Postale, with regard to the terms on which
project’.
IFP’s subsidiaries (Axens, Beicip-Franlab and Prosernat)
( 50 ) Council of State, Meunier, 10 July 1996: ‘When it concluded from the
choice of such a place for the location of the business and from a letter
are able to borrow on the market, under which an under
from the mayor concerning the possibility of land slip that the interested
taking would be given that in the financing contract for
party had accepted in full knowledge of the facts the risks of instability to
each transaction (for all instruments covered by a
which his establishment was exposed, the Administrative Appeal Court
contract) the following clause would be included in
made a final decision on the facts. When it took the view that the loss
writing: ‘Pursuant to French law (in particular the need
resulting from a situation to which the interested party had knowingly
for express statutory authority for each guarantee), the
exposed himself did not give him grounds for compensation, the Court did
not fail to apply the rules governing the liability of legal persons governed
present financing transaction shall not enjoy any form of
by public law’.
direct or indirect State guarantee’.

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(60) As specified in recitals 107 to 110 of decision
banks and financial institutions, (ii) that of its relations
C 56/2007, to which the Commission refers mutatis
with suppliers, and (iii) that of its relations with third-
mutandis, the French authorities consider that the two
party industrial partners that make use of its research
clarification measures proposed (the details of which
services.
are set out in recitals 55 and 59) would allow the
creditors of IFP and its subsidiaries to be made fully
aware of their rights, so that France could not be held
‘responsible for the expectations created in the minds of
IFP’s creditors concerning the existence of a guarantee’, or
(64) The
French
authorities
consider
that
in
its
dealings
with
regarded as voluntarily maintaining an opaque legal
banks and financial institutions IFP has so far drawn no
situation that procures an advantage for IFP and is
economic advantage from its EPIC status. They provide
liable to commit the State’s resources, as the Commission
evidence to show that: (i) over the long term, IFP
indicated in recital 87 of the opening decision.
recorded zero debt in the years 2005, 2006 and
2007 ( 54 ) and in 2008 and 2009, (ii) over the medium
term, although IFP each year negotiated overdraft
facilities with various banking institutions, it obtained
5.3 ADDITIONAL OBSERVATIONS FROM THE FRENCH
rates comparable to market rates and in any case has
AUTHORITIES
never made use of these credit lines, and finally (iii)
over the short term, IFP’s debt was close to zero or at
(61) By
letters
dated
16
July
2010
and
26
November
2010,
zero during the period under review.
the French authorities provided additional information
which in their opinion showed that there was no State
aid to IFP.
(65) As regards its dealings with suppliers, the French
authorities consider that IFP, as a contracting authority,
is subject to the disclosure and competitive procurement
(62) In
their
letter
dated
16
July
2010,
as
a
preliminary
point,
obligations laid down in Order (ordonnance) No 2005-
they say that in the France Télécom case the European
649 of 6 June 2005 (
Union courts held that in order to establish the

55 ), and consequently that it
cannot benefit from any advantage. In their letter dated
existence of State aid the Commission was obliged to
26 November 2010, the French authorities reiterate this
demonstrate that there was a real advantage ( 51 ). They
analysis, and say that in their opinion the fact that IFP’s
consider that in this case, the unlimited guarantee
orders are subject to a tendering procedure in accordance
which according to the Commission arises from IFP’s
Directive 2004/18/EC of the European Parliament and of
legal form in reality confers no economic advantage on
the Council of 31 March 2004 on the coordination of
it. In their letter dated 26 November 2010, the French
procedures for the award of public works contracts,
authorities say that in their opinion the burden of proof
public supply contracts and public service contracts (
lies with the Commission. They draw attention to the

56 )
constitutes a guarantee sufficient to avoid distortion of
requirements laid down in European Union case-law
competition in the market. According to France IFP has
with regard to proof and reasoning, more especially by
ensured competition between its suppliers, in line with
the General Court in the France Telecom case cited above
the obligations arising from European Union law, and
and by the Court of Justice in Krantz ( 52 ) and more
consequently cannot be accused of enjoying an
recently in Deutsche Post AG ( 53 ). The French authorities
unlawful advantage, at least in the absence of any
consider that the analysis presented by the Commission
specific evidence to that effect. The French authorities
in this case is based ‘more on hypotheses than on an
stress that recourse to electronic purchasing has been
analysis in concreto’.
facilitated precisely in order to improve efficiency of
public procurement: for example, recital 13 of Directive
2004/18/EC indicates that ‘This purchasing technique
allows the contracting authority … to have a particularly
(63) Furthermore, in the view of the French authorities, the
Commission considers that IFP could benefit from an
broad range of tenders … and hence to ensure optimum
advantage at three levels: (i) that of its relations with
use of public funds through broad competition.’ They
refer to a Commission report which concluded that the
public procurement legislation had had a positive impact
( 51 ) General Court in Joined Cases T-425/04, T-444/04, T-450/04 and
in terms of lowering prices, the fall being presented as
T-456/04 France and Others v Commission, 21 May 2010, not yet
the ‘social benefit’ of fairer competition between
reported in the ECR. The Court found that the Commission had
tenderers ( 57 ). By imputing these economies to IFP’s
failed to show that a draft contract for a shareholders’ loan that had
not been signed or put into effect by France Télécom might have
EPIC status, the Commission is at odds with the spirit
produced an improvement in France Télécom’s economic position
of the Directive, which sees the selection procedures as
by comparison with the situation in which it found itself (paragraph
the key vector for better competition leading to a
254), and that the Commission could not presume, on the sole
reduction in public procurement costs.
basis of a unilateral offer by the State to grant a loan of a certain
amount, that that offer would confer economic advantages on the
beneficiary, without taking account of the conditions governing the
( 54 ) The French authorities refer to their letters dated 7 May and 9 June
performance of the loan contract, in particular those regarding the
2008.
granting and the repayment of the loan, especially as the beneficiary
( 55 ) The French authorities refer to their reply to the Commission letter
had not accepted the offer but had confined itself to funding on the
dated 3 August 2007.
terms prevailing in the market (paragraph 255).
( 56 ) OJ L 134, 30.4.2004, p. 114.
( 52 ) Case C-69/88 [1990] ECR I-583.
( 57 ) European Commission, A Report on the Functioning of Public
( 53 ) Case C-399/08, 2 September 2010, not yet reported in the ECR.
Procurement Markets in the EU, 3 February 2004.

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EN
17.1.2012 Official
Journal
of
the
European
Union L
14/13
(66) Finally, with regard to IFP’s dealings with its customers,
— the award of EPIC status to IFP/Axens has allowed
France says that the contract research activities concerned
and continues to allow significant distortion of
are the services provided by IFP at the request of a
competition in the process technologies market in
customer, third party or subsidiary, on a subject which
which UOP operates, as it confers advantages in
comes within the scope of IFP’s task, does not involve
relations with suppliers, capital providers and
strategic interests for IFP in terms of ownership of the
customers (5.1.2).
results, is of a nature to enrich IFP’s knowledge and skills
in the conduct of the public R&D programmes that it
carries out, and does not come within the exclusive field
of activities of its subsidiaries. The French authorities
6.1.1 MARKET PERCEPTION OF IFP/AXENS
note that the research services that these customers
acquire call for specific equipment and expertise.
(69) According
to
UOP,
the
French
authorities’
argument
that
Axens is a separate economic entity, like the other IFP
subsidiaries, is untenable. The Commission, argues UOP,
has rightly pointed out that (i) Axens is wholly owned by
IFP; (ii) the implementation by Axens of the R&D of IFP
(67) France
contends
that
even
if
IFP
were
to
benefit
from
its
reflects strategic priorities decided by the State; (iii) the
EPIC status in the performance of these economic
managers of the publicly owned establishment IFP
activities, the advantage would have no material impact
participate in the management of Axens; (iv) Axens has
on the market. In particular, it would not be liable to
an exclusive contract with IFP, which is crucial to the
distort competition or to affect trade between Member
subsidiary’s economic activity; and (v) there is in
States. Over the period since the change of IFP’s status
particular an agreement providing for first call on and
(which occurred in July 2006), the French authorities
provision of staff.
nevertheless acknowledge that IFP may potentially have
benefited from a reduction in charges as a result of the
lack of subscription to performance bonds, but say that
on the basis of the sums usually charged by banks and
(70) UOP
adds
that
the
image
IFP
and
Axens
present
of
their
insurance companies to provide this type of service the
relationship, and the market perception of their rela
amount involved is negligible. The French authorities
tionship, also constitute decisive factors:
conclude that any such effect would not have the
character of an advantage, which calls into question the
very existence of State aid to IFP.
— IFP and Axens present themselves on the market as a
single economic entity, ‘IFP/Axens’. Axens’s Internet
site mentions in particular that the company is
‘backed by nearly fifty years of R&D and industrial
6 COMMENTS FROM THIRD PARTIES AND FROM THE
success’ ( 59 ). Axens’s advertisements for its technology
FRENCH AUTHORITIES
refer to IFP. Axens and IFP staff sometimes visit their
licensees together.
6.1 OBSERVATIONS FROM UOP
(68) In
its
letter
dated
28
November
2008,
UOP
submits
that
it has an interest n the proceedings ( 58 ), and goes on to
— The industrial press illustrates the market perception
put forward some general observations and to argue that
of IFP/Axens as a single economic entity. UOP
the entity that it refers to as ‘IFP/Axens’ receives State aid:
encloses extracts from press cuttings referring to
the activities of ‘IFP/Axens’ in the field of process
technology licences, or alternatively referring to
such licences being provided by IFP via its subsidiary
Axens. UOP also provides examples of articles or
— IFP/Axens, consisting of the publicly owned estab
presentations in which Axens staff have given the
lishment and its subsidiary Axens, is undeniably
impression that Axens is seen by IFP as comprising
perceived by the market as a public entity (5.1.1);
the entire activities of the industrial and procatalysis
divisions.
( 58 ) UOP states that it operates in the markets for the supply of
products and services to the petroleum refining, gas treatment
and petrochemicals production industries and to most manufac
turing industries. More specifically, it indicates that it designs,
6.1.2 THE ADVANTAGES CONFERRED BY THE EPIC STATUS
implements and authorises the exploitation of licences, and
provides maintenance of process technologies for such things as
(71) UOP indicates that the fact that Axens is perceived by
oil conversion, clean fuel production, fuel desulphurisation and
both suppliers and customers as disposing of unlimited
petrochemicals. It also states that it produces catalysts, molecular
filters, adsorbents and other specialised equipment. It states that it is
State resources to finance its activities gives it a
present in various European Union Member States (Austria,
significant market edge. Even supposing that this is
Belgium, the Czech Republic, Denmark, France, Germany,
only a market perception, its importance is magnified
Hungry, Ireland, Italy, Netherlands, Portugal, Poland, Slovak
in the context of the world economic crisis.
Republic, Spain, Sweden and the United Kingdom), that it has
representations in Belgium, France and Germany, and that it has
two production plants, one in Brimsdown, Enfield, United
( 59 ) UOP refers to the web page http://www.axens.net/about/history.
Kingdom, and the other in Reggio Calabria, Italy.
html, consulted on 20 November 2008.

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L 14/14
EN
Official Journal of the European Union
17.1.2012
(72) As regards customers, the guarantees offered by
of which ensures that there is no risk. Finally, UOP asks
IFP/Axens are of particular significance in a market
the Commission to analyse the agreements between
where customers take account of long-term economic
Axens and its customers, indicating that it is convinced
considerations before opting for a given technology.
that they contain no clause that would limit liability to
Taking the example of ‘aromatic compounds’, UOP
Axens alone.
explains, in substance, that before implementing such
technologies, customers have to make very significant
investments in the design and construction of the
production infrastructures, which takes several years of
6.2 COMMENTS FROM THE FRENCH AUTHORITIES ON
work. However, the success of these industrial complexes
UOP’S OBSERVATIONS
is linked to the performance of the technologies used,
with customers generally requiring them to be guar
(76) In
their
letter
dated
22
June
2009,
the
French
authorities
anteed by the seller of the processes ( 60 ). If the required
consider that UOP’s comments are based on assertions
performance level is not achieved, they will not hesitate
that are mistaken, or in some cases entirely false, and in
to hold the assignee responsible and to require
any event are not founded on any evidence that might
compliance with strict obligations regarding compen
demonstrate the existence of State aid to IFP or Axens.
sation. The long-term solvency of the assignee is
consequently an important factor in the choice made
by purchasers, not only for compliance with contractual
obligations, but also for the prospects offered in the field
(77) In
substance,
the
French
authorities
deny
any
relevance
of R&D as pledges of future improvements in the
to the allegation made that ‘IFP/Axens’ is perceived by the
performance of the process acquired. IFP/Axens,
market as a public entity benefiting from advantages in
perceived by the market as depending on the State,
relation to customers, suppliers and the financial markets,
therefore has an advantage over its competitors, since
and reject the assertion that this ‘IFP/Axens’ is a State
purchasers have no particular reason to doubt its long-
body whose long-term viability is assured.
term survival.
(78) The
French
authorities
develop
two
arguments:
(73) As
regards
suppliers,
UOP
considers
that
preferential
terms may be granted to IFP/Axens as compared with
its competitors; UOP cites the contracts signed jointly
— firstly, ‘IFP/Axens’ is not a State body with unlimited
by IFP and Axens mentioned in the opening decision.
resources at its disposal; moreover, there is no proof
that this entity is perceived as such on the market
(6.2.1);
(74) As
regards
the
financial
markets,
UOP
considers
that
IFP/Axens benefits from preferential terms and interest
rates on the capital markets as a result of the role of
— secondly, IFP’s EPIC status confers no market
guarantor of last resort played by the State. Furthermore,
advantage on Axens (6.2.2).
in a context of financial crisis, the presence of the State,
and the security it represents for investors, makes it
possible to attract private capital at a time of shortage.
Competing undertakings cannot obtain access to
6.2.1 ‘IFP/AXENS’ IS NOT A STATE BODY WITH UNLIMITED
comparable funding, or can obtain it only on far less
RESOURCES
favourable economic terms. According to UOP, the
effects of the economic and financial crisis have
(79) The
French
authorities
contend
that
contrary
to
UOP’s
strengthened the potential of the measure to distort
affirmations the suppliers and customers of ‘IFP/Axens’
competition still further.
do not perceive this undertaking as a State body with
unlimited resources.
(75) In
its
letter
dated
23
January
2009,
UOP
refers
to
its
(80) Firstly, the French authorities refer to the legal analysis
previous observations and to those sent in the course of
which they have sent the Commission and to their
the proceedings that led to decision C 51/2005 cited
previous comments, which, they maintain, show that
above. UOP considers that this information provides
IFP’s EPIC status confers no State guarantee of any kind.
sufficient evidence of the importance of the solvency of
co-contractors on the process licensing market
concerned. It reiterates the argument that the customers
of the IFP/Axens entity assume they are in a trading
(81) Secondly,
the
French
authorities
note
that
UOP
relies
on
relationship with a State body, the long-term viability
an alleged belief in an unlimited State guarantee for IFP/
Axens, a belief which has no existence in law and which
( 60 ) For example, regarding the volume and purity of the product flows,
is not by itself sufficient to demonstrate that there is
or the consumption of raw materials.
State aid.

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EN
17.1.2012 Official
Journal
of
the
European
Union L
14/15
(82) Thirdly,
even
supposing
that
IFP
does
enjoy
a
State
contractual guarantees and maintenance obligations tradi
guarantee – which the French authorities deny – it is
tionally provided for in licensing agreements ( 63 ); but
not true that any such guarantee would automatically
there is no justification for this argument, nor has UOP
extend to IFP’s subsidiaries on the ground that IFP and
substantiated the reasons why it is convinced that the
its subsidiaries form an economic group for purposes of
Commission will not identify any provision limiting
competition law. France argues that IFP’s subsidiaries, and
liability to Axens alone.
especially Axens, are private-law bodies subject to
company law, and would not be covered by such a
guarantee, especially because UOP’s theory of the
automatic extension of guarantees within a group is
contrary to the principle of the autonomy of subsidiaries.
(86) The
French
authorities
contend
that
the
rule
described
in
The concept of a group may have a meaning in
recital 84, according to which the subsidiary is not to
competition law, but it is not recognised in company
apply for any guarantee from the parent, also applies to
law, and the granting of guarantees within a group is
any guarantee that Axens might negotiate or conclude
subject to strict conditions of form and substance. This
with a customer. They illustrate their argument with the
is the case in particular for IFP: Article 7 of IFP’s consti
example of aromatic compounds mentioned by UOP in
tution provides for authorisation by the board of
its observations. They say that as a general rule, Axens
directors. In addition, the French authorities consider
chooses to limit its liability to a certain fraction of the fee
that the Commission has already taken note of this
[…] (*). This guarantee limitation policy, which is one of
point, since it accepted that the legal status of Banque
the ‘Principles of legal security of Axens’, is consequently
Postale, a legal person governed by private law, sufficed
quite different from the customs of other undertakings
in itself to rule out the existence of any unlimited
operating in this field, which, according to the French
guarantee to Banque Postale ( 61 ).
authorities, are in the habit of granting unlimited guar
antees in certain cases.
6.2.2 AXENS DOES NOT DERIVE ANY ADVANTAGE ON
THE MARKET FROM IFP’S EPIC STATUS
(87) Finally, the French authorities argue that the obligations
(83) UOP
has
argued,
the
French
authorities
say,
that
the
regarding maintenance or repairs applicable in the event
market is likewise of the belief that the IFP/Axens
of a claim would not bring into play any financial cover
entity is a State body with unlimited resources, and
on the part of IFP:
enjoys advantages in relation to customers, suppliers
and creditors; but the French authorities contend that
this argument is not based on any reliable evidence,
and is undeniably refuted by the facts.
(a) in the event of default by Axens, the capacity offered
by its civil liability insurers through the various
insurance policies under its world programme is
(84) The
French
authorities
have
submitted
an
internal
memo
from Axens’s legal and contracts department, entitled
well in excess of the maximum liability of Axens
‘Principles of legal security of Axens’
(
contractually agreed with its licensees;

62 ), which
explains the relations between IFP and Axens. These
relations are explicitly governed by the general rule that
Axens does not ask for any guarantee from its parent for
any reason whatsoever. The French authorities specify
(b) the capacity for immediate or rapid mobilisation of
that no exception is possible to this rule that there can
Axens’ resources is also very considerable, in
be no guarantee. The principle is also spelt out in full in
particular because of its low debt level;
the document, in the following terms: ‘IFP does not
guarantee Axens’s acts or omissions’. The French
authorities say that this rule applies to any contract or
project that Axens might possibly conclude or conduct
with customers, with suppliers or on the financial
(c) the agreements between IFP and Axens explicitly
markets.
limit IFP’s liability in the event of default on the
part of one of Axens’ licensees to sums which are
necessarily small, as they are correlated to the fee
6.2.2.1 The relations between Axens and its customers
received by IFP;
(85) UOP argues, say the French authorities, that the public
guarantee has important implications for Axens’s long-
term financial situation, especially in the light of the
(d) Axens’ civil liability insurer expressly waives any
recourse against IFP, for any reason whatsoever.
( 61 ) The French authorities refer to footnote 3 to decision N 531/2005
cited above.
( 62 ) This memo has been in existence since […] (*), and has been
( 63 ) The French authorities refer to the letter from UOP dated
updated and endorsed regularly by […] (*). The French authorities
23 January 2009, which they say takes up the arguments
forwarded version […] (*) as an annex to their letter.
developed under point 3(b) of the letter dated 28 November 2008.

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L 14/16
EN
Official Journal of the European Union
17.1.2012
(88) The
French
authorities
conclude
that
UOP’s
assertions
may reach up to […] (*) % depending on the case.
concerning advantages allegedly obtained by Axens on
Therefore if the customer considers that the work
the process licensing market are invalidated especially
carried out by IFP is defective, IFP can never be obliged
by the fact that Axens has continually conducted a
to repeat the work ad infinitum.
policy of limiting guarantees of liability granted to its
customers.
6.2.2.2 The relations between Axens and its suppliers
and the funding terms on the financial markets
(89) In
their
letter
dated
8 September
2009, the
French
(92) The French authorities deny any relevance to the
authorities state that the limitation of liability to
assertion by UOP that the alleged belief in the
customers is provided for in both the framework
existence of unlimited financial resources available to
licensing agreement
( 64 ) and the product licensing
Axens secures it preferential terms from either its
agreement ( 65 ) concluded between IFP and Axens, which
suppliers or the financial markets. France says that
entered into force on 1 January 2001. These two
UOP has not provided the slightest proof in support of
agreements provide that if Axens can prove that its
this allegation.
default originates in the services supplied by IFP, the
financial liability of the latter will be limited to a
percentage ( 66 ) of the sums in fact collected by IFP in
(93) The French authorities consider that the rule described in
fee pro rata to the sales transaction that forms the basis
recital 84, according to which the subsidiary is not to
of the claim (product licence), and to the unit subject to
apply for any guarantee from the parent, is sufficient to
a sub-licence or to the sales transaction carried out under
invalidate the hypothesis put forward by UOP.
a sub-licence that forms the basis of the claim
(framework licence). In other words, IFP’s liability can
never extend beyond 100 % of the sums received.
Moreover, the framework licence provides that Axens is
(94) Furthermore,
as
regards
Axens’s
borrowing
terms
on
the
responsible for financial guarantees granted to sub-
financial markets, and the terms available to Beicip-
licensees with regard to technical performance of the
Franlab and Prosernat, the French authorities point out
processes. This means that IFP is not liable for
that they are prepared to give the Commission an under
technical guarantees given by Axens to its customers.
taking that a clause would be included in writing in the
financing contract for every transaction stating that
‘Pursuant to French law (in particular the need for
express statutory authority for each guarantee), the
present financing transaction shall not enjoy any form
(90) In
addition,
it
should
be
pointed
out
that
the
licensing
of direct or indirect State guarantee’ (
agreements between Axens and its customers provide,

67 ).
conversely, that Axens’ financial liability is generally
confined to […] (*) % of the royalties paid for each
unit for which a claim is made. If for commercial
7 ASSESSMENT
reasons the guarantee given by Axens to its customer
proves to be higher than that given to it by IFP, IFP’s
7.1 EXISTENCE OF STATE AID WITHIN THE MEANING OF
liability is totally independent of that of Axens. The same
ARTICLE 107(1) TFEU
principle is applied to any licence that IFP grants to third
parties other than its subsidiaries.
(95) Article
107(1)
TFEU
reads:
‘Save
as
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 competition by favouring
certain undertakings or the production of certain goods
(91) Finally, the French authorities add that when IFP
shall, in so far as it affects trade between Member States,
performs services (studies, research to order, tests, etc.)
be incompatible with the internal market.’
for its customers, whether subsidiaries or firms outside
the group, IFP always seeks to limit its liability. The
liability accepted by IFP then consists in a commitment
to rectify the work carried out, while at financial level the
(96) To establish the existence of State aid in the present case
principle is that the liability is limited to […] (*) % of the
it must first be considered whether the EPIC status
remuneration actually received, with a maximum which
granted by France to IFP on 7 July 2006 involves the
use of State resources (7.1.1) to provide an unlimited
public guarantee covering economic activities (7.1.2).
( 64 ) Under this framework licensing system Axens may use IFP’s present
The extent of the cover by the State guarantee and the
and future intellectual property rights essentially in processes in its
nature of the activities covered will allow the scope of
field of activity to provide engineering services to customers in
connection with those processes and to transmit to them the
this decision to be defined (7.1.3), and it will then have
right to use the related technologies in the form of patent licence
to be considered whether the measure in question
sub-grants.
confers a selective advantage on the IFP group (7.1.4)
( 65 ) Under this product licensing system Axens may use IFP’s present
which may affect trade between Member States (7.1.5).
and future technology in its field of activity to manufacture and sell
to its customers catalysts, adsorbents, captation masses, equipment,
and other products and software developed by IFP.
( 67 ) Letter from the French authorities dated 13 October 2008,
( 66 ) […] (*).
paragraph 203.

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EN
17.1.2012 Official
Journal
of
the
European
Union L
14/17
7.1.1 USE OF STATE RESOURCES IN THE FORM OF AN
Commission will refer to the arguments set out in
UNLIMITED GUARANTEE
section 4.1, ‘Classification as aid’, of decision C 56/2007.
(97) In view of its particular structure as an economic group
for purposes of competition law, it is necessary to assess
the potential impact of the unlimited State guarantee
A. Guarantee of payment of individual claims
arising from the EPIC status of the publicly owned estab
lishment IFP on the whole of the IFP group, i.e. on the
(100) It is first necessary to consider the argument of the
publicly owned establishment itself and on its
French authorities that the existence of a State
subsidiaries, by proceeding in two stages:
guarantee in favour of EPICs is ruled out by the legis
lation or the case-law, before showing that in the event
that IFP were in default its creditors would benefit from a
— As regards the publicly owned establishment IFP, the
more favourable procedure than the creditors of under
impact of the unlimited guarantee arises directly from
takings governed by ordinary law.
its EPIC status: as a legal person governed by public
law, IFP is not subject to the ordinary law governing
the administration and winding up of firms in
difficulty. In the light of this particularity, the
a) Rejection of the arguments of the French authorities
parent of the IFP group may carry on economic
(101) Contrary to the French authorities’ affirmation, the
activities itself, under more advantageous conditions
Commission is able to conclude that French law does
than other market participants not benefiting from
acknowledge the existence of implied guarantees, and
comparable protection (7.1.1.1).
in particular the existence of a State guarantee deriving
from the status of publicly owned establishment. The
Commission rejects the arguments of the French
— As regards the activities carried out directly by the IFP
authorities for the following reasons.
subsidiaries governed by private law, which, for their
part, are entirely subject to the ordinary law of bank
ruptcy, any direct liability of the publicly owned
establishment, and therefore of the State, seems
(102) Firstly, where the French authorities assert that there is
impossible. If a subsidiary’s assets are insufficient,
no legislation or decision laying down the principle that
therefore, it has to be considered whether the
the State is to guarantee the debts of EPICs, the
creditors of Axens, Prosernat and Beicip-Franlab
Commission refers to recitals 120 and 121 of decision
could benefit from an indirect mechanism whereby
C 56/2007, mutatis mutandis. The Commission considers,
the parent would be liable for its subsidiaries,
on the contrary, that although it is true that there is no
equivalent to a guarantee mechanism (7.1.1.2).
legislation or decision confirming or excluding the
existence of an express State guarantee in favour of
EPICs, this absence does not mean that there can be
no implied guarantee.
7.1.1.1 Unlimited State guarantee to IFP conferred by
its EPIC status
(98) In
decision
C
56/2007,
the
Commission
concluded
( 68 )
that the special factors intrinsically linked to the legal
(103) Secondly, where the French authorities consider that the
form of La Poste as a publicly owned establishment (
courts have held that there is no such guarantee, notably

69 ),
and in particular the existence of a guarantee ensuring
in the judgments in Société de l’htel d’Albe ( 70 ) and
the payment of individual claims and the continued
Campoloro ( 71 ), the Commission refers to recitals 122 to
existence of La Poste or its obligations or both, implied
124 of decision C 56/2007, mutatis mutandis. In Société de
that the State performed the role of guarantor of last
l’htel d’Albe, as the Commission expert pointed out in
resort in respect of the economic activities of the
the postal case, the judgment did not refer to the precise
publicly owned establishment.
situation in which the guarantee would come into

play ( 72 ). In Campoloro ( 73 ), the Commission considers,
on the contrary, that the judgments establish a scheme
of State liability in proceedings for the recovery of the
(99) In the present case, the Commission considers that the
debts of publicly owned establishments which displays all
arguments set out in decision C 56/2007 can essentially
the characteristics of a guarantee mechanism.
be transposed to the EPIC status of the publicly owned
establishment IFP, and that IFP also enjoys a special legal
( 70 ) Council of State, Société de l’htel d’Albe, 1 April 1938, Recueil
position with regard to the payment of its creditors and
p. 341.
its continuation in business in the event of insolvency.
( 71 ) Council of State judgments in the Campoloro case, 10 November
For the purposes of the present analysis, therefore, the
1999 and 18 November 2005.
( 72 ) In this judgment, the Council of State merely refused to grant an
application brought by a creditor directly against the Minister for
( 68 ) See section 4.1.1 C, ‘Conclusion regarding the existence of a state
Public Works It found that a guarantee would come into play in the
guarantee in favour of La Poste’, recitals 251 to 255 of decision
event of insolvency; a guarantee mechanism did not require the
C 56/2007,
State to pay a debt of a publicly owned establishment whenever
( 69 ) As specified in recital 12 (footnote No 11), this legal status was
a creditor so requested.
likened to an EPIC before the change in form of La Poste to that of
( 73 ) The Commission refers to its analysis of the Campoloro case in
a public limited company.
section 4.1.1.A(b)(3) of decision C 56/2007.

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(104) Thirdly, in the postal case the French authorities argued
(c) The Commission concludes, as it did in recital 131 of
that the debts contracted by EPICs since the entry into
decision C 56/2007, to which it refers mutatis
force of the Organic Law governing the Finance Act on
mutandis, that the argument put forward by the
1 January 2005 did not qualify for an implied guarantee:
French authorities on the basis of the Organic Law
the Commission considers that this argument cannot
governing the Finance Act is not convincing, because
hold:
the fact that it is not stated in any Finance Act that
the State extends a guarantee to IFP by virtue of its
(a) The Commission emphasises that the change of legal
legal form does not mean that there is no implied
form of the publicly owned establishment IFP
guarantee. The Commission is not in any event
occurred on 7 July 2006, i.e. after the entry into
bound by the description of the measure as a ‘guar
force of the Organic Law governing the Finance
antee’ for purposes of French law, or by the fact that
Act. Under such circumstances, it is not necessary
a guarantee is or is not caught by the Organic Law
to examine the arguments put forward by the
governing the Finance Act. The only relevant
French authorities’ expert in the postal case
consideration is how the measure is to be described
regarding debts contracted before 1 January 2005,
for purposes of Union law. Union law recognises the
despite the fact that the French authorities refer to
existence of an implied guarantee once a Member
this mutatis mutandis in their comments. Debts
State legally has to repay a claim on another
contracted by IFP before 1 January 2005 were
person in the event of that person’s defaulting ( 76 ).
contracted by a trade body within the meaning of
Law No 43-612 of 17 November 1943 on the
management of trade interests, and therefore by a
legal person governed by private law, and
consequently could not be covered, at the time
(105) Fourthly, the Commission rejects the argument of the
they were entered into
(
French authorities that, if a State guarantee does exist

74 ), by the unlimited
guarantee conferred by the EPIC status.
in favour of EPICs, any establishment of a new EPIC
(including by change of legal form) would necessitate
measures to preserve the rights of creditors arising
(b) The Commission nevertheless notes, as its expert
before the change, and that conversely (modus tollens),
pointed out in the postal case, and as it explained
since no such mechanism has ever been set up ( 77 ), no
in recital 130 of decision C 56/2007, to which it
guarantee exists in favour of the publicly owned estab
refers mutatis mutandis, that the obligation to enter
lishment IFP:
State guarantees in a Finance Act is confined to the
‘giving’ (octroi) of such guarantees. To ‘give’ a
guarantee the State must confer a guarantee on an
organisation or an operation by an express manifes
tation of its intention. The scope of the obligation to
(a) As pointed out by the Commission’s expert in the
enter guarantees in the Finance Act does not extend
postal case, and as recalled in recital 133 of decision
to guarantees that arise out of the legal form of an
C 56/2007, to which it refers mutatis mutandis, the
organisation, or out of an obligation established in
Commission considers that this assertion is based on
case-law, which are guarantees of an implied and
too broad an interpretation of the constitutional
automatic character. This category is not the result
protection of the right of property.
of a decision of the State, but of the fact that the
State places itself in an existing legal framework, the
guarantee being only one effect of that
framework ( 75 ).
(b) The Commission takes the view, as it did in recital
( 74 ) However, in the case of insufficient assets of the publicly owned
134 of decision C 56/2007, to which it refers mutatis
establishment IFP subsequent to its change in legal form, all its
mutandis, that in the same way, when an EPIC is
creditors, irrespective of when their claim arose, would be in a
converted into a company that can be made the
comparable situation, all finding that the ordinary law relating to
subject of court proceedings for administration or
compulsory administration or winding up of undertakings in
winding up, the right of property does not require
difficulty did not apply to the publicly owned establishment IFP.
All the creditors of the publicly owned establishment IFP would be
that a specific measure be taken to preserve the
assured of seeing their claims finally paid, as explained under point
entitlements of creditors, and that the fact that no
A(b).
such measure has been taken does not constitute
( 75 ) The fact that the existence of this second category is outside the
evidence that there is no implied guarantee.
scope of Article 34 of the Organic Law governing the Finance Act
explains why the rule established by the case-law on guarantees
given by concessionaires has continued beyond 2001. It also
explains why when the State is a shareholder or partner in a
company or grouping whose debts are covered under the
Commercial Code by an unlimited guarantee, the State is not
(c) The Commission adds that, as explained in recitals
required to specify that fact in a Finance Act. The Commission
135 and 136 of decision C 56/2007, to which it
wishes to point out in this respect that the guarantee examined
refers mutatis mutandis, the fact that the French
here derives from the EPIC status of the publicly owned estab
lishment IFP, that this is a guarantee operating between the State
and the publicly owned establishment IFP (the latter’s creditors
( 76 ) General Court in Case T-442/03 SIC v Commission [2008] ECR
being only indirect beneficiaries thereof), and that this guarantee
II-1161, paragraphs 124-127. See also the Guarantees Notice.
covers not only the payment of individual claims, but also the
( 77 ) In particular, no such mechanism was set up at the time of the
continued existence of IFP or its obligations or both.
conversion of IFP, France Télécom, Gaz de France, EDF or ADP.

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authorities decided to give an express guarantee to La
Finance Act and is contrary to the subsequent case-law of
Poste when it obtained a legal form equivalent to that
the Council of State: in recital 104 above, and in decision
of an EPIC in 1990 ( 78 ) does not mean that there was
C 56/2007, the Commission concluded that the Organic
no implied guarantee before that date.
Law governing the Finance Act did not stand in the way
of an implied guarantee given by the State to IFP.
(109) Finally, as indicated in recitals 146 and 147 of decision
(106) Finally, as regards the article by Mr Labetoulle cited by
C 56/2007, to which it refers mutatis mutandis, the
the French authorities ( 79 ), and its analysis of the
Commission notes the memorandum from the Minister
Campoloro case-law ( 80 ), the Commission refers to the
for Economic Affairs, Finance and Industry dated 22 July
part of the present decision relating to the liability of
2003, concerning a ‘Census of implied and express
the State and to section 4.1.1 A(b)(3) of decision
guarantee arrangements granted by the State’, which
C 56/2007
confirms that there are implied State guarantees that
derive from an administrative or legislative act which
‘produces and entails financial consequences for the
State’. That memorandum shows that a State guarantee
can derive from legal acts of very different kinds ( 82 ) and
indicates that the setting up of a publicly owned estab
(107) Contrary to the argument put forward by the French
lishment may entail an implied guarantee given by the
authorities, who contend that such a guarantee is
State to the establishment’s creditors ( 83 ).
excluded by the legislation, the Commission notes that
the existence of implied guarantees arising out of the
legal form of publicly owned establishments is
confirmed by a memorandum of the Council of State
b) A creditor of IFP can be sure that his claim will be repaid.
drawn up in 1995 in the Crédit Lyonnais case, which
took the view that the organisation concerned enjoyed
(110) Following the example of the argument in section
an implied guarantee given by the State by reason merely
4.1.1.A(b) of decision C 56/2007, to which it refers
of its character as a publicly owned establishment ( 81 ).
mutatis mutandis, the Commission will now set out to
demonstrate that in the event of a default by IFP, its
creditors would be in a more favourable position than
that of creditors of an enterprise governed by commercial
law.
(108) As explained in recitals 142 to 145 of decision
C 56/2007, to which it refers mutatis mutandis, the
Commission does not share the interpretation put
(111) Firstly, in the case of publicly owned establishments, the
forward by the French authorities that this opinion of
conventional obstacles to the settlement of a claim
the Council of State cannot be transposed to the case
against a body governed by private law are not
of IFP. The opinion makes no reference to the aims of
applicable. On the basis of the factors detailed at
the establishment or to whether or not a public
greater length in recitals 150 to 154 of decision
accountant is present within it. Moreover, the French
C 56/2007, to which it refers mutatis mutandis, the
authorities do not explain why, in their view, this
Commission concludes on this first point that:
opinion should apply to publicly owned establishments
only if they have a public accountant. The Commission
rejects the arguments put forward by the French
authorities to the effect that the opinion is not applicable
— unlike the creditors of undertakings governed by
because it predates the Organic Law governing the
commercial law, creditors of IFP (which is not
subject to the ordinary law governing the compulsory
( 78 ) Contrariwise, the French authorities argued that, if La Poste had
administration or winding up of firms in difficulty)
enjoyed a State guarantee by virtue of its legal form, there would
are not in danger of seeing their claim cancelled in
have been no need to give an express guarantee for the debts
whole or in part as an outcome of compulsory
contracted by the old Administration of Posts and Telecommuni
winding-up proceedings;
cations which were transferred to La Poste. But, they argued, such a
guarantee was in fact given, in an order dated 31 December 1990.
( 79 ) D. Labetoulle, ‘La responsabilité des AAI dotées de la personnalité
( 82 ) See point 5 in the annex to that memorandum, which lists different
morale: coup d’arrêt à l’idée de “garantie de l’Etat” ’, RJEP/CJEG
acts including for example ‘a ministerial letter, or any other basis’.
No 635, October 2006.
( 83 ) In an explanatory note attached to the memorandum, in part 3,
( 80 ) On this point, the Commission also refers to section 4.1.1.A(b)(3)
under the heading ‘Experience of calls made on guarantees and the
of decision C 56/2007.
judgments of the Council have clarified a number of textbook cases
( 81 ) The Commission refers to recitals 139 to 141 of decision C
of guarantees which need to be identified’, it is indicated that ‘Some
56/2007. The following part of the memorandum was published
legal forms by their structure entail a liability on the part of their
in the annual report for 1995 (p. 219): ‘In connection with the
shareholders; this is true in particular of [the forms of partnership
draft law on State involvement in the recovery plans for Crédit
known as] the société en nom collectif, or SNC, and the groupement
Lyonnais and Comptoir des Entrepreneurs, the Council of State
momentané d’entreprises, or GIE. With these last two forms, third
… took the view that there was a State guarantee for this estab
parties will always seek out the State shareholder. The same
lishment which derived without any express legislative provision
applies to the creation of publicly owned establishments and to
from the very fact that it was a publicly owned establishment’.
some shareholdings in public limited companies’.

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— the fact that IFP has legal personality is no bar to the
1980 and the measures implementing it provide for the
existence of a guarantee given by the State;
deferral of a payment order, and nowhere envisage a
cessation of payments, and thereby give creditors to
understand that there are or that there will be the
resources necessary to settle a claim they hold on the
public entity. These two factors lead to it consider that a
— in the absence of any express limitation on the State’s
shortage of funds will be covered, if necessary by the
liability in respect of IFP, IFP’s creditors may
State, or is temporary only. But winding-up procedures
legitimately act on the principle that the State will
never provide for the possibility that a third party can
bear the debts of IFP, even though IFP possesses legal
become liable for the debts of the insolvent party, except
personality.
of course in the case of a guarantor.
(112) Secondly, in the case of the recovery of the debts of a
publicly owned establishment that has been found by a
(115) In accordance with the analysis developed in recitals 170
court to be in default, the procedure laid down in the
to 180 of decision C 56/2007, to which it refers mutatis
Law of 16 July 1980 (and in implementing
mutandis, the Commission considers that in the event of a
provisions ( 84 )) is, for the reasons explained in recitals
shortage of funds, French legislation authorises or indeed
113 to 117, more favourable to IFP’s creditors than
encourages the State to provide capital to publicly owned
insolvency proceedings in the courts under ordinary
establishments, rather than expecting them to secure
law, in so far as it is not liable to result in the cancel
conventional bank loans; the ‘additional resources’
lation of their claim on IFP.
referred to in the Law of 16 July 1980 may consist of
contributions of this kind. The Commission also
considers that the relevant legislation is known to
creditors, who consequently have good reason to
believe that the supervising authority will be in a
(113) In accordance with the analysis developed in recitals 157
position to secure the resources necessary to ensure
to 161 of decision C 56/2007, to which it refers mutatis
that their claims are satisfied. Consequently, the
mutandis, the Commission notes firstly that the Law of
Commission takes the view that the probability that a
1980 (
creditor might not succeed in obtaining satisfaction of his

85 ) and its implementing provisions ( 86 ) designate
the State as the authority responsible for covering the
claim under the procedures laid down by the Law of
debts of publicly owned establishments, and confer
16 July 1980 is low.
important prerogatives on the State: the mandatory
payment order and the creation of sufficient resources.
(116) However, contrary to the conclusion it drew in respect of
(114) Following the example of the argument in recitals 162 to
La Poste in decision C 56/2007, the Commission
168 of decision C 56/2007, to which it refers mutatis
observes that in this case the resources of its own that
mutandis, the Commission considers that the specific
IFP would be able to mobilise are relatively high, since, as
procedure laid down by the Law of 1980 and the
the French authorities have explained (see recital 44),
measures implementing it is a procedure only for the
available funds and investments at the end of 2007
recovery of claims, and not for winding up, and that at
(EUR 150,3 million) represented approximately five
the end of the procedure the claim is not cancelled,
times the amount of borrowings and financial liabilities
whereas at the end of winding-up proceedings under
(EUR 25,2 million). Consequently, the Commission
ordinary law a judgment terminating the proceedings
recognises that in its present financial position, it
on the ground that the assets are insufficient, without
seems unlikely, at least in the near future, that a
penalty, prevents creditors from pursuing the proceedings
shortage of own resources could lead to IFP being
further. The Commission also notes that the Law of
unable to meet its debts and give rise to the need for
State intervention.
( 84 ) The section of this decision describing the measure explains the
terms of the Law of 16 July 1980, the Decree of 20 May 2008
replacing the Decree of 12 May 1981, and the Circular of
16 October 1989.
( 85 ) The Law of 16 July 1980 provides that ‘if the decision-making body
of the authority or establishment has not released or created the
resources … the supervising authority shall do so, and if necessary
(117) Although it is unlikely at present, it cannot be ruled out
shall issue a mandatory payment order’.
that IFP might experience such a shortage of assets in the
( 86 ) The Decree of 12 May 1981, which on this point remains
longer term. In such circumstances, the fact that
unchanged by the amending Decree of 2008, states that the repre
resources cannot be mobilised by selling assets means
sentative of the State or the authority responsible for supervision
that use has to be made of other guarantee mechanisms
‘shall, as appropriate, release the necessary resources, either by
reducing the appropriations allocated to other expenditures and
(advances, efforts to establish a liability on the part of the
still available, or by increasing resources’.
State, etc.). Furthermore, in the event of a default on the

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part of IFP, the fact that the legislature has laid down
will not as a general rule recover the whole of their
rules protecting the assets might then be invoked in any
claims, and the enterprise being wound up will not
dispute in which it was alleged that there was a strict
usually have its debts paid by a third party.
liability resting on the State ( 87 ). On this point, the
Commission takes note of the argument put forward
by the French authorities ( 88 ) according to which even
if the State considers an asset belonging to a publicly
owned establishment to be ‘indispensable’ for the
(120) The French authorities also further deny that any possi
provision of a public service, and therefore objects to
bility of compensation of creditors that may be opened
its sale, it is not bound to compensate via a guarantee
up if the State is held liable can be considered equivalent
mechanism. The Commission notes, however, that the
to a guarantee. The Commission takes the view, however,
French authorities have acknowledged that in applying
that, in the procedure for the recovery of the debts of the
the procedure laid down in the Law of 16 July 1980
public bodies referred to in the Law of 16 July 1980, the
the representative of the State is bound by the
liability of the State, with or without fault, is indeed
requirement of continuity of public service (although
equivalent to a guarantee mechanism for purposes of
they deny that IFP can benefit as a result) ( 89 ). The
European Union law, because it ensures creditors that if
Commission therefore considers that such a choice by
IFP should default the State will be required to meet their
the public authorities to prevent sales of assets in order
claims. The judgment of the European Court of Human
to maintain a public service means that the State might
Rights (‘ECHR’) in Société de gestion du port de Campoloro et
incur strict liability for a breach of the principle of
Société fermière de Campoloro v France ( 91 ) (the Campoloro
equality before public burdens.
case) also points to the existence of an automatic
guarantee.
(118) Thirdly, for the reasons already set out in recitals 185 to
(121) Finally, as shown in recitals 181 to 184 of decision
226 of decision C 56/2007, to which it refers mutatis
C 56/2007, to which it refers mutatis mutandis, the
mutandis, the Commission considers that, in the unlikely
Commission considers that the French authorities’
event that the procedure laid down by the Law of 16 July
proposal for a clarification of the Decree implementing
1980 does not result in payment of creditors, the courses
the Law of 1980 is not sufficient to prevent an increase
still open to them to render the State liable have the
in resources from being achieved by an injection of
characteristics of a guarantee mechanism.
public funds.
(a) The French authorities propose to amend the Decree
(119) Although the French authorities consider that the State
implementing the Law of 1980 as follows (the
has in principle no liability, whether for a fault on its
amendment is shown in italic): ‘If the notice given
part or in the absence of any such fault (
has had no effect by the time these deadlines expire,

90 ), they
acknowledge that, if there is a requirement of continuity
the representative of the State or the authority
of public service that is binding on the representative of
responsible for supervision shall enter the expen
the State in the procedure laid down by the Law of
diture in the budget of the defaulting authority or
16 July 1980, a court may order that the creditor be
publicly owned establishment. The representative of
compensated. But in that event the French authorities
the State or the authority responsible for supervision
consider that the creditor is not given any advantage,
shall, as appropriate, release the necessary resources
as the compensation he receives is comparable to that
from the budget of the defaulting authority or estab
which he would have received under ordinary law. The
lishment either by reducing the appropriations
Commission draws attention, however, to certain specific
allocated to other expenditures and still available or
features of the special scheme introduced by the Law of
by increasing resources’.
1980: under the ordinary law governing compulsory
winding up, creditors (and especially unsecured creditors)
( 87 ) The Commission refers to section 4.1.1.A(b)(3) of decision
(b) However, as the Commission pointed out in recital
C 56/2007.
67 of the opening decision, neither in its present
( 88 ) In a memorandum submitted on 27 October 2009 in the postal
case, the French authorities denied that it was ‘impossible’ to
wording nor in the amended wording proposed by
mobilise own capital and reserves, on the basis of two arguments:
the French authorities does the legislation prevent an
the first of these, however, related to the prices charged by La Poste,
increase in resources from being made possible by a
and cannot be transposed to the circumstances of the present case,
subsidy or injection of public funds.
since IFP’s prices, unlike those of La Poste, are not subject to
sectoral regulation.
( 89 ) The Commission refers to points 112 and 113 of the
( 91 ) ECHR, Société de gestion du port de Campoloro and Société fermière de
memorandum sent by the French authorities on 23 January 2008
Campoloro v France, 6 December 2006, No 57516/00. In the
in the postal case.
Campoloro case the ECHR made the State liable for all of the
( 90 ) For further details on the position of the French authorities, see
sums owed to the applicant companies by the Commune of
section 3.1.1.B(a)(2) of decision C 56/2007.
Santa-Maria-Poggio.

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(122) For the reasons already set out in recitals 204 to 211 of
Article 1 of Protocol No 1 to the Convention, the
decision C 56/2007, to which it refers mutatis mutandis,
applicants having suffered interference with their
the Commission also considers that the EHCR’s judgment
property rights on account of a huge and special
in the Campoloro case demonstrates that, in this instance,
burden due to the non-payment of the sums which
the liability accepted by the French State operates as an
they should have received ( 94 ). In the light of the
implied guarantee of the public authorities’ liabilities and
above, the ECHR charged the whole of the debtor
is not linked to any condition relating to injury.
communes’ debt to the State ( 95 ).
(c) The Commission considers that this judgment has
three important implications:
(a) The Commission notes more specifically that the
ECHR rejected the arguments of the French
authorities which attempted to base their case ( 92 )
— Subject to the applicants obtaining a court
on the absence of, firstly, an operative event
judgment recognising their claim, the liability of
imputable to the State and, secondly, a guarantee
the State functions as an implied guarantee ( 96 ), in
on the part of the State to public authorities
so far as the French State is required to pay the
possessing legal personality, and accepted the
whole of the debt of the public body ( 97 ) and no
contrary arguments of the applicants ( 93 ).
distinction is made between debt conceivably due
to the public authority’s insolvency and possible
defaults imputable to the State (the ECHR did not
at any time seek to identify an act or omission
(b) The ECHR found that there had been a breach of
imputable to the State, and looked no further
Article 6-1 of the European Convention on Human
than the debtor’s insolvent status).
Rights (‘the Convention’), and added that the
judgments had to be implemented and that a State
authority could not use lack of resources as a pretext
— This liability covers the debts of public authorities
for not honouring a debt based on a judicial decision.
possessed, however, of legal personality. The
The ECHR also found that there had been a breach of
existence of legal personality and of assets
specific to the authority was expressly invoked
by the French Government in its opposition to
( 92 ) The judgment states that (Commission translation) ‘[The French
holding the French State liable, but this argument
Government] considers that only objective reasons concerned
was rejected by the ECHR.
exclusively with its being materially impossible for the commune
to release sufficient resources have delayed the complete
enforcement of the judgments … The Government therefore
maintains that the non-enforcement of the judgments given is
— The scope of the State guarantee extends to
not the result of a deliberate refusal to enforce them on the part
include public authorities dependent on the
of the national authorities, State or commune. The absence of funds
State. The guarantee is therefore intrinsically
is not a pretext, but a reality due to the insolvency of the debtor
connected with the debtor’s public-law legal form.
legal person … The non-payment of the debt is due entirely to the
commune’s financial difficulties, and these circumstances do not
appear to be such as either to release the authority from its obli
gations or to transfer the burden of its debt to the State (Council of
(d) Moreover, the Commission notes that the solution
State, commune of Batz-sur-Mer, 25 September 1970). There is no
adopted by the ECHR in the Campoloro case is not
legal basis under national law for substituting the State for the
an isolated one and stems from a well established
commune where the payment of compensation is concerned. Nor
can Article 6-1 of the Convention form the basis of any such
substitution in so far as a solution of that kind would be
( 94 ) (Commission translation) ‘The interested parties’ inability to have
contrary to the very concept of legal personality, which
these judgments implemented constitutes interference with those
presupposes autonomy and a distinct set of assets’.
parties’ property rights – interference such as is referred to in the
( 93 ) (Commission translation) ‘That is why no arrangements to soften
first sentence of the first paragraph of Article 1 of Protocol No 1.
the blow have been made under national law to confront a
The Government has provided no justification at all for such inter
situation of default on the part of the commune The State
ference, and the Court considers that lack of resources cannot
cannot offload its obligation to implement judicial decisions by
legitimise the omission concerned … In sum, the Court considers
invoking the absence of funds or the autonomy of regional or
that the applicant companies have been, and are still, subject to a
local authorities – an autonomy that it has not been able to
huge and special burden due to the non-payment of the sums from
guarantee to date, since the commune is in no position to pay
which they should have benefited in implementation of the
its debts. The applicants therefore denounce the State’s incapacity
aforesaid judgments dated 10 July 1992. There has therefore
to adopt positive measures that would have enabled the commune
been a breach of Article 1 of Protocol No 1’.
to contribute in accordance with its obligation … The applicants
( 95 ) (Commission translation) ‘In view of the above, the Court holds
note that, in its judgment of 18 November 2005, the Council of
that it is for the defendant State to pay the applicants or, if appro
State held that the legislature intended to give the representative of
priate, their legal successors, the sums (including interest) due to
the State, in the event of a local or regional authority’s not being
them as from the delivery, on 10 July 1992, of the judgments of
able to implement a judicial decision, the power to take the place of
the Bastia administrative tribunal (ibid.) until the day on which this
that authority’s decision-making bodies in order to release or create
judgment is given’.
the resources enabling the judicial decision concerned to be fully
( 96 ) The Commission wishes to emphasise that the terms used by the
implemented. It is on the basis of these omissions on the part of
ECHR do not refer to a possible liability on the part of the State but
the French State that the applicants demand both acknowledgement
hold that it is the responsibility of the State to ‘ensure’ that
of Article 6-1’s having been breached and the resulting compen
payment is made. Such terms relate more to the concept of a
sation – an initiative that no more contradicts the concept of legal
guarantee than to that of liability.
personality than it does the concepts of independence and of a
( 97 ) A judicial mechanism under national law can therefore be inter
distinct set of assets’.
preted as an implied guarantee.

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line of case-law, notably in the judgments in the
Ultimately, as regards the individual claims held by third
cases Artico v Italy ( 98 ) and Bourdov v Russia ( 99 ).
parties, the Commission considers that only a text of
general scope applicable in any situation and to any
type of third party, indicating that the State is not the
(123) For the reasons already set out in recitals 212 to 220 of
guarantor of IFP, would be enough to eliminate the
decision C 56/2007, to which it refers mutatis mutandis,
unlimited guarantee. In addition, even if the French
the Commission considers that the observations made by
proposals were to make it quite impossible for a
the French authorities are not of a nature to invalidate
creditor of IFP to hold the State liable for paying its
this reasoning. As it argued in the postal case, in recital
claim (something which in the Commission’s view has
222 of decision C 56/2007, and in the opening decision,
not been shown), such proposals would not enable it to
the Commission concludes that, as French law currently
be clearly established what would happen in the event of
stands, a creditor of IFP who has not obtained the
IFP becoming insolvent ( 101 ).
payment of his claim by recourse to the procedures
introduced by the Law of 16 July 1980 may receive all
of the sums corresponding to the unmet claim by
invoking the State’s last-resort liability. This is the
(125) Fourthly, even if he were to fail obtain satisfaction, the
opposite of what happens within the framework of
creditor of a publicly owned establishment could invoke
winding-up proceedings under ordinary law, where the
legal effects arising from a legitimate mistake he made at
reimbursement of the creditor is limited by the value of
the time the claim arose, when he believed that the claim
the available assets. In consequence of the above, the
would always be honoured.
Commission considers that the State’s liability is treated
as a guarantee, it is not the subject of any limitation by
French legislation, and is intrinsically linked to the
(126) For the reasons already set out in recitals 227, 228 (first
public-law legal form possessed by the debtor body.
to third indents) and 229 of decision C 56/2007, to
which it refers mutatis mutandis, the Commission
believes that the theory of appearance (
(124) Furthermore, for the reasons already set out in recitals

102 ) provides
confirmation that the creditors of IFP would be justified
223 to 226 of decision C 56/2007, to which it refers
in believing, on the basis of a body of consistent
mutatis mutandis, the Commission takes note of the
evidence, that such a guarantee does indeed exist (even
French proposal to include a clause in all IFP contracts
assuming, quod non, that the fact that IFP has the legal
involving claims so as to limit any risk of triggering the
form of an EPIC is not of a nature to confer on it, in law,
State’s strict liability based on IFP’s insolvency alone. It
an unlimited guarantee given by the French State). The
considers that such a legal framework would remain
main relevant indices in relation to the theory of
fragile and that there are doubts about its durability,
appearance derive firstly from the fact that a variety of
because the plea of accepted risk is a rule established
legislative instruments (Law of 16 July 1980 and the
by case-law, which could always evolve. The Commission
measures implementing it) or official (budgetary)
considers, however, that such a proposal is inherently
documents lead the creditor to believe that the State
inadequate as it does not cover all eventualities: it
would take over EPICs’ debts in the event of their
would not mean that the State guarantee could never
having a shortage of funds or that it would assume
come into play for any type of liability (in particular
liability for those debts; secondly from the fact that the
non-contractual liability and criminal liability).
lack of clarification by the French authorities of the legal
Moreover, it is impossible to make it contractually clear
situation following the Campoloro case and of the initial
to its debtors that the State will not be liable for IFP’s
proceedings undertaken by the Commission on the legal
debts, as IFP may find itself indebted towards a third
form of EPICs also increases creditors’ confidence that
party through a variety of judicial mechanisms, in
particular if it were to absorb another entity holding
claims by initially unidentifiable third parties
(
( 101 ) As will be shown in section B of this part, a creditor of IFP who

100 ).
had not been able to have his individual claim met by requesting
payment could always hope to obtain payment within the
( 98 ) ECHR, Artico v Italy, 13 May 1980, Series A, No 37: The ECHR
framework of an overall State-financed restructuring of the
decided that, where a failure to act was imputable to an entity
publicly owned establishment IFP.
other than the State, it was for the State, as giver of the guarantee
( 102 ) The concept of legitimate error such as to impart legal effects is
provided for in Article 6-1, to act in such a way that the applicant
linked to the theory of appearance. According to Cornu’s
in practice enjoyed the right conferred on him by that Article.
Vocabulaire Juridique, appearance is ‘the aspect resulting – inten
( 99 ) ECHR, Bourdov v Russia, 19 March 1997, No 59498/00: Here too
tionally or otherwise – from the combination of external signs
the Court held that an authority of the State could not use lack of
through which states and functions (status as representative, heir,
resources as a pretext for not honouring its debt.
owner, etc.) normally manifest themselves and that give rise to the
( 100 ) The Commission refers in particular to its arguments presented in
belief that the person invested with these signs really does possess
decision C 56/2007 relating to the effect on State liability of the
such a state or function’. The theory of appearance is a ‘theory of
absorption by a publicly owned establishment of another structure,
the courts according to which appearance alone is enough to
the rights and obligations of which are transferred to it at the same
produce effects in respect of third parties who, following a
time. If it were subsequently to meet that structure’s debts towards
legitimate error, have been unaware of the real state of affairs’.
a third party, no contract or other legal document would have laid
The theory of appearance is used in case-law (ECHR, 7 June
down that the State was not required to pay the debts of this
2001, Kress) and in private law to impart legal effects to a
publicly owned establishment towards creditors of the absorbed
contract in respect of which one of the parties has legitimately
structure, since such a situation could not have been foreseen ex
relied on simple appearance. The examples of apparent domicile
ante. Thus, through a mechanism (such as merger or absorption)
or, in public law, of de facto officials whose decisions can remain
for converting certain public sector structures, the publicly owned
legitimate may also be cited. This theory has the advantage of
establishment IFP could acquire debts towards third parties,
making it easier to demonstrate the existence of a legal attribute
without its being possible contractually to provide in advance
or legal effect not expressly and explicitly affirmed by any legis
for a limitation of the guarantee on the part of the State.
lation.

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such a guarantee does in fact exist; and finally from the
of publicly owned establishments are always transferred
fact that the lack of any clear indication as to the effects
to another legal person, which cannot refuse them, so
of a situation in which an EPIC is in default also militates
that each creditor can therefore be certain that the right
in favour of this view.
arising from his claim may be invoked against another
body and that his claim will not, therefore, be cancelled.
(127) In the present case, the Commission wishes to add that
(131) The Commission refers to the detail of the analysis
prior to 7 July 2006, any creditors of the publicly owned
presented in recitals 233 to 250 of decision
establishment IFP were in a contractual relationship with
C 56/2007, based on the study carried out by its
a trade body within the meaning of Law No 43-612 of
expert in the postal case on organic developments
17 November 1943 on the management of trade
affecting publicly owned establishments, which identifies
interests, a body which was a legal person governed by
three reasons why publicly owned establishments may be
private law, and which they had no reason to think could
closed ( 103 ): the case of publicly owned establishments
be covered by a State guarantee of any kind.
which have reached the ends of their lives, the case of
Consequently, the theory of appearance can in any
publicly owned establishments being closed because the
event be applied only with regard to claims arising
tasks assigned to them no longer need to be carried out,
after the change of status of the publicly owned estab
and the case, most frequently encountered, that the tasks
lishment IFP.
assigned to them have been transferred elsewhere,
necessarily implying a transfer of the rights and obli
gations.
(128) Following the conclusions of its expert in the postal case,
the Commission has arrived at the view that, as regards
(a) On the basis of this expert report, it can be
claims arising after 7 July 2006, even if, in the scenario
considered firstly that although there is no overall
championed by the French authorities, it was in error
judicial scheme for organising the closing down of
that a creditor came to consider that the State was
publicly owned establishments, experience shows that
required to guarantee the debts of publicly owned estab
the legislation always provides for transferring the
lishments and of IFP in particular, his error would be
rights and obligations of the establishment that is
legitimate given the above-mentioned factors, and the
to be closed either to the State or to the body that
law could impart effects to it. If, exceptionally, the
is to take over its task ( 104 ).
creditor did not succeed in obtaining the payment of
his claim, he could nevertheless rest assured that there
was no likelihood of the claim being cancelled.
(b) Secondly, there is generally a transfer of ‘rights and
obligations’ (with the term ‘obligations’ undoubtedly
referring to debts), sometimes a transfer of
‘assets’ ( 105 ) (a formulation that would also include
B. Guarantee of the continued existence of IFP
debts). The only example found of the pure and
and/or of its obligations
simple closing down of a publicly owned estab
lishment involved, in any case, the transfer of the
(129) For the reasons already set out in recitals 230 to 250 of
‘debts’ themselves to other entities governed by
decision C 56/2007, to which it refers mutatis mutandis,
public law ( 106 ).
the Commission considers that even if, within a
reasonable period and after the use of the procedures
described in the previous section, the creditor of an
(c) Thirdly, even when the task disappears, the publicly
EPIC does not succeed in obtaining the payment of his
owned establishment’s rights and obligations are, in
claim, he will be secure in the knowledge that the claim
practice, taken over by another body.
will not be cancelled, in contrast to the situation of a
creditor of a company constituted under private law in
( 103 ) Distinction drawn on the basis of the arguments in the thesis of S.
liquidation, who has no guarantee that his claim will
Carpi-Petit, Les successions en droit administratif, PUR, 2006.
have to be met.
( 104 ) To the Commission’s knowledge, there are no instances of legal
texts envisaging the extinction of the debts.
( 105 ) According to Cornu’s Vocabulaire juridique, by ‘assets’ (patrimoine) is
meant a ‘collection of the property and obligations of one and the
same person (that is to say of his duties and charges assessable in
(130) The Commission stresses that there is no public
monetary terms)’.
authority-motivated winding up/closing down of
( 106 ) The Commission expert in the postal case refers to the only
publicly owned establishments in which the rights and
known example of a publicly owned establishment which
obligations of the establishments are also cancelled: in
reached the end of its life: the winding up of the Université
thématique d’Agen (Decree of 15 July 2002, Journal Officielle de
the event of publicly owned establishments being
la République Franaise, 23 July 2002). Article 1 of this Decree
closed down by decision of a public authority – and
provides that the liquidator is responsible for ‘proposing to the
despite the fact that no legislation expressly provides
Minister for Higher Education that the assets, claims, debts and
for this – experience and certain basic principles of
balance of the liquidation account remaining at the end of the
administrative law tend to show that the rights and obli
winding-up period be distributed between Bordeaux I and
gations of publicly owned establishments that are closed
Bordeaux IV universities’. It is thus expressly provided that the
debts of the publicly owned establishment which has been
down as such are always taken over by another body
wound up are to be transferred to other legal persons governed
and, failing that, by the State. In other words, the debts
by public law.

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(d) Fourthly and finally, the practice described in the
— if the actions envisaged above were to be spread out
study is in accordance with codifying instruction
over time, the creditor can be certain that his claim
No 02-060-M95 of 18 July 2002 and the guide to
will not be cancelled, even if IFP were to be subject to
the financial organisation of the creation, conversion
structural development.
and abolition of national publicly owned estab
lishments, cited above ( 107 ), namely that the rights
and obligations of a wound-up EPIC go either to
(134) These special factors are intrinsically linked to IFP’s legal
the State or to the legal entity that will take over
form as a publicly owned establishment and imply that
the establishment’s task.
the State performs the role of guarantor of last resort. It
may therefore be legitimately concluded that IFP benefits
from an unlimited guarantee on the part of the French
(132) Guided by its expert in the postal case, the Commission
State by virtue of its legal form as an EPIC.
concludes that the debts of publicly owned estab
lishments are in practice always transferred to another
legal entity governed by public law in the event of the
(135) The unlimited State guarantee to IFP results in a transfer
closing down of the publicly owned establishment that
of State resources within the meaning of point 2.1 of the
carried out the task concerned. The creditors of these
Guarantees Notice. IFP pays no premium for this
publicly owned establishments, such as IFP, therefore
guarantee. There is thus both an advantage to the estab
have a guarantee that their unpaid claims will not be
lishment and a drain on public resources, as the State
cancelled.
waives the remuneration that normally accompanies
guarantees. In addition, the guarantee creates the risk
of a potential and future claim on the resources of the
State, which could find itself obliged to pay IFP’s
C. Conclusion regarding the existence of a State
debts ( 108 ).
guarantee in favour of IFP
(133) On the basis of the evidence of the existence of a
guarantee ensuring the payment of individual claims
(136) Finally, the State’s unlimited guarantee to IFP is imputable
and the continued existence of IFP’s obligations, the
to the State, because it derives from the combination of
Commission concludes that, from the change in the
IFP’s public-law legal form, principles of national law,
legal form of the publicly owned establishment IFP
and two legislative acts, namely the Law of 25 January
which occurred on 7 July 2006:
1985, now the Commercial Code, and Law No 80-539
of 16 July 1980 and the measures implementing it.
— the creditors of IFP do not encounter the usual
7.1.1.2 The unlimited guarantee does not cover IFP’s
private and public law limitations on the payment
private-law subsidiaries
of a claim in full;
(137) As the Commission already indicated in its decision on
case C 51/2005 ( 109 ), in the opening decision in the
present case, and in section 2 above (‘The IFP group’),
— in recovering the sums owed to them, the creditors of
IFP and its subsidiaries Axens, Beicip-Franlab and
IFP may have recourse to specific procedures auth
Prosernat form an economic group for purposes of
orising the State to force the debtor body to settle the
competition law: the economic integration of the
claim;
publicly owned establishment IFP and its subsidiaries
Axens, Beicip-Franlab and Prosernat is sufficiently
strong to justify such a conclusion, because the
— nowhere does French law give the creditors of IFP to
publicly owned establishment IFP holds 100 % of
understand that IFP could face, for good, a situation
Axens’s capital and 100 % of Beicip-Franlab’s capital
in which it had a shortage of funds;
directly, and 100 % of Prosernat’s capital indirectly; it
exercises control of its subsidiaries through the
presence of IFP managers in the subsidiaries’ decision-
making bodies; it expresses its opinion in particular on
— the budgetary documents give the impression that, if
the strategic planning and the key decisions for the future
there is a shortage of funds, the State could give an
of the subsidiaries; and it is party to exclusive technology
exceptional grant to public sector bodies, of which
transfer agreements which are essential for the pursuit of
IFP is one;
its subsidiaries’ economic activities (agreements that
include reciprocal rights of first refusal ( 110 )) and to
assignment contracts for the provision of premises and
— if the procedures described above do not enable the
( 108 ) General Court, Joined Cases T-204/97 and T-270/97 EPAC v
creditor to obtain satisfaction, he can hold the State
Commission [2000] ECR II-2267, paragraphs 80 and 81.
liable in order to obtain the payment of his claim in
( 109 ) Section 7.1 of decision C 51/2005.
full;
( 110 ) Articles 3-1, c) of the industrial research agreement between IFP
and Axens and the industrial research agreement between IFP and
Prosernat, and Article III.2 of the agreement between IFP and
( 107 ) See recitals 25 (third indent) and 45, and footnote 20.
Beicip-Franlab.

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staff. The precise scope of the State guarantee has
compulsory winding-up procedure under ordinary law to
therefore to be examined in order to establish whether,
which these private-law subsidiaries would be subject in
in the event of default by an IFP subsidiary governed by
the event of cessation of payments (a).
private law, public resources could be mobilised to
compensate its creditors (in other words, whether or
not the unlimited State guarantee covers the economic
a) Compulsory winding up under ordinary law
activities of IFP’s subsidiaries).
(143) Supposing that an IFP subsidiary, a public limited
company, was in default (in other words that it was no
longer able to meet current liabilities out of its available
assets), and that a reorganisation seemed manifestly
(138) UOP did not express an opinion on this point in its
impossible ( 112 ), the procedure under ordinary law ( 113 )
comments. Its arguments are based on market operators’
would lead to it being wound up compulsorily. The
perception of ‘IFP/Axens’ which, in its opinion, is liable
commencement of such proceedings ( 114 ) would be
to confer an advantage on the IFP group in relation to
requested, where appropriate, by a debtor within forty-
suppliers, customers or capital providers. This aspect will
five days at the latest following the cessation of payments
be examined in section 7.1.4 of this decision, which
(unless the debtor had already requested the
investigates the advantages which the IFP group derives
commencement of conciliation proceedings). The
from the measure.
purpose of such a compulsory winding up procedure
would be to end the business activity of the undertaking
or to sell its assets through a general or separate sale of
its interests and property ( 115 ). In the order commencing
the winding up proceedings ( 116 ), the court appoints a
(139) On the other hand, as indicated in recital 47, the French
supervisory judge (juge-commissaire) and, as liquidator, a
authorities deny the existence of a State guarantee for
court-registered administrator (mandataire judiciaire) or
IFP’s subsidiaries, in particular because they have the
another person chosen for competence in this field.
legal form of public limited companies governed by
Within a month of his appointment, the liquidator
ordinary law.
draws up a report on the situation of the undertaking
and then carries out the liquidation operations and the
verification ( 117 ) of claims ( 118 ). The proceeds of the liqui
dation are shared among the creditors according to their
ranking (preferential and mortgage creditors, creditors
(140) In section 7.1.1.1, the Commission showed that the
secured by a special security over movable property,
publicly owned establishment IFP enjoyed an unlimited
unsecured creditors, i.e. without preference, pro rata to
guarantee; it will now consider whether the creditors of
their claims).
IFP’s private-law subsidiaries are covered by (A) a
guarantee of payment of their individual claims or (B)
a guarantee of the continued existence of their obli
(144) Where there are no longer any current liabilities and the
gations in the event of insufficient assets.
liquidator has sufficient sums at his disposal to satisfy the
creditors, or where continuing the winding up has
become impossible due to lack of assets, the court
( 112 ) Cf. Article L. 640-1, subparagraph 1 of the Commercial Code.
A. Creditors of IFP’s subsidiaries have no guarantee
( 113 ) The simplified procedure introduced by the Law of 26 July 2005
of payment of their individual claims
would not be applicable to the subsidiaries Axens, Beicip-Franlab
and Prosernat. As specified in Article L. 641-2 of the Commercial
(141) IFP’s subsidiaries have the legal form of public limited
Code, this simplified procedure is applicable if the debtor’s assets
companies. As legal persons governed by private law
include no immovable property, if the enterprise has employed no
(unlike their controlling shareholder, which is a publicly
more than five employees during the six months prior to the
owned establishment), they are fully subject to the
commencement of the proceedings and if its turnover excluding
tax is no more than EUR 750 000. In the case of compulsory
compulsory administration and winding-up procedures
winding up, these subsidiaries would therefore be subject to the
provided for under ordinary law in France ( 111 ).
ordinary-law procedure, which is summarised in recitals 143 and
144.
( 114 ) Cf. Article L. 640-4 of the Commercial Code.
( 115 ) Cf. Article L. 640-1 of the Commercial Code.
( 116 ) Cf. Article L. 641-1, second subparagraph, of the Commercial
Code.
(142) Before examining whether the controlling shareholder,
( 117 ) Cf. Article L. 641-4, first subparagraph, of the Commercial Code.
the publicly owned establishment IFP, might have a
The second subparagraph of the same Article specifies that
vicarious liability that could be invoked for its
unsecured claims (i.e. those not covered by any particular
subsidiaries (b), an account must be given of the
guarantee) are not verified in principle if it is clear that the
proceeds of the asset sales will be totally absorbed by legal fees
and preferential claims.
( 111 ) It may be worth recalling that Article 2 of the Law of 25 January
( 118 ) All creditors of the IFP subsidiary concerned whose claims
1985, which has become Article L. 620-2 of the Commercial
predated the decision to open the proceedings have to send a
Code, provides that: ‘Administration and winding-up procedures
statement of their claims to the representative of the creditors
shall apply to traders, persons registered with the craftsmen’s
within a period of two months of the publication of the
register, farmers and legal persons governed by private law’
decision ordering the winding up in the Official Bulletin of Civil
(emphasis added).
and Commercial Announcements (BODACC).

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closes the winding up
( 119 ). After closure of the
(147) At the end of the present detailed examination, the
proceedings, similar proceedings cannot be resumed
Commission concludes that in French civil and
against the debtor. In other words, a judgment termi
commercial law, in the event of default by one of the
nating the winding-up proceedings owing to lack of
subsidiaries, (i) its controlling shareholder will not in
assets prevents the creditors from bringing further
principle be liable, except where the controlling share
proceedings against the debtor unless the claim results
holder can be shown to have committed a fault in the
from a criminal conviction or rights attached to the
management of its subsidiary. The plans to reform the
person of the creditor ( 120 ).
Civil Code, recently contemplated then abandoned, which
aimed precisely to extend the principle of vicarious
liability to the relationship between parent and
subsidiaries of a group, confirm a contrario (ii) that such
b) No guarantee mechanism for IFP’s private-law subsidiaries
a principle does not exist at present in French law.
(145) As the Commission expert explained in the postal case,
in some commercial forms of enterprise, and in
particular public limited companies (SAs) or private
limited companies (SARLs), the members are not
i) N o g e n e r a l v i c a r i o u s l i a b i l i t y o f a
normally speaking obliged to pay the debts of the organi
s h a r e h o l d e r f o r i t s s u b s i d i a r y
sation in which they take part to an amount beyond
their initial contribution. IFP’s subsidiaries are public
(148) According to legal theory
( 122 ), the organisation of a
limited companies and fall squarely into this category.
group never by itself gives rise to a chain of liability.
Therefore, in the IFP group, as in any other group of
French law keeps to the principle of personal liability
companies, in the event of default by a subsidiary with
set out in Article 1382 of the Civil Code ( 123 ). Only an
limited liability (in this case a public limited company),
unlawful act which can be imputed to the conduct of the
the liability of the parent (as for any other ordinary
parent could open access to its assets.
shareholder) is confined to the loss of its contributions,
always assuming there are no suretyships, endorsements,
guarantees, letters of intent or letters of comfort ( 121 )
explicitly committing it.
(149) As a preliminary point, the parent of the IFP group is a
legal person governed by public law, namely the publicly
owned establishment IFP, which raises an additional
difficulty: the question has first to be asked which
(146) In view of the fact that IFP and its subsidiaries belong to
court, an administrative court or an ordinary civil or
the same economic group for purposes of competition
criminal court, would have jurisdiction under the
law, it has to be considered whether or not, in the event
French system to establish whether when a legal person
of default on the part of one of these private-law
governed by private law is to be wound up compulsorily,
subsidiaries, the relationship of economic dependency
and is controlled by a legal person governed by public
of the subsidiaries on their parent may in French
law, there is any liability that rests on the controlling
company law automatically trigger the liability of the
entity.
publicly owned establishment IFP, and consequently
mobilise public resources, since the State is responsible
for the bulk of IFP’s financing and has implicitly guar
anteed it as a publicly owned establishment.
(150) As regards proceedings for liability because of insufficient
assets ( 124 ), the Court of Conflicts of Jurisdiction (Tribunal
( 119 ) Cf. Articles L. 643-9 and following of the Commercial Code.
( 120 ) There are a few exceptions to the principle that proceedings
des conflits) for long considered that the ordinary courts
against the debtor may not be resumed, in particular in the case
had jurisdiction where the legal person governed by
of 1) personal bankruptcy of the debtor (faillite personnelle); 2) the
public law was manager de jure ( 125 ), and that the admin
debtor being found guilty of fraudulent or negligent bankruptcy
istrative courts had jurisdiction where the legal person
(banqueroute); 3) previous compulsory winding up proceedings
governed by public law was manager de facto ( 126 ).
closed for lack of assets, less than five years before the opening
However, it seems that the jurisdiction of the adminis
of the current proceedings; 4) fraud in dealings with one or more
creditors (the court then authorises the resumption of individual
trative and the ordinary courts is now distinguished by
proceedings by any creditor against the debtor). Finally,
reference to the nature of the service provided: whether it
proceedings may be resumed after closure on the grounds of
is an administrative public service, or an industrial or
insufficiency of assets if it appears that assets were not realised
commercial activity.
or that actions in the interests of the creditors were not taken
during the proceedings.
( 121 ) According to Mestre (Lamy Sociétés Commerciales, 2003, No 1914),
( 122 ) B. Grimonprez, ‘Pour une responsabilité des sociétés mères du fait
a letter of intent is defined as ‘a document sent by a parent
de leurs filiales’, Revue des sociétés, 2009, p. 715, point 8.
company to its subsidiary’s creditor bank in which the parent
( 123 ) This is the general provision according to which a person must
company, in any of a number of ways, provides the bank with
repair any damage caused through that person’s fault to another.
assurances regarding commitments given to the bank by the
( 124 ) Cf. Article L. 651-2 of the Commercial Code.
subsidiary’. According to Cozian, Viandier, and Deboissy, Droit
( 125 ) Court of Conflicts of Jurisdiction, Commissaire de la République du
des Sociétés, Litec, 16th edition, No 1992 et seq.), ‘by signing the
Loiret v TGI d’Orléans, 2 July 1984, Recueil, p. 449; AJDA
letter of intent, the parent company promises the creditor to
1984.562, concl. Lateboulle.
ensure that the subsidiary is in a position to meet its
( 126 ) Court of Conflicts of Jurisdiction, Préfet de la Loire v Tribunal de
commitments’. According to the information sent by the French
commerce de Saint-tienne, 23 January 1989, Recueil, p. 291; D.
authorities, the commitments of IFP’s private-law subsidiaries are
1989.367, concl. Ms F. Flipo; D. 1898.370, note P. Amselek
not explicitly guaranteed by the publicly owned establishment IFP.
and F. Derrida.

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(a) Where an administrative public service is involved,
(emphasis added). In the case before it the Court of
the old rule, based on de jure or de facto
Conflicts of Jurisdiction ruled that the activities
management, seems to have been abandoned by
conducted by a public limited company with a
the Court of Conflicts of Jurisdiction ( 127 ) in its
board of directors and supervisory board (SEM
Département de la Dordogne decision ( 128 ), where the
Olympique d’Alès en Cévennes) were not of an
Court decided that the administrative courts had
administrative public service nature, on the basis of
jurisdiction because the service involved was an
two considerations: the company’s object ( 131 ) and its
administrative public service, regardless of whether
financing ( 132 ).
the legal person governed by public law was the de
jure or de facto manager of the person governed by
private law that actually performed the public service
task. The Court recalled that in line with its judgment
in Blanco ( 129 ) ‘the liability which may lie with the
State or with other legal persons governed by
(151) As regards more specifically the public limited companies
public law by reason of damage attributed to their
Axens, Beicip-Franlab and Prosernat, which are
administrative public services is governed by public law’
subsidiaries governed by private law controlled by the
(emphasis added), and that the situation was
publicly owned establishment IFP, it emerges from the
otherwise only where the law expressly so
information contained in the file, especially that recalled
provided; the Court went on to find that in Law of
in recital 159, that their object is economic and not
25 January 1985 on compulsory administration and
administrative ( 133 ). In addition, the bulk of the
winding-up procedures, (now codified in Articles L.
resources of these companies comes from operating
624-3 et seq. of the Commercial Code) the legislature
proceeds generated by their economic activities and not
had not, ‘by way of exception to the principles
from public funding. Finally, it should be noted that
governing the liability of public-law persons,
these subsidiaries of a publicly owned establishment
intended to confer jurisdiction on the ordinary
were set up as commercial companies on the initiative
courts for determining the civil liability of the State
of a legal person governed by private law ( 134 ) (and not
or other legal persons governed by public law in the
of a legal person governed by public law, because IFP
performance of a duty to provide an administrative public
was converted into an EPIC only on 7 July 2006).
service’ (emphasis added).
Therefore the industrial and commercial nature of the
activities of Axens, Beicip-Franlab and Prosernat seems
undeniable and, in the event of compulsory winding
up by the court, jurisdiction to hear any case concerning
liability against the publicly owned establishment IFP
would undoubtedly lie with the ordinary courts.
(b) Conversely, where an industrial or commercial
activity is concerned, jurisdiction to determine the
civil liability of a legal person governed by public
law controlling a private person in liquidation
(152) It must therefore be considered in what circumstances
clearly rests with the ordinary courts. In its
the controlling shareholder may be held liable in the
judgment in Société d’conomie Mixte Olympique
light of the case-law of the Court of Cassation. In
d’Alès en Cévennes (
order to extend compulsory winding-up proceedings

130 ), the Court of Conflicts of Juris
diction held in particular that ‘although jurisdiction
initiated in respect of a specific person (the subsidiary)
to determine the civil liability of the State or of other
so as to include another legal person (the parent), the
legal persons governed by public law in respect of
conditions laid down are very strict. Confronted by
the performance of a duty to provide an adminis
trative public service rests with the administrative
( 131 ) The object of SEM Olympique d’Alès en Cévennes was in particular
courts, such proceedings come under the jurisdiction
to organise sports events for which an admission fee would be
charged, the recruitment and training of players, and the
of the ordinary courts where it is shown that the State
promotion, by any appropriate means, of the town’s professional
or the legal person governed by public law is liable in
team.
respect of an industrial or commercial activity; there is
( 132 ) The financing of SEM Olympique d’Alès en Cévennes was ensured
no necessity to determine whether the public
largely from the proceeds of spectators’ entry tickets, advertising,
authority acted as manager de jure or de facto’
sponsoring and subsidies from the National Football League and
the French Football Federation.
( 133 ) In the case of Axens, marketing of catalysts and technologies for
( 127 ) Submissions of Government Commissioner, Emmanuel Glaser, in
the refining and petrochemicals industries; in the case of Beicip-
Case CE (3/8 SSR) Département de la Dordogne, 5 December 2005,
Franlab, publication and distribution of specialised software and
req. No 259748; see in particular ‘La faillite d’un comité
consultancy and advisory services; and in the case of Prosernat,
d’expansion économique entrane-t-elle la responsabilité du dépar
marketing of gas treatment and sulphur recovery plants and related
tement qui l’a créé?’, Bulletin Juridique des Collectivités Locales
services.
No 2/06, p. 138-143.
( 134 ) As a trade body, IFP did not have the character of a publicly
( 128 ) Court of Conflicts of Jurisdiction, Comité d’expansion de la Dordogne
owned establishment, but of a legal person governed by private
v Département de la Dordogne, 15 November 1999, Rec., p. 479;
law (Council of State, 5/3 SSR, 7 December 1984, 16900 22572,
AJDA 1999.992, chron. Ms P. Fombeur and M. Guyomar.
published in Recueil Lebon). This interpretation was confirmed by
( 129 ) Court of Conflicts of Jurisdiction, 8 February 1873, Rec. 1er supplt
an opinion delivered by the Finance Section of the Council of State
61, concl. David; GAJA, 15th edition, No 1.
in 1997, following a referral by the Minister for the Economy,
( 130 ) Court of Conflicts of Jurisdiction, SEM Olympique d’Alès en
Finance and Industry (Finance Section – Opinion No 360 991 of
Cévennes, 20 November 2006, Rec., concl. Stahl.
26 August 1997).

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a defaulting subsidiary, the victims of its actions have to
disorder in the accounts that would justify the unification
prove misconduct on the part of the parent in order to
of the assets’ ( 141 ). It therefore seems to be particularly
obtain redress; this may in particular take the form of (α)
difficult to hold a parent company liable for the actions
denial by the parent of the legal personality of its
of one of its subsidiaries on the basis of the inseparability
subsidiary, or (β) mismanagement of the controlled
of their assets ( 142 ), with the level of proof required by
company.
the Court of Cassation being extremely high.
α) Denial by the parent of the legal personality of the
(156) In the present case, it has to be pointed out that the
subsidiary
Commission has already found that ‘IFP and the
subsidiaries concerned are distinct legal entities and
(153) In its judgments the Court of Cassation has established
their accounts are separate’
( 143 ). In addition, the
that the liability of a parent company may extend to the
agreements signed between IFP and its subsidiaries,
actions of its subsidiaries in two exceptional cases: firstly,
especially the agreements for exclusive technology
where the assets of the subsidiaries are inseparable from
transfer or the assignment of staff ( 144 ), do not produce
those of the parent (confusion du patrimoine), and
general disorder in the accounts such as to justify unifi
secondly, where the subsidiaries are fictitious legal
cation of the assets within the meaning of the case-law of
persons ( 135 ).
the Court of Cassation, since each service is specifically
entered in the respective balance sheets of each entity of
the IFP group, as will be established in particular in
sections 7.1.4 and 7.3.
(154) The concept of inseparable assets
( 136 ) generally applies to
a situation where the accounts of the two separate legal
entities are such that it is impossible to determine to
which of them a specific asset or liability belongs.
(157) To show that a subsidiary is a ‘fictitious legal entity’ it
However, to show that assets are inseparable it is not
must be established that the constitution of the
enough that there should be links, even close links,
subsidiary is flawed for lack of intention to cooperate
between the companies of the group. Likewise, the fact
(affectio societatis) so that the subsidiary does not have a
that partners or managers or even the registered
real existence as a company. The Court of Cassation ( 145 )
office ( 137 ) are identical does not by itself mean that the
considers that there is a fictitious company where the
assets are inseparable. The fact that relations within the
legal person against which the proceedings are brought
group are formally defined in agreements between the
exists only apparently, by reason of a lack of any activity
parent company and its subsidiaries usually suffices to
separate from that of the natural or legal person directing
rule out any possibility of inseparability of assets ( 138 ).
the business ( 146 ).
(155) In two recent cases, Metaleurop ( 139 ) and AOL Liberté ( 140 ),
(158) On the basis of publicly available information ( 147 ), the
the Court of Cassation seems actually to have tightened
Commission also notes that the publicly owned estab
its approach to the conditions for the extension of
lishment IFP and Axens, Beicip-Franlab and Prosernat
proceedings to include the parent company of a group.
have neither the same contact information nor the
Even very intensive integration of the group companies
same business premises:
does not necessarily entail inseparability of assets.
According to the legal literature, ‘Neither the liquidity
and exchange agreements between the two entities, nor
the exchanges of staff, nor the advances of funds by the
(a) The publicly owned establishment IFP is registered in
parent company, nor the parent company’s control of
the Nanterre Trade and Companies Register
the management of the subsidiary imply a general
( 141 ) See footnote 117.
( 135 ) Cf. Article L. 621-2, second subparagraph, of the Commercial
( 142 ) P. Roussel Galle, note cited above; P. Delmotte, ‘Les critères de la
Code: ‘At the request of the administrator (court-registered or
confusion de patrimoines dans la jurisprudence de la Cour de
otherwise) or the public prosecution service, or by the court’s
cassation’, RJDA 2006-6. 539, No 14.
own motion, proceedings that have commenced may be
( 143 ) Cf. recital 132 of Decision C 51/2005.
extended to one or more other persons where their assets are
( 144 ) And hence the fact, mentioned by UOP in its comments, that the
inseparable from those of the debtor or where the legal person is
staff of Axens and IFP sometimes visit their customers together.
fictitious. The court that has commenced the initial proceedings
( 145 ) Com. 13 October 1998, Bull. Joly 1999. 58, note P. Seerlooten.
shall remain competent for this purpose’ (emphasis added).
( 146 ) Therefore, according to the authors of the parliamentary report
( 136 ) B. Grelon and C. Dessus-Larrivé, ‘La confusion de patrimoines au
cited in recital 165, a company established for the purpose of
sein d’un groupe’, Rev. sociétés 2006. 281, No 3.
settling the debts of another company which is the subject of
( 137 ) See in particular recital 158.
collective proceedings, whose activity it has continued in the
( 138 ) Com. 16 October 2001, Act. proc. coll. 2001-20, No 256; Com.
same premises, with the same managers, the same clientele and
8 January 2002, Act. proc. coll. 2002-6, No 70.
the same franchise contract, constitutes under the case-law a
( 139 ) Court of Cassation, Commercial Division, Metaleurop, 19 April
fictitious company, which justifies the extension of the compulsory
2005, No 05-10094, D. 2005. AJ. 1225, comments A. Lienhard
administration procedure.
and summary 2013, comments F.-X. Lucas; JCP E 2005. 721, note
( 147 ) In particular from the following Internet sites: http://www.
B. Rolland and chron. 1274, comments P. Petel.
ifpenergiesnouvelles.fr; http://www.axens.net/; http://www.beicip.
( 140 ) Com. 10 January 2006, Rev. sociétés 2006. 629, note P. Rousel
com/index.php/eng; http://www.prosernat.com/en/, consulted on
Galle.
28 June 2011.

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(‘RCS’) under number B 775 729 155 and its
especially as the Court of Cassation is very exacting when
registered office is located in Rueil-Malmaison ( 148 ).
it comes to categorising a legal person as ‘fictitious’ ( 155 ).
IFP owns two establishments in France, in
Solaize ( 149 ) and Pau ( 150 ) respectively.
(b) Axens is registered in the Nanterre RCS under
(a) Axens, set up in 2001, engages in an economic
number B 599 815 073 and its registered office is
activity in the market for catalysts and technologies
also located in Rueil-Malmaison, but at a different
for the refining and petrochemicals industries, for
address from its parent (
which it employs more than 600 people and

151 ). Its operating centres
are also located in different sites from those of its
through which it achieves an annual turnover of
parent, mostly outside France: in the United States, in
approximately EUR 300 million.
Houston, Texas; Princeton, New Jersey; Savannah,
Georgia; and Calvert City, Kentucky; in Canada, in
Brockville, Ontario: in China, in Beijing; in Japan,
in Tokyo; in India, in New Delhi; in Bahrain; and
in Russia, in Moscow.
(b) Beicip-Franlab, set up in 1967, engages in a real
activity in the publication and distribution of explo
ration-deposits software and in consultancy and
advisory services. This activity involves over 100
(c) Beicip-Franlab is registered in the Nanterre RCS under
employees and provides an annual turnover of
number B 679 804 047, and its registered office is
approximately EUR 40 million.
also located in Rueil-Malmaison, but at a different
address from its parent and Axens ( 152 ). It has
subsidiaries and offices in a large number of
countries in the world, in particular in Bahrain; in
Abu Dhabi; in Tripoli in Libya; in Kuala Lumpur in
Malaysia; in Houston, Texas, in the United States; in
Villahermosa in Mexico; in Rio de Janeiro in Brazil;
(c) Prosernat, acquired in 2001, provides consultancy
and in Moscow in Russia.
and other services and supplies gas treatment and
sulphur recovery plants. The company employs
about 70 people to carry out this activity and has
a turnover of approximately EUR 50 million.
(d) Prosernat is registered in the Nanterre RCS under
number B 315 251 330 and its registered office is
located in Puteaux ( 153 ). The company states ( 154 ) that
it is present in some twenty countries throughout the
world, including in South America (Argentina, Brazil,
(160) Leaving aside the question of mismanagement, which will
and Venezuela), Europe (United Kingdom, Italy, and
be examined in recitals 161 to 164, it is clear from the
Norway), North Africa (Algeria and Egypt), the Gulf
above that the extremely limited cases in which the case-
countries (Saudi Arabia, United Arab Emirates,
law gives a parent company vicarious liability for its
Kuwait, Oman, and Qatar), Iran, Russia, the
subsidiaries – the subsidiary is a fictitious legal entity
Commonwealth of Independent States and South-
or the assets of the subsidiary and the parent company
East Asia.
are inseparable – are clearly not fulfilled in this case.
Consequently, the Commission considers that if IFP’s
subsidiaries Axens, Beicip-Franlab and Prosernat were to
be wound up the conditions for automatically holding
(159) In addition, in this case, the economic activities engaged
IFP liable would not be met.
in by each of the subsidiaries are real, so that the
companies cannot reasonably be classified as fictitious,
( 148 ) Address: 1 & 4, avenue de Bois-Préau, 92852 Rueil-Malmaison
Cedex – France.
( 149 ) Address: Rond-point de l’échangeur de Solaize, BP 3, 69360
β) Liability for mismanagement of the subsidiary by the parent
Solaize – France.
( 150 ) Address: Hélioparc Pau-Pyrénées, 2, avenue du Président Pierre
(161) A fault in the exercise of supervision over a subsidiary
Angot, 64000 Pau – France.
may traditionally render the parent company liable ( 156 ).
( 151 ) Address: 89, boulevard Franklin Roosevelt – BP 50802, 92508
Where the parent has committed a fault in the
Rueil-Malmaison Cedex – France.
( 152 ) Address: 232, Avenue Napoléon Bonaparte – P.O. Box 213,
92502 Rueil-Malmaison – France.
( 155 ) Court of Cassation, Commercial Division, 18 December 2007,
( 153 ) Address: 100 -101, Terrasse Boieldieu, 92800 Puteaux – France.
No 06-14093.
( 154 ) Information consulted on 28 June 2011 on the following Internet
( 156 ) P. Delebecque, ‘Groupes de sociétés et procédures collectives:
site: http://www.prosernat.com/en/contactus/zoom_image_
confusion de patrimoines et responsabilités des membres du
img20080715219.php.
groupe’, Rev. proc. coll. 1998/2, p. 129, see in particular No 14.

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supervision that it has to exercise over the management
such fault, and above all of a causal link between this
of its subsidiaries, ‘especially in the case of groups of
and the damage suffered y reason of the conduct of the
companies, the case-law allows the parent company to
subsidiary ( 166 ).
be held liable’ ( 157 ). According to the literature, misman
agement by a parent company which has acted as de jure
or de facto manager of a subsidiary in difficulty may
render it liable if the subsidiary is wound up ( 158 ): the
parent company may be held liable as a shareholder of
(163) In any event, it is clear from the above that legal actions
the subsidiary ( 159 ) if faults that originated the controlled
of this case are never actions seeking the enforcement of
company’s difficulties can be imputed to it ( 160 ).
a guarantee, since they are always based on a fault
committed by the parent company. Therefore such
actions do not demonstrate the existence of a general
principle of vicarious liability of a parent company for
its subsidiaries, a principle which would be contrary to
the principle of the limitation of a shareholder’s liability
to the initial contribution made to the company, apart
from cases where the company is a fictitious entity or
where its assets are inseparable form those of its parent
company, which can be ruled out here.
(162) Ordinary law therefore provides for the liability of
managers in relation to their company, its shareholders
or its creditors ( 161 ). In the case of a group, the creditors
of a subsidiary which has suspended payments will try to
(164) To sum up, it is clear from the case-law of the Court of
demonstrate that the parent company has assumed the
Cassation that the principle of liability of a parent
role of manager of the subsidiary, de jure or de
company for mismanagement of a subsidiary does not
facto ( 162 ). Liability of a parent for its subsidiary on the
in any way provide a mechanism equivalent to a
basis of a fault committed by the parent is therefore
guarantee.
provided for in particular by the law governing collective
proceedings ( 163 ), and more specifically in the context of
actions for liability for insufficient assets
( 164 ), on
condition that the parent has acted as the manager ( 165 )
of its subsidiary. However, for the parent company to be
ii) R e c e n t p l a n s f o r r e f o r m o f v i c a r i o u s
held liable for fault, it is necessary to provide proof of
l i a b i l i t y
(165) According to the findings of a recent parliamentary
( 157 ) Parliamentary report cited above, p. 63.
information report ( 167 ), in the present state of the law
( 158 ) B. Grimonprez, ‘Pour une responsabilité des sociétés mères du fait
de leurs filiales’, cited above, point 10.
it appears, therefore, that ‘the approaches taken in the
( 159 ) Ibid., point 11.
case-law throw into relief the obstacle which legal personality
( 160 ) D. Schmidt, ‘La responsabilité civile dans les relations de groupes
places in the way of the assignment of liability’ (emphasis
de sociétés’, Rev. sociétés 1981, p. 725.
added) ( 168 ).
( 161 ) Liability in relation to third parties can in theory be incurred on
the basis of Articles L. 223-22 and L. 225-251 of the Commercial
Code.
( 166 ) In the specific case of environmental damage, in view of the crucial
( 162 ) As regards de facto management, it should be pointed out that a
nature for the community of environmental claims, and the risk of
parent company will not systematically be considered a de facto
their non-enforcement, Article L. 512-17 of the Environmental
manager, and the court considering the particular case will require
Code concerning the rehabilitation of sites being taken out of
precise actions which can be imputed to the parent company and
operation was recently amended in order to allow action to be
which show that, without legal entitlement, it has directly or
taken against the parent company for fault resulting in an insuf
indirectly carried out a positive and independent activity in the
ficiency of assets preventing the subsidiary from meeting its
administration of the subsidiary; see in particular Com. 9 May
environmental rehabilitation obligations. As amended by Law
1978, D. 1979. 419, note M. Vasseur. See also J.-L. Rives-
No 2010-788 of 12 July 2010 on national commitment to the
Langes, ‘La notion de dirigeant de fait’, D. 1975. chron. 41;
environment (Article 277), Article 512-17 of the Environmental
D. Tricot, ‘Les critères de la gestion de fait’, Dr. et patr. January
Code provides: ‘Where the operator is a subsidiary within the
1996, p. 24, cited by B. Grimonprez, cited above, point 13.
meaning of Article L. 233-1 of the Commercial Code and
( 163 ) Apart from the law on collective procedures, the Court of
compulsory winding up has been initiated or ordered against it,
Cassation, Commercial Division, 26 March 2008, No 07-11.619,
the liquidator, the prosecution service or the representative of the
Ademe v. Elf Aquitaine, recently found that while a parent company
State in the département may ask the court which has initiated or
that acted alongside its subsidiary might incur fault-based liability,
ordered the compulsory winding up to find that the parent company
a parent was not obliged, by the mere fact of its participation in its
has committed a serious fault which has contributed to the subsidiary
subsidiary, to finance the subsidiary in order to enable it to meet
having insufficient assets and, if it is shown that such a fault has been
its obligations (even supposing the subsidiary was responsible for a
committed, to make the parent company liable for all or part of the
public service, so that there might be a threat to the public
financing of the rehabilitation measures of the site or sites to be taken
interest).
out of operation’ (emphasis added). As regards the causal rela
( 164 ) Cf. Article L. 651-2 of the Commercial Code.
tionship, see: Paris, 15 January 1999, Bull. Joly 1999. 626,
( 165 ) The authors of the parliamentary report cited above state, for
§ 137, note B. Saintourens.
example, that at the time of the Metaleurop judgment, handed
( 167 ) Information report No 558 (2008-2009) on civil liability, by
down by the Court of Cassation on 19 April 2005, the Court’s
Mr Alain Anziani and Mr Laurent Béteille, drawn up on behalf
Documentation and Study Service indicated that ‘certain conduct
of the Legal Affairs Committee, submitted to the Senate on 15 July
… on the part of a parent company in relation to its subsidiary
2009 (available at the Senate Internet site: http://www.senat.fr/rap/
could as a matter of fact constitute mismanagement such as to
r08-558/r08-5581.pdf).
result in insufficient assets at the subsidiary’.
( 168 ) Parliamentary report cited above, p. 62.

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(166) This obstacle seems to be so critical that three has
of the person responsible, but rather to proof of an act
recently been debate in France on the advisability of a
that might have rendered the direct author personally
reform of the Civil Code which would extend vicarious
liable if he had not acted under the control of
liability to situations of economic dependence ( 169 ) (with
others’ ( 173 ).
special reference to the relationships of the subsidiaries of
a group with their parent company). Certain consumer
associations ( 170 ) mentioned in the parliamentary report
cited above seem in particular to deplore the fact that the
(169) The second paragraph of Article 1360 of the preliminary
technique of converting units into subsidiaries allows
draft defines this principle in the case of the liability of
certain entities, in the event of later litigation involving
the parent company of a group of companies in relation
the liability of a subsidiary, to rely on the legal parti
to its subsidiaries:
tioning of the companies of the group even though in
their commercial dealings they have presented the image
of a group of perfectly integrated companies offering a
range of services.
‘Article 1360
… Likewise, a person shall also be liable where he
controls the economic activity or assets of a professional
(167) Article 1355 of the Catala preliminary draft ( 171 ) recently
person who is in a situation of dependence even though
proposed the introduction of a new basis for vicarious
acting for his own account, if the victim shows that the
liability which would call into question the principle of
act giving rise to the damage is related to the exercise of
the legal autonomy of subsidiaries:
control. This shall apply in particular to parent
companies in respect of damage caused by their
subsidiaries, and to licensors for damage caused by
their licensees’ (emphasis added.)
‘Article 1355
(170) It is clear from the above, a contrario, that in the present
A person shall be liable automatically for the damage
state of French law, vicarious liability of the parent
caused by those whose way of life he regulates, or
company for its subsidiary requires proof that the
whose activity he organises, directs or controls in his
parent committed a fault affecting the subsidiary.
own interest …’
(171) As regards foreseeable developments in French positive
law, the Commission notes that the reform contemplated
on this point seems to have been abandoned: in the
(168) The comments made by the authors of this preliminary
context of the parliamentary report cited above, the
draft clarify the innovations proposed with regard to
working party of the Senate Legal Affairs Committee
non-contractual vicarious liability. The legislation would
declared itself against any legislative provision ‘estab
add as a possible basis ‘the act of directing and orga
lishing the existence of strict liability by reason of a
nising the activity of others in the personal interest of the
state of economic dependence’ (Recommendation
person exercising such control’ ( 172 ), which would make
No 19). Moreover, a reform along these lines no longer
quite a profound change to the present legal position,
seems to be on the agenda: in particular, it does not
especially as the liability would henceforth be strict: it
appear in Bill No 657 on the reform of civil liability ( 174 )
would not be ‘subject to proof of a fault on the part
presented during the ordinary session 2009-2010
(registered at the office of the President of the Senate
( 169 ) According to the first paragraph of Article 1384 of the Civil Code:
on 9 July 2010).
‘A person is liable not only for the damage he causes by his own
act, but also for that which is caused by the acts of persons for
whom he is responsible, or by things which are in his custody.’
The authors of the parliamentary report cited above note that the
courts have been creative in introducing systems of liability which
(172) In conclusion, whereas the State is liable in the event of
are not provided for by any legislation, covering liability arising
default of a publicly owned establishment, by a
from things, vicarious liability, or liability for abnormal neigh
mechanism which, especially in view of its automatic
bourhood disturbance. So far, however, case-law has not estab
character, has all the features of a guarantee, there is in
lished a vicarious liability of a parent company for the actions
of its subsidiaries.
the current state of French law no implicit and automatic
( 170 ) The associations Consommation, Logement et Cadre de Vie (CLCV)
liability of parent companies for the actions of
and UFC-Que choisir, see parliamentary report cited above, p. 62
subsidiaries governed by private law under compulsory
and p. 65.
winding up.
( 171 ) Report to the Minister for Justice, presented on 22 September
2005: ‘Preliminary draft reform of the law of obligations
(Articles 1101 to 1386 of the Civil Code) and the statute of
( 173 ) Catala preliminary draft cited above, p. 177.
limitations (Articles 2234 to 2281 of the Civil Code)’.
( 174 ) Available online from the Senate Internet site: http://www.senat.fr/
( 172 ) Catala preliminary draft cited above, p. 166.
leg/ppl09-657.pdf.

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B. Creditors of IFP’s subsidiaries have no guarantee
actions of IFP’s subsidiaries: they must first show that
of the continued existence of the subsidiaries
there has been a fault on the part of the publicly
and/or their obligations
owned establishment, which means that any liability
is not automatic and cannot be likened to a
(173) On the basis of the above, the Commission concludes
guarantee mechanism.
that if, as public limited companies, the IFP subsidiaries
were to be wound up and their existence terminated,
their rights and obligations would disappear at the
same time. Admittedly their controlling shareholder, the
publicly owned establishment IFP, would have the option
(177) The Commission emphasises that it has already come to
of a prior capital injection (
similar conclusions in other cases in which it took the

175 ) to avoid their winding up.
Such a capital contribution could then ensure the
view that a public limited company wholly owned by a
continuation the claims against the subsidiaries held by
publicly owned establishment, or by the State itself, was
third parties.
not covered by the unlimited public guarantee enjoyed
by its shareholder. As regards companies owned directly
by the State, the Commission considered, as early as
2003, in the EDF case ( 176 ), that the conversion of an
(174) However, that would be a strategic choice on the part of
EPIC into a public limited company under ordinary law,
the publicly owned establishment and not a legal obli
which made it subject to the ordinary law on bankruptcy,
gation automatically imposed on it. Moreover, such a
had the effect of withdrawing the guarantee enjoyed by
choice would be subject to the strict framework of
the undertaking up to that time. This approach was
State aid law: if the capital injection was not the
recently confirmed when La Poste was transformed into
behaviour of a private investor operating under normal
a public limited company wholly owned by the
market economy conditions, it would have to be notified
State ( 177 ). As regards companies held by publicly
to the Commission by the French authorities and await
owned establishments, the Commission acknowledged,
the Commission’s prior vetting (and approval).
in the decision cited above relating to the setting up of
La Banque Postale, that the fact that the subsidiary had
the legal form of a public limited company wholly
(175) The Commission therefore concludes that in the event of
owned by a publicly owned establishment (namely La
winding up, the creditors of IFP’s subsidiaries have no
Poste, which at that time was a publicly owned estab
certainty regarding the settlement of their claims.
lishment with a form equivalent to that of an EPIC) was
by itself sufficient to rule out the possibility of an
unlimited guarantee to the subsidiary ( 178 ).
C. Conclusion regarding the lack of a State guarantee
covering the private-law subsidiaries of the
publicly owned establishment IFP
7.1.2 ECONOMIC NATURE OF THE ACTIVITIES OF THE
(176) On the basis of the above, the Commission concludes
PUBLICLY OWNED ESTABLISHMENT IFP THAT ARE
that, in contrast to the creditors of the publicly owned
COVERED BY THE UNLIMITED GUARANTEE
establishment IFP, the creditors of the private-law
subsidiaries of the IFP group do not have a guarantee
(178) As the Commission already pointed out in its previous
either of the payment of their individual claims or of the
decisions relating to the publicly owned establishment
continued existence of these companies in the event of
IFP ( 179 ), under its constitution, IFP performs three tasks:
winding up. These private-law subsidiaries are not
covered by the unlimited guarantee enjoyed by IFP by
virtue of its legal form as a publicly owned estab
lishment. The Commission bases its analysis on the fact
that the creditors of the IFP subsidiaries governed by
— research and development in the fields of oil and gas
private law:
prospecting and refining and petrochemicals tech
nologies,
(
— remain subject to the ordinary-law procedures

176 ) Commission Decision 2005/145/EC of 16 December 2003 on the
State aid granted by France to EDF and the electricity and gas
regarding the administration and winding up of
industries (OJ L 49, 22.2.2005, p. 9). See in particular recital
undertakings;
135 of the decision: ‘The Commission considers that making
EDF subject to the ordinary law on bankruptcy will have the effect
of withdrawing the unlimited State guarantee which it enjoyed’
(emphasis added.)
— are unable, in the current state of French law, to rely
( 177 ) See Article 2 of decision C 56/2007: ‘the effective conversion of La
on an automatic liability of the controlling share
Poste into a public limited company will result in the unlimited
holder of the subsidiaries, the publicly owned estab
guarantee which La Poste enjoys being withdrawn’ (emphasis
lishment IFP, and hence of the French State, for the
added.)
( 178 ) The Commission refers to footnote 3 to decision N 531/2005
cited above, where it said that as a public limited company,
( 175 ) In this respect, the Commission points out that the recapitalisation
Banque Postale would be subject to the provisions of ordinary
of the subsidiary Prosernat, mentioned by the French authorities in
law, and especially Law No 85-98 on the compulsory adminis
the observations referred to in recital 46, took place in March
tration and winding-up of undertakings, and consequently would
2006, i.e. before the change in IFP’s legal form on 7 July 2006,
not enjoy an unlimited State guarantee.
and therefore occurred at a time when IFP was not yet covered by
( 179 ) See recital 18 of decision C 51/2005, and recital 6 of the opening
an unlimited State guarantee.
decision.

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— the training of engineers and technicians,
— the conduct of independent R&D for more
knowledge and better understanding, including
collaborative R&D;
— the provision of sector information and documen
tation.
— the dissemination of research results.
(184) It furthermore considers that technology transfer
(179) As explained in recital 31, the French authorities consider
activities (licensing, spin-off creation or other forms of
that the publicly owned establishment IFP is a research
management of knowledge created by the research
organisation assigned a three-fold task in the general
organisation) are of a non-economic character if these
interest (research, training and documentation).
activities are of an ‘internal nature’ ( 188 ) and all income
from these activities is reinvested in the primary activities
of the research organisations.
(180) The Commission likewise takes the view that in the light
of the tasks assigned to it IFP can be termed a ‘research
(185) On the other hand, the Commission considers that
organisation’ within the meaning of point 2.2.(d) of the
research carried out under contract with industry, the
Community framework for State aid for research and
renting out of research infrastructure and consultancy
development and innovation
( 180 ) (‘the R&D&I
work constitute economic activities ( 189 ).
Framework’): its primary goal is to conduct fundamental
research ( 181 ), industrial research ( 182 ) or experimental
development ( 183 ) and to disseminate their results by
(186) In the case under examination, the unlimited guarantee
way of teaching, publication or technology transfer.
conferred on IFP by virtue of its EPIC status covers both
its non-economic activities (which in itself does not give
rise to any problem under the law governing State aid)
and its economic activities, which are of two types.
(181) In accordance with the Court of Justice case-law
( 184 ), the
public financing of the activities carried out by a research
organisation (including their cover by an unlimited
(187) Regarding the first type of economic activity, although, as
public guarantee) may ( 185 ) lead to the granting of State
indicated in recital 31, the majority of IFP’s activities are
aid provided that the organisation in question is engaged
non-economic, the French authorities acknowledged in
in an economic activity, i.e. an activity consisting of
their letters dated 13 January and 16 July 2010 that
offering goods and services on a given market ( 186 ),
outside the exclusive field of activity of its subsidiaries
regardless of its legal status and the way in which it is
IFP provided services consisting essentially in renting out
financed.
infrastructures and premises, providing staff and
supplying legal services to its the subsidiaries, and
contract research services for third parties and its
subsidiaries. As pointed out in recital 185, such activities
(182) In its decision-making practice the Commission has
are economic activities as generally defined by the
clarified what it considers to be economic and non-
Commission.
economic activities engaged in by research organi
sations ( 187 ).
(188) Regarding the second type of economic activity, tech
nology transfers such as licensing, spin-off creation or
other forms of management of knowledge created by
(183) The Commission takes the view that the primary
the research organisation are in principle non-
activities of research organisations are normally of a
economic, as recalled in recital 184, if they are of an
non-economic character, notably:
internal nature and if the profits they generate are
entirely reinvested in public research. In the present
case, however, as the Commission found in decision
— education for more and better skilled human
C 51/2005, the very specific relationships between the
resources;
publicly owned establishment IFP and certain of its
subsidiaries governed by private law are such that
‘certain of IFP’s activities fall outside the scope of its
( 180 ) OJ C 323, 30.12.2006, p. 1.
non-economic activities insofar as they give rise to
( 181 ) As defined in point 2.2(e) of the R&D&I Framework.
( 182 ) As defined in point 2.2(f) of the R&D&I Framework.
commercial exploitation by its subsidiaries’ ( 190 ). The
( 183 ) As defined in point 2.2(g) of the R&D&I Framework.
Commission came to the conclusion that the subsidiaries
( 184 ) Court of Justice in Case C-41/90 Hoefner & Elser [1991] ECR
concerned could not be considered autonomous from
I-1979, paragraph 21, and Case C-309/99 Wouters [2002] ECR
their parent in so far as their activities formed part of
I-157, paragraphs 46 et seq.
( 185 ) Provided the other conditions laid down in Article 107(1) TFEU
are also met.
( 188 ) See footnote 25 to the R&D&I Framework: ‘By internal nature, the
( 186 ) Case 118/85 Commission v Italy [1987] ECR 2599, paragraph 7;
Commission means a situation where the management of the
Case C-35/96 Commission v Italy (CNSD) [1998] ECR I-3851,
knowledge of the research organisation(s) is conducted either by
paragraph 36; and Case C-309/99 Wouters [2002] ECR I-1577,
a department or a subsidiary of the research organisation or jointly
paragraph 46.
with other research organisations’.
( 187 ) This practice is summarised in particular in point 3.1.1 of the
( 189 ) See footnote 24 to the R&D&I Framework.
R&D&I Framework.
( 190 ) See recital 151 of decision C 51/2005.

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IFP’s development strategy, IFP exercised not only de jure
status mainly through more favourable funding terms on
but also de facto control, exclusive agreements bore
the capital markets ( 192 ), which is an advantage resulting
witness to strong economic integration, and IFP and
from the non-applicability of the ordinary legal
the subsidiaries concerned had a common image in the
procedure for compulsory administration and winding
eyes of operators in the relevant sectors. The technology
up to legal entities governed by public law. Moreover,
transfers between IFP and its subsidiaries Axens, Beicip-
in the event of default of the publicly owned estab
Franlab and Prosernat, and especially those resulting from
lishment, the Commission noted that the State
industrial research work ( 191 ), must consequently be
guarantee would cover all of IFP’s debts, which, as
categorised as economic activities for purposes of
specified in recital 71 of the opening decision, might
competition law.
be not only financial but also commercial or of
another nature again, in particular claims held by
suppliers (whose invoices had not been paid) or by
customers (to whom services had not been supplied).
7.1.3 SCOPE OF THE PRESENT DECISION
(189) It is clear from section 7.1.1 that only the activities
carried out directly by the publicly owned establishment
IFP are covered by the State guarantee; the activities
(194) At the end of the detailed examination of the measure,
carried out by its subsidiaries, which are governed by
therefore, the Commission considers that it is appropriate
private law, are not covered by the guarantee.
to analyse the existence of any advantage to the publicly
owned establishment IFP in its relations with (A) banks
and financial institutions, (B) its suppliers and (C) its
customers.
(190) Moreover, among the activities carried out directly by IFP,
there can be a State aid element only in the guarantee
cover given to activities of an economic character, and
always provided the other conditions laid down in
Article 107(1) TFEU are also met.
A. No advantage in dealings with banks and financial
institutions
(195) In the opening decision, although the Commission
acknowledged that the publicly owned establishment
(191) Finally, it is clear from section 7.1.2 that these economic
IFP was not the subject of a financial rating by an
activities are confined on the one hand to contract
external rating agency (
research activities carried out by the publicly owned

193 ), it pointed out that the
funding granted to IFP necessarily entailed an assessment
establishment IFP, and on the other hand to the
by creditors of the risk of default (
transfer of technologies in the exclusive fields of

194 ). Given that IFP had
recourse to the credit market to finance its debt, the
activity of the subsidiaries Axens, Prosernat and Beicip-
Commission could not at the preliminary examination
Franlab and the renting out of infrastructure, provision of
stage rule out the possibility that IFP might enjoy an
staff and provision of legal services.
economic advantage as a result of the weight given by
the financial markets in their assessments to the State’s
role of last-resort guarantor of IFP’s debts.
7.1.4 EXISTENCE OF A SELECTIVE ADVANTAGE TO THE IFP
GROUP
(192) To analyse any advantages that the IFP group may derive
from the unlimited guarantee conferred on the parent,
(196) At the end of the detailed examination, the Commission
IFP, by virtue of its EPIC status, the Commission will
takes note of the information sent by France which is
proceed in two stages: it will first examine any
referred to in recital 64 above, and which is summarised
advantages to the parent (7.1.4.1), and then examine
in Table 1 in the present recital.
those potentially transferred to its subsidiaries (7.1.4.2).
( 192 ) See recitals 90 and 98 of the opening decision.
( 193 ) In the case of undertakings such as La Poste, which are the subject
of a financial rating by independent agencies, the Commission
showed, in point 4.1.2(a) of decision C 56/2007, that the
guarantee conferred by the status of publicly owned establishment
allowed the beneficiary establishment to obtain more favourable
7.1.4.1 Advantages to the publicly owned estab
borrowing terms than those that it would have obtained on its
lishment IFP
own merits.
( 194 ) See recital 101 of the opening decision, and also recital 102,
(193) In the opening decision, in accordance with point 2.1.3
where the Commission cites in particular a report to the French
of the Guarantees Notice, the Commission said that it
Senate in which the Finance Committee declared on the subject of
took the view that IFP could derive benefit from its EPIC
Réseau Ferré National (national rail network): ‘This [financial]
mechanism, combined with the unlimited and unconditional
implied State guarantee resulting from its EPIC status, may give
( 191 ) See recital 182 of decision C 51/2005: ‘the public financing
Réseau Ferré National significant borrowing capacity, at interest
concerns only the industrial research stages’.
rates very close to those of the SNCF’.

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Table 1
Debt of the publicly owned establishment IFP over the period 2005-2010
2005 2006 2007 2008 2009 2010
Entity: IFP
EUR thousand EUR
thousand EUR
thousand EUR
thousand EUR
thousand EUR
thousand
Loans and debts with credit Amounts payable within
[…] (*) […]
(*) […]
(*) […]
(*) […]
(*) […]
(*)
institutions (*)
one year (1)
Amounts payable at over
[…] (*) […]
(*) […]
(*) […]
(*) […]
(*) […]
(*)
one year
(1) of which bank loans and overdrafts and bank credit
[…] (*) […]
(*) […]
(*) […]
(*) […]
(*) […]
(*)
balances
2005 2006 2007 2008 2009 2010
Interest rate on loans and debts contracted with credit institutions: Interest rate + Interest rate + Interest rate + Interest rate + Interest rate + Interest rate +
margin
margin
margin
margin
margin
margin
Medium and long-term loans […]
(*) […]
(*) […]
(*) […]
(*) […]
(*) […]
(*) […]
(*)
Bank loans and overdrafts and [Bank No 1] (**) EONIA
+
EONIA +
short-term credit facilities
[…] (*)
[…] (*)
[Bank No 2] (**) EONIA
+
EONIA +
[…] (*)
[…] (*)
[Bank No 3] (**) EONIA
+
[…] (*)
[Bank No 4] (**)
EONIA +
[…] (*)
(*) net of consolidation adjustments of the leasing components
(**) since the data are presented as at 31/12 for each year, the figures for 2010 are not yet known.
(197) This information shows that as regards the amounts
commitment fee of […] (*) %, i.e. EUR […] (*)) and
payable at more than one year, IFP has not had
EONIA + […]
(*) % with [Bank No
3]
(**) (plus
recourse to borrowing from credit institutions since its
commitment fee of […] (*) %, i.e. EUR […] (*)) or
change of legal form, i.e. over the period between 2006
[Bank No 1] (**) (plus commitment fee of […] (*) %, i.e.
and 2009 for which the data are available. Over the same
EUR […] (*)). IFP also received another spot offer from
period, following the change of status, IFP has had
[Bank No 3] (**) (depending on the term of drawdown
recourse to borrowing at less than one year only once,
chosen), for a rate equal to EURIBOR + […] (*) %. The
in 2009, for a negligible sum of EUR […] (*). Moreover,
Commission notes the fact that these rates are equivalent
the rate applied at the time by [Bank No 3] (**) (EONIA
to those negotiated by IFP before its change of status in
+ […] (*) %) was […] (*) base points higher (all other
2006, when it was still a legal person governed by
things being equal) than the rate negotiated by IFP in
private law not covered by a State guarantee.
2005 with [Bank No 1] (**) (EONIA + […] (*) %), when
IFP it was still a legal person governed by private law,
and therefore not yet covered by the State guarantee that
it now derives from its status as a publicly owned estab
lishment.
(199) In view of the above, the Commission acknowledges that,
over the period between its change of legal form and
2010, IFP did not derive any actual economic
advantage from its EPIC status in its relations with
(198) As regards 2010 specifically, the French authorities
banks and financial institutions. In other words, it
specified that the publicly owned establishment IFP had
appears that the potential advantage that the undertaking
received four proposals for credit facilities amounting to
might have derived from the unlimited guarantee, in the
EUR […] (*), at a one-year rate varying between EONIA +
form of interest rates on borrowings more favourable
[…] (*) % with [Bank No 4] (**) (plus commitment fee of
than what was available on the market, did not
[…] (*) %, i.e. EUR […] (*)) or [Bank No 5] (**) (plus
materialise during the period under review.

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(200) This conclusion naturally applies only for the past, since
(204) To estimate the fall in price resulting from the more
the Commission cannot make assumptions concerning
favourable assessment of the risk of default made by
future conduct by market operators or about their
suppliers in the case of an EPIC, the Commission will
perception of the impact of the State guarantee on the
look at the cost of equivalent risk cover. In the absence
risk of default of the publicly owned establishment IFP.
of a State guarantee, a supplier to IFP wishing to benefit
Therefore, in the context of the annual reports that the
from a comparable guarantee (i.e. to cover itself in full
French authorities will be called upon to send the
against the risk of default of the other party) could have
Commission in the future, they should furnish
recourse to the services of a specialised credit institution
information relating to the levels and terms of IFP’s
or insurance undertaking. Such cover against the risk of
debt, providing proof that these loans are in line with
default is commonly offered by specialised factoring
market conditions, or adding the gross equivalent of the
companies ( 195 ).
aid component to the estimate of the maximum impact
of the guarantee using a methodology similar to that
described in Table 6 appearing in recital 300.
(205) The remuneration for such a factoring service comprises
two components:
(201) Finally, the Commission notes the proposal of the French
authorities to include the following written statement in
the financing contract for each transaction (for all
instruments covered by a contract):
(a) a financing fee (or debit interest) calculated in
proportion to the time involved, to cover the
funding of the advance granted to the supplier,
which depends in particular on the interest rate in
‘The issue/programme/loan does not enjoy any form of
force at the time the claims are transferred;
direct or indirect State guarantee. In the event of
insolvency, the State would not be obliged to act as
financial substitute for IFP for payment of the claim.’
(b) a factoring fee proper, varying between 0,7 % and
2,5 % of the turnover assigned, with an average
(202) While this commitment will not by itself suffice to
rate of 1,5 % ( 196 ), calculated on the value of the
resolve the question of the existence of the guarantee,
claims transferred, to pay for the accounting
in the particular context, combined with all the other
management, collection and performance bond
obligations imposed on France, it will allow the plea of
services.
accepted risk to be relied upon where appropriate, and
any negative repercussions of the guarantee to be limited
considerably.
(206) In their letter dated 26 November 2010, the French
authorities said that, in their opinion, the Commission’s
arguments on the role of factoring were based on an
B. Advantage in dealings with suppliers
inaccurate assessment of the reasons for which an under
taking might have recourse to this type of service. They
(203) As regards suppliers, contrary to the view expressed by
the French authorities (see recital 65), in order to prevent
acknowledged that factoring companies could provide
IFP from drawing any advantage from its EPIC status it is
three services, i.e. cash advance, collection and
not sufficient that it should be subject, under European
guarantee of claims, but said they could offer these
Union law or national law, to a competitive procurement
services jointly or separately. On the basis of a Banque
obligation: when IFP issues a public call for tenders, every
potential supplier drawing up a tender can anticipate the
( 195 ) It may be worth recalling that factoring is a contract by which a
impossibility of a bankruptcy of IFP. When considering
factor (i.e. a specialised credit institution) purchases, for a fee, the
claims held by a supplier on his customers. The service provided to
public procurement, therefore, a distinction has to be
the supplier is three-fold: the factor pays him a cash advance, frees
drawn between the fall in price resulting from the effi
him from need to recover the debts, and guarantees their payment
ciency gains secured by competition between bidders –
(in the event of non-payment, notably if the customer defaults, the
which, as the Commission found in the report cited by
factor bears the risk). Regarding this final point, it should be
the French authorities, represent a genuine ‘social benefit’
pointed out that such a guarantee is a performance bond, in so
– and the fall in price resulting from the more favourable
far as the factor undertakes to pay the seller the invoices he has
issued. The risk of insolvency of the purchaser and the risk of non-
assessment by contractors of the risk of default on the
payment on the due date are borne by the factor.
part of an entity which they know is protected from the
( 196 ) The Commission bases this estimate on publicly available
risk of compulsory winding up by its status as a publicly
information. See in particular the financial information sites
owned establishment. Both of these factors tend to cause
http://www.netpme.fr and http://www.banque-info.com, and in
the prices of public procurement to fall, but they are of
particular the article on factoring by Mr Luc Bernet-Rollande,
an intrinsically different nature, which means that there
consultant and instructor in banking and finance, on the
following Internet sites: http://www.banque-info.com/fiches-
can be no question for the Commission of imputing the
pratiques-bancaires/l-affacturage and http://www.netpme.fr/
effects of the second factor to the first.
banque-entreprise/2-affacturage.html (consulted on 28 June 2011).

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de France study carried out in 2009 ( 197 ), they added
(208) The French authorities observe that since its change of
that, among these different services, delegated
legal form in 2006, the payments made by IFP to factors
management (i.e. a financial transaction without debt
have increased. They say that this trend invalidates the
collection) was becoming predominant in the services
Commission’s argument concerning the perception of
offered by factors, so that recourse to factoring
third parties of the risk of default of EPICs. They
increasingly amounted to a mere cash transaction for
consider that if IFP had benefited from cover of its risk
the supplier. The Commission takes note of this obser
of default by the State from 2006, recourse to the
vation.
services of factors should have become less frequent
from that date, if it did not stop altogether.
(207) The French authorities have communicated the volume
of payments made by IFP to factors ( 198 ) since 2004 (to
(209) But as the French authorities themselves indicate (see
pay for supplies needed for both types of activity,
recital 206), recourse to factoring is increasingly
economic and non-economic):
associated with a need for cash advances (increase in
the delegated management service) and less and less
with a need to transfer the risk of non-payment
Table 2
(decline in the collection, financing and guarantee
service), and in IFP’s accounts it is not possible to
Recourse to factoring by IFP’s suppliers over the period
break down the use made of factoring by its suppliers
2004-2010
by type of service; in the Commission’s view, therefore,
the trend established by IFP does not invalidate the
Commission’s arguments, still less does it show that
Number of Payments to Number of
IFP’s suppliers have concluded that since IFP’s change
Year
suppliers
factors
invoices
concerned
(in euros)
concerned
of legal form the risk of a default on its part has
increased.
2004 […]
(*) […]
(*) […]
(*)
2005 […]
(*) […]
(*) […]
(*)
(210) The Commission acknowledges that it is unable to
provide a precise estimate of the amount of the
2006 […]
(*) […]
(*) […]
(*)
premium which would be necessary to cover IFP’s
suppliers against the risk of default if IFP did not
2007 […]
(*) […]
(*) […]
(*)
already enjoy a State guarantee. The Commission
points out, however, that since the factoring fee
2008 […]
(*) […]
(*) […]
(*)
referred to in recital 205.b in fact covers three separate
services (collection, financing and guarantee against the
2009 […]
(*) […]
(*) […]
(*)
risk of unpaid invoices), the maximum amount of 2,5 %
of the guaranteed turnover which is mentioned there
2010 ( 199 ) […]
(*) […]
(*) […]
(*)
must in any event be an upper bound to the premium
which would be required to cover the risk of default
Period as a whole
[…] (*) […]
(*)
only.
(2004-2010)
( 199 ) Over the first 10 months of the year.
(211) In any event, the French authorities are still free to notify
a more precise methodology for estimating the advantage
conferred by the guarantee on IFP in its dealings with
( 197 ) On the basis of information supplied by the Banque de France, the
suppliers. Such a methodology could be based on an
French authorities state that the proportion of transactions
comprising a comprehensive offer covering all the above-
economic report by an expert, which would be debated
mentioned services is still falling, from 45 % in 2008 to 35 % in
by the two sides in the context of the appraisal, and if
2009, in favour of delegated management, which has risen from
found appropriate could be the subject of a positive
35 % to 49 %. According to the same study, the distribution of
decision by the Commission and could be used by
factoring by type of transaction in 2009 is as follows: collection,
France to meet the information requirements laid down
financing and guarantee (without delegated management): 35,5 %;
collection and financing (without delegated management): 6,9 %;
in the operative part of this decision.
delegated management: 49.1 %; collection and guarantee: 0,3 %;
reverse factoring: 3,8 % (this is a formula which allows a debtor
to ask the factor to pay his main suppliers in his place; for the
(212) As regards the amounts in question, the French
supplier, it provides a guarantee of being paid cash without
authorities indicated in their letter dated 26 November
recourse, while the purchaser has the same time for payment,
secures the loyalty of his suppliers, supports their cash position,
2010 that the cost of these goods and services was incor
and obtains a discount for cash payment); syndication: 3,8 %;
porated directly into the ratios for the use made of the
other: 2,5 %.
staff allocated to the activities to which the acquisition of
( 198 ) The French authorities rightly point out that it is not possible,
these goods and services related ( 200 ). Moreover, the
when suppliers are paid directly, to determine whether or not
they have concluded a factoring agreement for delegated
management, and that it is not possible, if a factor is paid in
( 200 ) As explained in decision C 51/2005, the costs attached to the
place of the supplier, to know the precise scope of the services
various acquisitions and staff expenses are then the subject of
subcontracted to the factor by the supplier, and in particular
separate accounting, so that the two types of activities
whether or not the supplier has contracted a factoring service
(economic and non-economic) and their costs and financing are
with guarantee.
clearly distinguished in IFP’s accounts.

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invoicing of seconded staff and of premises did not give
are particularly sensitive to the guarantees that their
rise to any significant specific expenditure, since all the
providers are able to give them in terms of cover of
relevant costs were already integrated into the structural
both contractual and non-contractual liability.
costs of the establishment.
(217) As regards non-contractual liability, the French
(213) Finally, with regard to the goods and services specifically
authorities stated in their letter dated 13 January 2010
acquired for the pursuit solely of economic activities, the
that in France companies governed by private law and
French authorities submit that the average annual value
publicly owned establishments were both subject to
of such supplies represents only a small fraction of IFP’s
ordinary law (Article 1382 of the Civil Code, relating
annual average turnover ( 201 ). For contract research, on
in particular to tortious liability) ( 203 ). They added that
the basis of the information obtained by IFP via its
IFP’s activities presented specific characteristics, in that
analytical accounting system, the average value of
they required the use of laboratory apparatus and
supplies acquired by IFP to provide its services between
inflammable, explosive or toxic products, which were
2006 and 2009 comes to EUR […] (*) per year.
potential sources of a significant ‘industrial’ risk ( 204 ),
within the meaning of the term customarily used by
insurers. Consequently, IFP had entered into various
insurance contracts to cover not only the traditional
risks (civil liability), but also specific risks, such as
(214) The Commission considers that, for the performance of
those associated with sources of ionising radiation or
its economic activities, IFP has enjoyed a real economic
with breakdown of machinery in the areas surrounding
advantage, consisting in a reduction in the prices charged
wells. As regards civil liability cover, IFP’s insurance
by its suppliers, and resulting from a more favourable
contract covered four risks: civil liability for its
assessment by the latter of the risk of default of the
operations, civil liability after delivery, professional
establishment. The Commission cannot quantify this
liability and environmental damage.
advantage precisely, but considers that, in any case, it

would not have exceeded a sum in the order of EUR
[…] (*) per year on average over the period under
review (2006-2009) ( 202 ).
(218) It appears from the above that IFP has not shifted its
non-contractual liability to the State by taking the risk
that in the event of a claim it would be able to rely on
(215) Finally, the Commission points out that such an
the guarantee it derives from its EPIC status, but that, on
advantage in dealings between IFP and its suppliers is
the contrary, it has covered the risk by entering into the
selective, because its competitors, which remain subject
necessary insurance contracts on the market.
to compulsory administration and winding-up
procedures under ordinary law, do not enjoy a
comparable guarantee conferred by the State, which is
intrinsically linked to IFP’s status as a publicly owned
establishment.
(219) As regards contractual liability, it is clear from the
information supplied by the French authorities in
response to UOP’s comments, in particular those set
out in recital 91, that with respect to the provision of
services IFP’s liability towards its customers (whether they
C. Advantage in dealings with customers
are its own subsidiaries or third parties) ‘is limited to
[…] (*) % of the remuneration actually received, with a
(216) As regards the research services provided by the publicly
maximum which may reach up to […] (*) % depending
owned establishment IFP, the Commission notes the
on the case’, so that if the customer considers that the
comments made by UOP, which indicates that in tech
work carried out by IFP is defective, the latter cannot
nology transfer, a field which is risky by nature, acquirers
under any circumstances be obliged to repeat the work
ad infinitum. Moreover, the Commission takes note of
the French authorities’ observation that, on account of
( 201 ) This low level (in the order of […] (*) %) is explained by the fact
that the goods and services specifically allocated to the pursuit of
the principle of non-combination of liabilities, a
economic activities relate essentially to fees, sub-contracting, travel
contracting party cannot invoke non-contractual
and purchases of consumables directly linked to the corresponding
liability to seek compensation for damage suffered
research service (and are invoiced on to the customer).
under a contractual relationship ( 205 ).
( 202 ) This figure is arrived at by multiplying the turnover recorded each
year (EUR […] (*)) by the maximum rate adopted to cover the risk
of default of IFP (2,5 %). For each year, using the same calculation
( 203 ) Moreover, the conditions for tortious liability are strictly regulated:
method, and taking account of the variations in turnover, the
there must be (i) fault, (ii) damage and (iii) a causal link between
figures are as follows: EUR […] (*) in 2007, EUR […] (*) in
fault and damage.
2008, and EUR […]
(*) in 2009. For 2006, it would
( 204 ) On account of the significance of this risk, IFP has concluded a
also be appropriate in theory to apply a rate of 48,5 %
contract with a lead insurer which has taken a co-insurer to share
(= (365-188)/365) in proportion to the time involved, since the
the benefits and risks associated with the contract.
guarantee started only from 7 July 2006, the 188th day of the year
( 205 ) Judgment Cass. civ. 2 o , 9 June 1993: ‘this provision [Article 1382
2006, which was the date of conversion of IFP’s legal form, i.e. a
of the Civil Code] is not applicable to compensation for damage
maximum of EUR […] (*).
relating to the performance of a contractual commitment’.

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L 14/40
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Official Journal of the European Union
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(220) The fact remains that, in view of the State guarantee
and public works or in international trade), it does not
granted to IFP, its customers are assured that IFP will
seem feasible in the case of contract research services to
never be subjected to compulsory winding up and
cover more than best efforts, since R&D is by nature a
therefore will always be able to fulfil its contractual obli
high-risk field in which the purchaser of research work
gations, or failing that that they will be compensated for
has no certainty that it will lead to results that can be
any such breach.
exploited. In this respect, the Commission notes that the
amount contractually guaranteed to IFP’s customers,
including its subsidiaries, is limited to 100 % of the
price of the research work carried out.
(221) By analogy with the arguments it set out in recitals 204
et seq. with regard to dealings with suppliers, the
Commission considers that in the absence of a State
guarantee, a customer wishing to enjoy the same level
(225) The Commission acknowledges that it is unable to
of protection would take out a performance bond from a
provide an exact estimate of the premium which would
financial intermediary (a bank or insurance company, for
be required to guarantee to customers (including
example) to ensure the completion of the contract
subsidiaries) that IFP will use its best efforts in carrying
between it and IFP. The purpose of such protection
out the research work. Questioned on this point, the
would be to guarantee financial compensation for the
French authorities indicated in their letter dated
customer for loss caused by (total or partial) breach of
26 November 2010 that they did not have any
contract.
information on the premiums charged on the market
to cover the specific risks in the field of R&D. The
Commission considers, however, that the premium
which would be required by the market to cover such
a risk (limited to best efforts in research, and therefore
(222) France acknowledges, not without certain reservations, as
less than the risk attached to full performance without
set out in recital 66, that ‘the only supposed effect on IFP
defects) should logically be lower than the maximum
that might be identified would be a reduction in charges
estimates mentioned in recital 223. Therefore the
as a result of the absence of subscription to performance
Commission considers that a maximum rate of 5 % of
bonds’. The French authorities conclude, without elab
the turnover generated by the service covered is in any
orating further, that, on the basis of ‘the sums usually
case an upper bound to the premium which would be
charged by banks and insurance companies to provide
necessary to cover such a risk.
this type of service, it is clear that the sum involved in
such a reduction would be negligible’.
(226) As regards the volume of the economic activities which
might be covered by such a guarantee, the Commission
(223) The Commission points out, firstly, that a large number
recalls that these activities are of two types: on the one
of factors enter into the calculation of the cost of a
hand, renting out infrastructure, providing research staff
performance bond, notably the type of contract and
and legal services, and the contract research activities
the sum covered, the staff employed, the financial
carried out by IFP on behalf of both third parties and
situation, the risk of default and the claims history of
its own subsidiaries, and on the other hand, the transfer
the undertaking whose service the contract concerns, as
of technology from IFP to its subsidiaries in the exclusive
well as other purely financial factors, such as the fees or
fields of activity of Axens and Prosernat. As regards the
commissions of intermediaries. On the basis of publicly
activities carried out by IFP in the exclusive field of
available information ( 206 ), the Commission estimates that
activity of its subsidiary Beicip-Franlab
(
the rate applied generally speaking varies between 1 %

207 ), the
Commission has already found that they are financed
and 5 % of the turnover covered.
entirely from income earned in the market for oilfield
operation consultancy services and the contract devel
opment of oilfield software. In decision C 51/2005, the
Commission established the absence of intra-group
transfers of public funding from the publicly owned
(224) The calculation of premiums by specialised intermediaries
establishment IFP to its subsidiary Beicip-Franlab, since
uses statistical techniques, which may be refined by type
the business relations between the two entities were
of risk, and it is not possible to establish a priori a
based on normal market conditions. The remuneration
standard rate for a performance bond. The final price
paid by Beicip-Franlab to IFP ‘broadly’ ( 208 ) covers the
of the guarantee depends ultimately on the estimated
cost of work done by IFP in its subsidiary’s exclusive
value of potential losses and the probability that they
domain, so that the Commission can conclude that the
may occur. Consequently, whereas a guarantee of full
prices charged are such that in any event Beicip-Franlab
performance without defects is proposed in certain
already bears a cost equivalent to any additional impact
sectors (for example in civil engineering and building
of the State guarantee on the research costs borne by IFP.
( 206 ) According to the site specialising in performance bonds http://
( 207 ) See recitals 149 to 151 of decision C 51/2005.
www.performancesuretybonds.com, consulted on 28 June 2011.
( 208 ) See recital 149 of decision C 51/2005.

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In these conditions, the cover provided by the State
(230) As regards the following years, in accordance with
guarantee for the business relations between the
Article 5(1) of decision C 51/2005, until the expiry
subsidiary and its parent is not of a nature to confer a
date of the exclusive agreements, France is required to
competitive advantage on the activities conducted by IFP
‘submit to the Commission a detailed annual report on
in the exclusive research fields of its subsidiary Beicip-
the projects carried out by IFP in the exclusive fields of
Franlab. Consequently, the fact that they may be covered
activity of Axens and Prosernat’. The information
by the State guarantee does not constitute State aid
contained in these annual reports allows a precise calcu
within the meaning of Article 107(1) TFEU.
lation to be made of the annual volume of the research
services carried out by IFP on behalf of and in the
exclusive fields of its subsidiaries.
(227) Regarding activities of the first type carried out by IFP for
third parties and its own subsidiaries, the French
authorities in their letter dated 26 November 2010
(231) So far, France has sent the Commission the annual
provided figures for the volume of economic activities
reports for 2007, 2008 and 2009. In view of the time
carried by IFP between 2006 and 2009. It emerges
needed to process the accounting data, the 2010 report
from this information that the average annual value of
is to be forwarded in the course of 2011.
research services during this period is in the order of
EUR […] (*), including EUR […] (*) on behalf of third
parties and EUR […] (*) on behalf of the subsidiaries.
(232) In the exclusive fields of Axens, these economic activities
are summarised for the years 2007 to 2009 in Table 3
(228) The French authorities also provided information
shown in this recital (EUR thousand).
concerning the administrative services supplied by IFP
to its subsidiaries during the same period. This
information shows that, since 2006, the average annual
Table 3
amount invoiced by IFP to its subsidiaries is in the order
of EUR […] (*) for the staff provided and EUR […] (*) for
Activities of lFP in the exclusive fields of Axens between
the costs of premises and ancillary services (frais de domi
2007 and 2009
ciliation). ( 209 )
(EUR thousand)
Total Total
charges
Total own
Public resources
(229) Regarding the activities of the second type, i.e. the
resources
(+) or benefit (–)
transfer of technology from IFP to its subsidiaries in
2007 […]
(*) […]
(*) […]
(*)
the exclusive fields of activity of Axens and Prosernat,
it should first be pointed out that decision C 51/2005
2008 […]
(*) […]
(*) […]
(*)
already contained the figures for 2006:
2009 […]
(*) […]
(*) […]
(*)
(a) in the exclusive field of Axens, IFP carried out
economic activities comprising technical feasibility
(233) The research services provided by IFP in the exclusive
studies prior to industrial research amounting to
field of Axens therefore generated economic activity
EUR […]
(*) and industrial research work
amounting to EUR […] (*) in 2007, EUR […] (*) in
amounting to EUR […] (*), i.e. in total EUR […] (*).
2008, and EUR […] (*) in 2009, which is comparable
to that established by the Commission for 2006 in
decision C 51/2005 (EUR […] (*)).
(b) in the exclusive field of Prosernat, IFP carried out
economic activities comprising technical feasibility
studies amounting to EUR […] (*) and industrial
(234) In the exclusive fields of Prosernat, these economic
research work amounting to EUR […] (*), i.e. in
activities are summarised for the years 2007 to 2009
total EUR […] (*).
in Table 4 shown in this recital (EUR thousand).
(c) In total, IFP carried out research work in the exclusive
fields of its subsidiaries amounting to EUR 56,4
Table 4
million (EUR 7,4 million for technical feasibility
Activities of IFP in the exclusive fields of Prosernat
studies and EUR 49,0 million for industrial research
between 2007 and 2009
work), whereas the volume of its own resources was
only EUR […] (*), and the Commission accordingly
(EUR thousand)
considered that these research activities had been
Public resources
subsidised by public funds to the amount of
Total Total
charges
Total own
resources
(+) or benefit (–)
EUR 11,3 million (an aid intensity of 20 %) ( 210 ).
2007 […]
(*) […]
(*) […]
(*)
( 209 ) These are the financial flows generated by renting out equipment
2008 […]
(*) […]
(*) […]
(*)
or premises (laboratories) and by ancillary services (legal services).
( 210 ) Aid intensity is the ratio between public funds used and the total
2009 […]
(*) […]
(*) […]
(*)
cost of the research project, i.e. here 11,3/56,4 = 20 %.

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L 14/42
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(235) The research services provided by IFP in the exclusive
benefited from a real economic advantage, consisting in
field of Prosernat therefore generated economic activity
the absence of payment of a premium for a performance
amounting to EUR […] (*) in 2007, EUR […] (*) in
bond, at the very least for best efforts, which it was able
2008, and EUR […] (*) in 2009, comparable to that
to offer in respect of its research activities to its
established by the Commission for 2006 in decision C
customers, including to its subsidiaries Axens and
51/2005 (EUR […] (*)).
Prosernat in their exclusive fields. The Commission
cannot quantify this advantage precisely, but in view of
the specific nature of the risk covered, the Commission
considers that in any case it would not exceed, service by
(236) On the basis of the above, the Commission considers
service, year by year, the sums shown in Table 5 in this
that in the pursuit of its economic activities IFP has
recital:
Table 5
Upper bounds to economic advantage derived by IFP from the unlimited guarantee in its customer relations
between 2006 and 2009
2006 2007 2008 2009
Research services (outside the
Upper bound ( 1 )
Upper bound
Upper bound
Turnover
Upper bound
exclusive fields of the
Turnover
(insurance
Turnover
(insurance
Turnover
(insurance
(EUR
(insurance
subsidiaries)
(EUR million)
premium)
(EUR million)
premium)
(EUR million)
premium)
million)
premium)
On behalf of subsidiaries […]
(*) EUR
[…]
(*) […]
(*) EUR
[…]
(*) […]
(*) EUR
[…]
(*) […]
(*) EUR
[…]
(*)
On behalf of third parties […]
(*) EUR
[…]
(*) […]
(*) EUR
[…]
(*) […]
(*) EUR
[…]
(*) […]
(*) EUR
[…]
(*)
Administrative services
provided
Invoicing of staff provided […]
(*) EUR
[…]
(*) […]
(*) EUR
[…]
(*) […]
(*) EUR
[…]
(*) […]
(*) EUR
[…]
(*)
Invoicing of premises and […] (*) EUR
[…]
(*) […]
(*) EUR
[…]
(*) […]
(*) EUR
[…]
(*) […]
(*) EUR
[…]
(*)
ancillary services
Services in the exclusive […] (*) EUR
[…]
(*) […] (*) EUR
[…]
(*) […] (*) EUR
[…]
(*) […] (*) EUR
[…]
(*)
field of Axens
million
million
million
million
Services in the exclusive […] (*) EUR
[…]
(*) […]
(*) EUR
[…]
(*) […]
(*) EUR
[…]
(*) […]
(*) EUR
[…]
(*)
field of Prosernat
Total for the subsidiaries […]
(*) EUR
[…]
(*) […] (*) EUR
[…]
(*) […] (*) EUR
[…]
(*) […] (*) EUR
[…]
(*)
million
million
million
million
Total for third parties […]
(*) EUR
[…]
(*) […]
(*) EUR
[…]
(*) […]
(*) EUR
[…]
(*) […]
(*) EUR
[…]
(*)
( 1 ) These figures are arrived at by multiplying the turnover recorded each year by the maximum rate applied to cover the performance bond (5 %). For 2006, it would be
appropriate in theory to apply a rate of 48,5 % (= (365-188)/365) to this product in proportion to the time involved, since the guarantee started only from 7 July 2006,
the 188th day of the year 2006, which was the date of conversion of IFP’s legal form.
(237) In any event, the French authorities are still free to notify
to compulsory administration and winding-up
a more precise methodology for estimating the advantage
procedures under ordinary law, do not enjoy a
conferred by the guarantee on IFP in its dealings with
comparable guarantee conferred by the State, which is
customers. Such a methodology could be based on an
intrinsically linked to IFP’s status as a publicly owned
economic report by an expert, which would be debated
establishment.
by the two sides in the context of the appraisal, and if
found appropriate could be the subject of a positive
decision by the Commission and could be used by
France to meet the information requirements laid down
7.1.4.2 Advantages transferred to the private-law
in the operative part of this decision.
subsidiaries of the IFP group
(239) As regards the subsidiaries of the publicly owned estab
(238) Finally, the Commission points out that such an
lishment IFP, in its opening decision the Commission
advantage in dealings between IFP and its suppliers is
pointed out that it could not at the preliminary investi
selective, because its competitors, which remain subject
gation stage rule out the possibility that any advantage

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14/43
arising from the EPIC status of the publicly owned estab
relations between IFP and its subsidiary Beicip-
lishment IFP, such as in particular more advantageous
Prosernat (***) were conducted on normal market terms.
borrowing terms, might also benefit the three
subsidiaries ( 211 ).
(244) In the case cited above relating to La Banque Postale, the
(240) At the end of the present detailed examination, for the
Commission considered it necessary for the French
reasons listed in section 7.1.1.2, given that in French law
authorities to enter into commitments permitting a
a shareholder in a group of companies does not bear
mechanism to be put in place which neutralised at the
general vicarious liability for its subsidiaries, there is no
level of the subsidiary any advantages that might be
reason to take the view that the publicly owned estab
enjoyed by the parent. As regards the funding terms,
lishment IFP, and consequently the French State, can be
this obligation was to state in writing in the financing
liable for the payment of claims held by third parties in
contract, for each instrument covered by a contract, that
respect of the economic activities of Axens and
under French law (in particular the need for express
Prosernat, in particular if those subsidiaries were to be
statutory authorisation by law for each guarantee) this
subjected to compulsory winding up.
financing transaction would not benefit from any
guarantee of any kind, direct or indirect, on the part of
the State. The issuing prospectus of each transaction was
to publicise this contractual provision ( 214 ).
(241) However, it should be noted that in decision
N 531/2005 cited above, although it took the view, as
recalled in recital 177, that as a public limited company
La Banque Postale remained subject to ordinary law with
(245) In the present case, the French authorities have given a
regard to compulsory administration and winding-up and
commitment, with regard to the borrowing terms of the
did not therefore itself enjoy an unlimited State
IFP subsidiaries (Axens, Beicip-Franlab and Prosernat), to
guarantee, the Commission nevertheless examined the
state in writing in the financing contract for each trans
question of a possible transfer to the subsidiary of the
action (for any instrument covered by a contract) that
effects of the public guarantee conferred on its sole
‘Pursuant to French law (in particular the need for
shareholder ( 212 ).
express statutory authority for each guarantee), the
present financing transaction shall not enjoy any form
of direct or indirect State guarantee’.
(242) More precisely, the Commission took the view ( 213 ) that
the operating structure of the group resulted in permea
bility between the shareholder (La Poste) and the
subsidiary (La Banque Postale), owing to the combined
(246) As regards the use by the subsidiaries of human and
effect of (i) the use by the subsidiary of human and
material resources made available by their parent, as
material resources made available by the parent and (ii)
noted by the Commission in decision C 51/2005, ‘if
the remuneration of these resources on the basis of the
there is any subsidisation of economic activities, it
costs borne by the parent, in such a way that in the
results from the level of the remunerations paid by the
event of an economic advantage of a nature to cause
subsidiaries concerned to the parent company and is
the costs of La Poste to fall, the remuneration paid by
reflected in IFP’s accounts’ ( 215 ). In the examination of
La Banque Postale to its parent would have been reduced
IFP’s accounts, the only cost components not taken
accordingly, resulting in an (at least partial) transfer of
into account by the Commission for the year 2006 in
this economic advantage to the subsidiary.
decision C 51/2005, and for the following years in the
annual reports sent by the French authorities, are those
relating to the cover provided by the unlimited guarantee
for the services provided by IFP to its subsidiaries. Since
(243) In the same way, in decision C 51/2005, the
the premium corresponding to a performance bond, at
Commission considered that there was a measure of
the very for best efforts, was not paid to the State, it was
porosity, in particular in the prices applied by IFP for
not possible for it to be priced into the services supplied
the services supplied to Axens and Prosernat in their
to the subsidiaries either.
exclusive fields, such that the intra-group business
relations did not follow a market-driven logic, but on
the contrary offered the possibility of cross-subsidisation
of the economic activities of the subsidiaries via public
funds made available by the parent. As recalled in recital
(247) Consequently, it must be held that the economic
226, the Commission concluded moreover that the
advantage conferred on the publicly owned establishment
by the guarantee it enjoys by virtue of its legal form was
transferred in this way to its private-law subsidiaries
( 211 ) See recital 104 of the opening decision.
Axens and Prosernat.
( 212 ) See recital 8 of decision N 531/2005 cited above, according to
which the unlimited State guarantee to La Poste was to be the
subject of separate proceedings, while that decision would deal
(***) Clerical error: for ‘Beicip-Prosernat’ read ‘Beicip-Franlab’.
with the effects of the guarantee on Banque Postale.
( 214 ) See recital 96 of decision N 531/2005 cited above.
( 213 ) See recitals 88 to 91 of decision N 531/2005 cited above.
( 215 ) See recital 132 of the decision.

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Official Journal of the European Union
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(248) The French authorities have confirmed the existence of
administrative services), which has the effect of
the contracts jointly concluded by IFP and its subsidiaries
favouring the IFP group and therefore of distorting
Axens, Prosernat and Beicip-Franlab with common
competition within the meaning of Article 107(1) TFEU.
suppliers, which the Commission mentioned in its
opening decision and which UOP also referred to in its
comments, as indicated in recital 73; but the French
authorities have pointed out that that essentially they
(252) The markets on which the IFP group operates, in
concerned the transport sector (air and rail) for
particular that of contract research in the case of the
business travel of the staff of the various entities. The
publicly owned establishment IFP itself, those of
Commission considers that if the subsidiaries were able
catalysts and technologies for the refining and petro
to benefit from more favourable purchasing conditions
chemicals industries in the case of its subsidiary Axens,
granted to the IFP group — which has not necessarily
and consultancy, other services, and infrastructures in the
been established with regard to the supplies in question
field of gas treatment and sulphur recovery in the case of
— this was the result of a volume discount policy
its subsidiary Prosernat, are wide open to trade within the
applied by these suppliers for bulk purchasing, rather
European Union, so that the measure is liable to have an
than for any impact of the guarantee. In any case, even
unfavourable impact on competing undertakings which
supposing that the analysis presented in section 7.1.4.1 B
have, or wish to develop, similar economic activities in
with regard to the publicly owned establishment can be
the markets concerned.
transposed to the subsidiaries for the supplies obtained
jointly with it, and that by such a mechanism these
subsidiaries benefit from a transfer of the advantage
enjoyed by the publicly owned establishment IFP on
account of the guarantee, thus enabling them to obtain
(253) The existence of an unlimited State guarantee for the
these services more cheaply, the sums in question would
publicly owned establishment IFP is consequently liable
be so negligible that the Commission doubts whether
to distort competition and to affect trade within the
they can be described as a real economic advantage.
meaning of Article 107(1) TFEU.
7.1.6 CONCLUSION REGARDING THE NATURE OF THE AID
(249) Consequently, in line with the conclusions of decision
C 51/2005, the only activities that may benefit from
MEASURE
an advantage deriving from the cover provided by the
(254) The guarantee given by the State to IFP by virtue of its
parent’s State guarantee for the research activities
legal form therefore results in a transfer of State
conducted in the subsidiaries’ exclusive fields are
resources imputable to the State, and distorts or
confined to the ‘contribution [by the publicly owned
threatens to distort competition and trade between
establishment IFP] to activities in the fields of activity
Member States by favouring the IFP group.
of Axens and Prosernat’ ( 216 ). The Commission cannot
quantify the advantage transferred to Axens and
Prosernat precisely, but in view of the specific nature
of the risk covered, the Commission considers that it
would not in any case exceed, service by service, year
(255) The Commission concludes that this guarantee
by year, the sums shown in Table 5 in recital 236.
constitutes State aid within the meaning of

Article 107(1) TFEU.
(250) In the Commission’s view, such an economic advantage
7.2 UNLAWFULNESS OF THE AID MEASURE
transferred by the publicly owned establishment IFP to its
private-law subsidiaries Axens and Prosernat is selective,
(256) Before its change of legal form, IFP was a legal person
because the subsidiaries’ competitors do not have access
governed by private law, in the form of a trade body
to the technologies and human and material resources of
within the meaning of Law No 43-612 of 17 November
IFP on such favourable terms.
1943 on the management of trade interests. In this
capacity, IFP was subject to the compulsory adminis
tration and winding-up procedures provided for under
ordinary law and did not benefit from the State
7.1.5 DISTORTION OF COMPETITION AND EFFECT ON
guarantee conferred by EPIC status.
TRADE
(251) The measure examined may lead to a reduction in the
operating costs of IFP for the services it supplies to third
(257) IFP became an EPIC on 7 July 2006, by Decree of 6 July
parties (contract research) and in those of Axens and
2006, adopted under Law No 2005-781 of 13 July
Prosernat for the services they obtain from their parent
2005. This change of legal form is the basis of an
(research in their exclusive field, contract research,
unlimited State guarantee granted to the publicly
provision of staff and infrastructures, and provision of
owned establishment IFP. The measure in question
must therefore be categorised as new aid within the
( 216 ) See recital 154 of decision C 51/2005.
meaning of Article 1(c) of the Procedural Regulation.

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(258) In accordance with Article 2(1) of the Procedural Regu
which is not available under a commercial service
lation, Member States are required to notify in sufficient
supplied by a private operator. These services can be
time ‘any plans to grant new aid’. The change of IFP’s
classified into the following categories:
legal form was not formally notified by France, but only
pointed out incidentally in the context of other
proceedings, and the measure was implemented without
the prior approval of the Commission, so that the State
(a) services linked to specific infrastructures with very
aid in question was put into effect by the French
few if any equivalents in the world ( 219 );
Government in breach of Article 108(3) TFEU.
(b) interpretation of cases using software developed by
(259) Consequently, the Commission considers that this
IFP which is not yet marketed or which in the
measure constitutes unlawful aid within the meaning of
particular context can be used only with specific
Article 1(f) of the Procedural Regulation.
expertise and IFP skills ( 220 );
7.3 COMPATIBILITY OF THE AID MEASURE
(c) use of special IFP expertise ( 221 );
7.3.1 AID IN THE FIELD OF CONTRACT RESEARCH AND
SERVICES PROVIDED BY THE PUBLICLY OWNED
ESTABLISHMENT IFP
(d) use of expertise under development to validate the
(260) The services provided consist in the renting out of
competency, technologies and methodologies
research infrastructure, providing staff or providing
developed ( 222 ).
legal services (to the subsidiaries).
(263) The contract research services provided by the operating
centre for refining and petrochemicals have consisted, for
(261) IFP’s contract research services generally consist in
example, in assistance in the establishment, by a foreign
providing support to a customer (a third party or
university (
subsidiary) (

223 ), of activities within the specific

217 ) wishing to conduct research activities
competence of IFP in the field of catalysts, work
with a view to better understanding or mastery of a
relating to ‘[…]
(*)’
(
scientific or technical phenomenon (

224 ) to gain insight into the

218 ). The request
phenomena of […] (*), or a study on […] (*) (
may be more or less precise and leave IFP greater or

225 ).
lesser scope, ranging from simple compliance with spec
ifications strictly defined by the customer to the supply
( 219 ) The French authorities cite the following examples of uses in
of full research including recommendations. […] (*) In
particular:
— research equipment […] (*) for an evaluation […] (*) or to
response to a request IFP draws up a technical and
carry out tests […] (*);
commercial proposal, accompanied by contractual
— research equipment […] (*) to carry out a testing programme
conditions for implementation, which is then the
of […] (*) or to test a […] (*);
subject of negotiation with the customer. The French
— a […] (*) specifically adapted by IFP for its research work in
authorities have explained the contract research and
[…] (*) and […] (*) for […] (*);
— methodology for […] (*) developed by IFP to carry out a study
provision of services provided by IFP in its three fields
of […] (*);
of competence, handled by its operating centres (‘centres
— test cells adapted for […] (*) or […] (*);
de résultat’) for exploration and production, refining and
( 220 ) The French authorities cite in particular the example of use of a
petrochemicals, and engines and energy.
[…] (*) for […] (*).
( 221 ) The French authorities cite the following examples of uses in
particular:
— expertise […] (*);
— feasibility study concerning […] (*);
(262) The services provided by the operating centre for explo
( 222 ) The French authorities cite the following examples of uses in
ration and production are aimed in particular at vali
particular:
— feasibility study […] (*), feasibility study […] (*): expertise in
dating and/or improving the methodologies, technologies
[…] (*) developed with […] (*);
and software developed by the research centre. Moreover,
— study […] (*) on the site of […] (*), project […] (*): expertise in
to carry out some of these services, the centre makes
the field of […] (*) – validation and improvement of […] (*);
available to its industrial partners infrastructures and
— […] (*) under the project […] (*) (validation of the concept of
calculation algorithms specific to IFP or rare expertise
[…] (*)) on behalf of […] (*).
( 223 ) This involved […] (*), a university recently set up in […] (*), for
which the contract research services were invoiced in the context
( 217 ) It may be worth recalling that when contract research is carried
of a research consortium involving IFP, […] (*) acting on behalf of
out on behalf of subsidiaries, it relates to topics outside the
[…] (*).
exclusive fields of Axens and Prosernat.
( 224 ) The research work was carried out on behalf of […] (*). The
( 218 ) The French authorities explain that this might, for example, take
[…] (*) in particular enable […] (*) on the basis of […] (*).
the form of a geological study based on information supplied by
( 225 ) The study was carried out on behalf of […] (*): IFP in particular
the customer, laboratory testing for […] (*), or a performance
checked […] (*) and made recommendations on […] (*), used for
calculation for a material provided by the customer.
[…] (*).

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(264) Contract research services provided to car manufacturers
component which IFP does not seem to have taken
by the operating centre for engines and energy consisted,
into account is an insurance premium to be paid by
for example, in […] (*) on the basis of […] (*), of a
IFP for the performance bond (or best efforts guarantee).
[…] (*) and an IFP methodology ( 226 ), a study […] (*)
based on research by IFP […] (*) ( 227 ), or tests of
[…] (*) on […] (*) developed by IFP ( 228 ).
(270) As regards the contract research carried out by the
publicly owned establishment IFP on behalf of its
subsidiaries Axens and Prosernat, the Commission
(265) This description shows that the contract research
considers that the economic advantage resulting from
activities conducted by IFP on behalf of third parties
the guarantee may either remain with IFP and where
concern technical feasibility studies prior to research
appropriate be put to other uses or, in view of the
activities, or aim at the acquisition of new knowledge
specific nature of the links binding them to their
and skills in IFP’s fields of competence or at the appli
parent, be transferred to the subsidiaries through the
cation of knowledge and technologies developed by IFP
pricing mechanism:
to develop new products, processes or services.
(a) in the former case, the compatibility of the aid is
(266) The French authorities have supplied costings of the
examined in this section;
contract research activities and the provision of services
on behalf of third parties by IFP for the period 2004-
2009. The information sent shows that these research
services represent annually about [0-5] (**) % of IFP’s
(b) in the latter case, the Commission refers to the
total budget (i.e. EUR […] (*) in services for about
analysis of compatibility presented in section 7.3.2,
EUR 300 million in budget), which means that this
which, as a precaution, will include the amounts at
economic activity can be regarded as only residual
stake in the estimate of the advantage potentially
within the activities of the publicly owned establishment.
transferred to the subsidiaries.
7.3.1.1 Possible transfer of State aid to third parties or
(271) As regards third-party customers, likewise, if it could be
subsidiaries
established that an amount corresponding to this addi
tional cost component was systematically transferred to
(267) In accordance with point 3.1.2 of the R&D&I
Framework, where a not-for-profit research organisation
the third parties via the pricing mechanism, detailed
performs economic activities, such as renting out infra
examination of the aid transferred would very likely
structures, supplying services to business undertakings or
reveal de minimis sums ( 230 ). The information sent by
performing contract research, any public funding of these
the French authorities shows that the majority of the
economic activities will generally entail State aid.
services invoiced generate less than EUR […] (*) in
However, if it is possible to prove that the totality of
turnover (i.e. a maximum amount of cover of the risk
the State funding has been passed on to the final
of default of EUR […] (*)), the largest contract amounting
recipient, and that there is no advantage granted to the
to only EUR […] (*) (i.e. a maximum amount of cover of
intermediary, the intermediary organisation may not be a
the risk of default of EUR […] (*)).
recipient of State aid.
(272) However, it cannot be concluded that the margin applied
(268) In the present case the research organisation, which is the
by IFP has always allowed the totality of the State aid to
publicly owned establishment IFP, performs contract
be passed on to the customer for contract research
research activities whilst being covered by an unlimited
services. In such a case, the absence of a guarantee
public guarantee, and it must be held that it receives
premium paid to the State to cover contract research
State aid unless it can be proved that the selling price
contracts performed for third parties would constitute
of these services has allowed the totality of the State aid
additional public funding made available to the publicly
to be transferred to its customers.
owned establishment by the State.
(269) The pricing of IFP’s contract research services is estab
(273) The public funds involved could then be put to three
lished on the basis of their total production cost ( 229 ), to
uses:
which a margin is applied, the rate of which varies
according to the outcome of the negotiations with the
customer mentioned in recital 261. The only cost
(a) to finance non-economic activities of the publicly
owned establishment, which would not entail State
( 226 ) […] (*), who was aware of this tool, asked IFP to apply it to
aid;
[…] (*).
( 227 ) […] (*) asked IFP to adapt […] (*) allowing testing […] (*).
( 228 ) […] (*) asked IFP to apply its knowhow concerning […] (*) to
( 230 ) Commission Regulation (EC) No 1998/2006 of 15 December
validate […] (*).
2006 on the application of Articles 87 and 88 of the Treaty to
( 229 ) […] (*).
de minimis aid (OJ L 379, 28.12.2006, p. 5).

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(b) or to finance other contract research activities on
within the meaning of Union law. The fact that non-
behalf of third parties or subsidiaries: this case is
economic activities may be covered by a public
analysed in detail in section 7.3.1.2;
guarantee by reason of IFP’s legal form, therefore, does
not entail any granting of State aid. But the bulk of IFP’s
activity is of a non-economic nature. Consequently, the
impact of the guarantee it enjoys by virtue of its legal
(c) or to finance research carried out by the publicly
form falls mainly on these non-economic activities, and
owned establishment in the exclusive field of
affects the ancillary contract research and provision of
activity of its subsidiaries, which could consequently
services only in the second place.
be added to the amounts of State aid already trans
ferred to the subsidiaries: this hypothesis is analysed
in detail in section 7.3.2.
(276) On the other hand, where the guarantee covers the
economic activities of a research organisation, for
example contract research or provision of services,
7.3.1.2 Compatibility of a State guarantee conferred on
without being priced on market terms, it confers State
a research organisation for the performance of
aid on the research organisation, which, as explained
contract research services and services ancillary
above, can be added to the public funding of its non-
to its principal objective of independent public
economic activities in the general interest (independent
research
public research), or to the funding of its other economic
activities of contract research and provision of services,
(274) Before examining the specific features of the present case,
or finally to the funding of technological transfer to
the Commission wishes to reassert the general approach
Axens and Prosernat ( 234 ).
that it has adopted in its decision-making practice,
according to which an unlimited State guarantee
covering economic activities in principle constitutes
incompatible State aid ( 231 ). Generally, the Commission
considers unlimited guarantees in a sector open to
(277) In the first two cases, however, although in the present
competition to be incompatible with the TFEU, in
case the State guarantee is a priori unlimited, it is
particular because such a guarantee causes the State to
possible, exceptionally, to make an a posteriori
shoulder the liability for all the risks attaching to an
estimate, for the years 2006 to 2009, of an upper
economic activity without the beneficiary undertaking
bound to the gross grant equivalent of the effects of
paying the cost of such cover, and gives rise to a
the guarantee (the risk premium not paid to the State),
situation of moral hazard which incites the beneficiary
which (provided that it has been retained by IFP) comes
undertaking, protected from any threat of bankruptcy, to
in addition to the public funds already paid by the State
increase its risk-taking by comparison with a situation in
to IFP to cover the net costs of its independent public
which it would have to bear all the negative conse
research and contract research activity or provision of
quences of its actions. Under the principle of propor
services.
tionality, such unlimited guarantees cannot usually be
justified by the need to perform an economic task of
general interest, because with an unlimited guarantee it
is impossible to check whether the amount of aid
(278) In this respect, however, the Commission wishes to
exceeds the net costs of providing the public service ( 232 ).
emphasise that the contract research and the provision
of services covered by the State guarantee are confined to
activities which are ancillary to the principal activity of
independent public research, i.e. economic activities
(275) In the present case, it should be pointed out that French
which:
legislation has assigned public service obligations to the
publicly owned establishment IFP, consisting of a three-
fold task of research, training and documentation; unlike
services of general economic interest ( 233 ), these obli
gations fall outside the scope of economic activities
(a) do not prejudice the normal operation, the inde
pendence or the neutrality of the research organi
sation;
( 231 ) The Commission refers in particular to point 4.1.b of the Guar
antees Notice and to points 118 to 123 of the Community
guidelines on State aid for railway undertakings (OJ C 184,
22.7.2008, p. 13) (‘the Railway Guidelines’).
( 232 ) See in particular point 120 of the Railway Guidelines, recital 127
(b) are performed on normal market terms, and in
of the EDF decision cited above, and recital 311 of decision
C 56/2007.
particular at a market price or, in the absence of a
( 233 ) Although the expression ‘services of general economic interest’ is
market price, at a price that reflects all the organi
not defined in the Treaty, ‘there is broad agreement that the term
sation’s costs (net of the impact of the guarantee)
refers to services of an economic nature which the Member States or
plus a reasonable margin;
the Community subject to specific public service obligations by
virtue of a general interest criterion’ (Commission, Green Paper on
Services of General Interest, 21 May 2003, point 17, emphasis
( 234 ) The compatibility of such a use of the aid is analysed in section
added).
7.3.2.

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(c) are the subject of accounting separate from that of
(283) Provided that these ancillary activities continue to
the independent public research activities, especially
represent a very limited fraction of the budgets devoted
as regards their respective costs and funding;
by IFP to its principal task of independent public
research, and taking account of the positive impact of
these ancillary activities in terms of objectives in the
common interest, the Commission is of the opinion
(d) are intrinsically linked to the principal activity of
that the fact that they are covered by the State
independent public research, so that it is not
guarantee cannot under any circumstances adversely
technically possible to separate them, by reason in
affect trading conditions to an extent contrary to the
particular of the use of the same infrastructures,
interest of the Union within the meaning of
equipment, materials or technologies, or the use of
Article 107(3)(c) TFEU.
the same researchers, scientists, engineers, designers
or technicians.
(284) In the annual reports relating to the measure at issue, it
(279) These ancillary activities may consist in research, expert
will be for the French authorities to provide proof that
reports or technical or scientific consultancy, entailing
this condition is still being met. In case of doubt about
where appropriate the provision of infrastructures,
equipment, materials or technologies with high inno
the ancillary nature of contract research activities or
vative content which are funded or introduced in the
provision of services, they should of course notify the
context of, and are necessary to, the independent
Commission accordingly without delay, and where
public research work, which have few if any equivalents
appropriate notify any State aid taking account of the
in the world (
impact of the State guarantee.

235 ) outside the services offered by one or
more comparable research organisations, and the use of
which requires the expertise and competency of
researchers, scientists, engineers, designers or technicians
who are employed mainly by the research organisation to
contribute to its independent public research work.
(285) The Commission also takes note of the proposal of the
French authorities to include a clause stating that the
State bears no liability in any contract specifically
falling within IFP’s economic activity, and therefore its
(280) These services also permit the dissemination of scientific
contract research activities and its provision of services,
knowledge between public research and the industrial
so as to allow a plea of accepted risk to be relied upon
sector, offering customer undertakings the possibility to
where appropriate, thus strictly limiting any negative
access IFP’s experimental resources, technologies and staff
repercussions of the guarantee.
knowhow, and allowing IFP to accumulate feedback on
the use made of its original work, which is a source of
future improvements in its independent public research
activities. These reciprocal impacts in the field of
scientific knowledge are mutually beneficial for the
7.3.2 AID TO THE IFP GROUP IN THE EXCLUSIVE FIELDS OF
various operators involved and for the European Union
ACTIVITY OF AXENS AND PROSERNAT
as a whole.
7.3.2.1 Basis for the examination of the compatibility
of the aid
(281) As indicated in recital 266, contract research and services
(286) Since this is a State aid measure designed to support the
activities represented only [0-5] (**) % of IFP’s total
R&D work carried out by IFP, the rules applicable to the
budget over the period between 2004 and 2009,
examination of compatibility are those relating to State
which is an extremely small proportion.
aid for research and development.
(282) Moreover, for any one customer, the services invoiced are
usually for an amount below EUR […] (*) in turnover,
(287) Because IFP’s change of legal form took place on 7 July
which means that the estimated maximum amount of aid
2006, the date on which the State granted the unlimited
usually remains negligible, in the order of EUR […] (*)
guarantee in question is prior to 1 January 2007, when
per contract. Consequently, in the Commission’s view,
the R&D&I Framework entered into force. In accordance
the aid at issue is proportionate to the objective in the
with the notice on the determination of the applicable
general interest which is the dissemination of scientific
rules for the assessment of unlawful State aid (
knowledge in the European Union.

236 ),

therefore, the Commission will consider the compatibility
of this non-notified measure on the basis of the 1996
( 235 ) In particular on account of their nature as ‘prototypes’ or ‘pilot
R&D Framework, which was in force at the time the aid
projects’ within the meaning of point 2.2(g) of the R&D&I
was granted.
Framework, production of which would be too expensive to
allow them to be used only for demonstration and validation by
IFP’s customers.
( 236 ) OJ C 119, 22.5.2002, p. 22.

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(288) However, in view of the fact that IFP’s economic activities
the projects carried out in the exclusive fields of activity
are to be covered by the unlimited guarantee conferred
of Axens and Prosernat for the years 2007, 2008 and
by its EPIC status over an unlimited period of time, and
2009 into the two abovementioned categories defined in
in view of the fact that, as explained in recital 277, it is
the 1996 R&D Framework, or alternatively into
possible, exceptionally, to make a quantified estimate of
industrial research activities within the meaning of
the maximum impact of the guarantee in this particular
point 2.2(f) of the 2006 R&D&I Framework and
case, the Commission will also make an assessment of
technical feasibility studies preparatory to industrial
whether the cover provided by the unlimited guarantee
research within the meaning of point 5.2 of that
for IFP’s activities in the exclusive fields of activity of
Framework. The work consisted in studying new
Axens and Prosernat is compatible with the internal
synthesis routes or the improvement of synthesis
market on the basis of the R&D&I Framework, from
routes, on a scale far from the industrial level. It was
1 January 2007, the date on which the Framework
aimed at validating concepts, and constituted industrial
entered into force. In any event, the conclusions of the
research within the meaning of the 1996 R&D
analysis of compatibility remain the same whichever
framework and the R&D&I Framework. Annual
framework is applied.
summaries of each project were forwarded to the
Commission with the annual reports communicated
under decision C 51/2005.
7.3.2.2 Research stages
(289) In decision C 51/2005 ( 237 ), the Commission considered
that the activities carried on by IFP in collaboration with
(292) For the following years, the Commission points out that
its subsidiaries Axens and Prosernat in their exclusive
decision C 51/2005 requires France to submit a report to
fields of activity did fall under the heading of R&D,
the Commission each year setting out the details of the
because in each project sticking points were identified
projects carried out by IFP classified by category of
in the component parts, their relationships or the char
research.
acteristics of the target processes or products; the work
was carried out prior to certification, by staff consisting
mainly of research workers and technicians, using
methods based on experimentation, interpretation and
7.3.2.3 Eligible costs
modelling; and the results were wide in scope and
patented. The Commission also observed that activities
(293) The costs of projects in the exclusive fields of Axens and
of the same type carried on by other operators in the
Prosernat set out in decision C 51/2005 ( 241 ) (for 2006)
sector were usually classified as research activities ( 238 ).
and in the annual reports (for the years 2007, 2008 and
The analysis of the innovative aspects of the research
2009) are in line with the eligible costs defined in Annex
activities carried out was performed on the basis of the
II to the 1996 R&D Framework and point 5.1.4 of the
internationally recognised standards of the Frascati
R&D&I Framework.
Manual ( 239 ).
(294) The costs of research activities carried out by IFP invoiced
(290) With respect to the year 2006, in decision C 51/2005
to Axens and Prosernat include the costs directly
the Commission examined the work carried out under
chargeable to projects relating to sub-contracting, travel,
the research agreements concluded between IFP and
insurance and documentation, and supplies and small
Axens, on the one hand, and IFP and Prosernat, on the
equipment. They also include the other costs chargeable
other ( 240 ). The Commission came to the conclusion that
to projects such as expenditure on research personnel,
within the meaning of the 1996 R&D Framework this
the amortisation of fixed tangible and intangible assets
work consisted in industrial research activities and
and other overheads. These costs are incurred directly as
technical feasibility studies preparatory to industrial
a result of the research activities and are broken down
research activities. Each research activity carried out by
between the different research projects in proportion to
IFP and Axens on the one hand, and by IFP and
the time spent by the research personnel on each project.
Prosernat on the other, was classified on the basis of
The costs of cross-cutting R&D projects relating to the
the specific examples and explanations provided by the
methods and equipment used in other R&D projects are
Frascati Manual.
allocated in proportion to the costs of each R&D project.
(291) Moreover, in the reports forwarded in accordance with
decision C 51/2005, the French authorities have classified
(295) These costs fall into the following categories: costs of
consultancy and equivalent services, personnel costs,
costs of instruments, equipment, and land and
( 237 ) See recitals 168 to 171 of the decision.
( 238 ) See in this connection SINTEF’s website http://www.sintef.no/
premises, and additional overheads and other operating
default.aspx?id=490 (site consulted on 28 June 2011).
expenses, which are in line with the categories of eligible
( 239 ) Organisation for Economic Cooperation and Development, The
costs in the 1996 Framework and the R&D&I
Measurement of Scientific and Technological Activities: Proposed
Framework.
standard practice for surveys on research and experimental development,
2002.
( 240 ) See recitals 168 to 171 of the decision.
( 241 ) See recitals 168 to 171 of the decision.

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(296) In succeeding years this information too should be
(EUR million)
included in the annual reports submitted by the French
2006 2007 2008 2009
authorities.
Area of activity IFP/ […] (*) […]
(*) […]
(*) […]
(*)
Prosernat
7.3.2.4 Intensity of the aid
Total 7,4 3,5 0,9 0,9
(297) According to the 1996 R&D Framework, the maximum
Annual cost of industrial research work (EUR million)
permissible aid intensity is 75 % for technical feasibility
studies preparatory to industrial research projects (point
Area of activity IFP/ […] (*) […]
(*) […]
(*) […]
(*)
5.4) and 50 % for industrial research projects (point 5.3).
Axens
Area of activity IFP/ […] (*) […]
(*) […]
(*) […]
(*)
Prosernat
(298) According to the R&D&I Framework, the aid intensity, as
calculated on the basis of the eligible costs of the project,
Total 49,0 45,5 52,8 55,2
may not exceed 50 % for industrial research (point
5.1.2(b)) and 65 % for studies preparatory to industrial
Own resources (EUR million)
research activities carried out in large undertakings (point
5.2(b)). To recap, the activities covered by the State
Amount […]
(*) […]
(*) […]
(*) […]
(*)
guarantee relate only to industrial research and
Annual State aid (EUR million)
technical feasibility studies carried out by IFP, since
precompetitive development activity within the meaning
Amount of public 11,3 6,4 7,7 11,1
of the 1996 R&D Framework (or experimental devel
funding ( 1 )
opment within the meaning of the R&D&I Framework)
is financed entirely by Axens and Prosernat from their
Upper bound to the […] (*) […]
(*) […]
(*) […]
(*)
own resources out of income obtained on the markets.
impact of the

guarantee in dealings
between IFP and its
suppliers
(299) The Commission has drawn up Table 6 appearing in
recital 300 on the basis of the lists of projects detailing
Upper bound to the […] (*) […]
(*) […]
(*) […]
(*)
the annual costs by project and by research stage and on
impact of the
the basis of the statement of IFP’s resources.
guarantee in dealings
between IFP and its
customers ( 2 )
(300) In performing this exercise, the Commission has followed
— in the exclusive field […] (*) […]
(*) […]
(*) […]
(*)
a conservative approach by including all costs falling
of the subsidiaries
under the exclusive fields of activity of Axens and
Prosernat, directly or indirectly, and excluding all
— outside the exclusive […] (*) […]
(*) […]
(*) […]
(*)
proceeds other than those paid by Axens and
field of the subsidi
Prosernat (
aries

242 ). As a precaution, the Commission has
also integrated into this table all the potential effects of
Maximum amount of 13,1 9,8 11,3 14,7
the unlimited guarantee on the unlikely assumption that
public funding
they would all be used by IFP to fund research activities
(including the upper
in the exclusive fields of activity of Axens and Prosernat
bound to the impact
(effects of the guarantee in relations with suppliers and
of the guarantee)
customers, whether subsidiaries or third parties).
Intensity of the aid
20,0 % 13,0
% 14,3
% 19,8
%
(net of upper bound
to the impact of the
Table 6
guarantee)
Maximum estimate of the total amount of public funding
Upper bound to the 23,2 % 20,0
% 21,0
% 26,2
%
contributed by lFP to the activities carried out in the
intensity of the aid
exclusive fields of activity of Axens and Prosernat
(including upper
between 2006 and 2009
bound to the impact
of the guarantee)
(EUR million)
Maximum permissible
2006 2007 2008 2009
intensity ( 3 )
Annual cost of technical feasibility studies (EUR million)
— 1996 R&D
53 % 51,8
% 50,4
% 50,4
%
Framework
Area of activity IFP/ […] (*) […]
(*) […]
(*) […]
(*)
Axens
— R&D&I Framework
— 51,1
% 50,3
% 50,2
%
( 1 ) Data from decision C 51/2005 for 2006 and the annual reports
submitted by the French authorities for 2007 to 2009.
( 242 ) Own resources consist of dividends, royalties and other proceeds
( 2 ) See the last two lines of Table 5 in recital 236.
such as the income from patents filed by IFP. In its examination
( 3 ) Weighted average of the permissible aid intensities for industrial
the Commission has taken into account only remuneration paid by
research and feasibility studies.
Axens and Prosernat.

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(301) The Commission has checked on compliance with the
(306) The Commission would refer to the analysis in recitals
permissible intensities by research stage on the basis of
196 to 198 of decision C 51/2005 concerning the
the annual lists of projects carried out between 2006 and
strategic interest, monitored and validated by technical
2009, taking account of the maximum possible impact
committees, of the research conducted by IFP and its
of the unlimited guarantee deriving from IFP’s status as a
subsidiaries in the field of the long-term security of
publicly owned establishment, and incorporating as an
energy supplies, with special reference to renewing and
additional aid component the estimated upper bound
increasing production of oil and gas (increasing the
to the insurance premiums for the various risks. In all
success rate in exploration and deposit recovery rates,
cases, even incorporating all the possible effects of the
exploitation of unconventional resources, etc.),
guarantee in dealings with customers and suppliers, the
designing refining processes, developing conversion tech
upper bound to the intensity of the aid remains well
nologies, developing innovative fuels and efficient engine
within the maximum permissible. In conclusion, the
technologies, and diversifying the energy sources used in
Commission considers that the aid intensities permitted
fuel production; a large number of these objectives are
by the 1996 R&D Framework and the R&D&I
among the European Union’s priorities for research,
Framework are complied with.
energy policy and environmental policy.
(302) With regard to succeeding years, the Commission points
out that decision C 51/2005 requires France to submit
(307) With regard to the year 2006, the Commission reiterates
an annual report to the Commission so that the latter
the analysis it presented in recital 199 of decision
may satisfy itself that the aid intensities by research stage
C 51/2005, according to which, thanks to State
and by project are being complied with. From 2010, the
support, of which the unlimited guarantee forms an
report will have to cover all projects carried out in the
integral part, IFP and its subsidiaries were able to
fields of activity of Axens and Prosernat, classified
conduct additional research activities which would not
according to research categories, stating not only their
have been pursued otherwise, owing to the technological
costs by research stage and the amounts of public
risk or the highly uncertain return on investment.
financing and of own resources allocated by IFP and its
subsidiaries, but also the upper bound to the amount of
the guarantee premium, estimated according to the
method described in this decision, including any effects
on the terms of IFP’s debt financing in line with the
(308) On the basis of the annual reports submitted by the
reasoning in recital 200.
French authorities, the Commission finds that this
approach continued in 2007, 2008 and 2009. In these
reports, the French authorities indicate, for each project,
the incentive effect obtained as a result of the aid,
7.3.2.5 Cumulation
notably in terms of scope of the project, its speed and
(303) The rules on overlapping aid measures, whether in point
the increase in the total amount allocated to R&D.
5.12 of the 1996 R&D Framework or in point 8 of the
R&D&I Framework, are complied with. The Commission
has considered the total amount of public funding, irre
spective of its origin, including the maximum impact of
(309) For example, in 2007, in the exclusive field of Axens, the
the unlimited guarantee for the years 2006 to 2009.
IFP group conducted flagship projects, […] (*) ( 244 ).
[…] (*). Without State aid, a lag of several years would
have occurred before these products were placed on the
(304) From 2010, the French authorities are to apply the same
market: the R&D projects would have been launched
method in the annual reports sent to the Commission.
later, they would have developed more slowly, and
[…] (*).
7.3.2.6 Incentive effect
(305) The 1996 R&D Framework and the R&D&I Framework
(310) In the exclusive field of Prosernat, State aid enabled the
require that State aid have an incentive effect, i.e. result in
launch of the project […] (*) on […] (*), the finalisation
the recipient changing its behaviour so that it increases
and patenting of original processes of […] (*) ( 245 )
its level of R&D (and innovation). The following criteria
[…] (*). [Such a project] (**) entailed delicate, difficult
are generally sufficient to demonstrate the existence of an
operations requiring substantial human, technical and
incentive effect for projects in receipt of aid below the
financial investments that a company like Prosernat
thresholds for a detailed assessment: an increase in the
could not achieve alone. Consequently, the State
size of the project, an increase in its scope, an increase in
support provided by the publicly owned establishment
its speed and an increase in the total sum allocated to
IFP proved essential. In particular, only IFP had
R&D&I. If a significant effect on at least one of these
specialised teams available with the capacity to devise
elements can be demonstrated, the Commission will
the models necessary to develop the process and
normally conclude that the aid proposal has an
laboratory equipment adapted to handling components
incentive effect, taking account of the normal
which are harmful to health.
behaviour of an undertaking in the respective sector ( 243 ).
( 244 ) […] (*).
( 243 ) See point 6 of the R&D&I Framework.
( 245 ) […] (*).

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(311) In 2008, in the exclusive field of Axens, the State aid
explore solutions breaking with the existing technologies,
enabled removal of the scientific and technical barriers in
[…] (*). Likewise, the project […] (*) was continued on
[…] (*). Moreover, the project […] (*) ( 246 ) also
catalysts which, after extrapolation, allowed diversifi
underwent major developments. The State aid enabled
cation of the supply on the growth market […] (*).
the publicly owned establishment IFP to develop, in
Without the State aid, the development of the catalysts
association with industrial partners, a process […] (*),
would have been far more sequential and the
which will be accessible to the market via licensing.
improvement in performances slower. As regards
The development work for a process of this type
[…] (*), the project […] (*), which related to innovative
involves both […] (*), and […] (*).
catalysts […] (*) allowed new pathways to be explored
thanks to the State aid, whilst the project […] (*), which
aimed to explore the limits of the technology (variation
(312) In the exclusive field of Prosernat, a project […] (*)
in loads in particular) in order to […] (*), succeeded in
relating to the capture of CO 2 in fumes was imple
enlarging its spectrum beyond the existing performances.
mented. The capture/storage of CO 2 (CSC) is one of
the means identified to reduce global warming ( 247 ). In
view of the constituents of the fumes and their low
(314) In the exclusive field of Prosernat, the State aid permitted,
pressure, IFP had to take up new technological chal
for example, the relaunch and continuation of R&D work
lenges. Prosernat would not have been able to develop
with respect to […] (*) which had been undertaken but
this process from its own resources, in view of the uncer
gradually sidelined. The State support also meant that it
tainty surrounding the structure, magnitude, deployment
was possible to avoid losing the earlier technological
and regulatory framework of the future market for
achievements and to maintain a range of processes
capture of CO 2 .
[…] (*) on the market. Likewise, the public aid allowed
the continuation of the project […] (*) on the capture of
CO 2 […] (*).
(313) In 2009, in the exclusive field of Axens, the project
[…] (*) on the processes […] (*) can be mentioned as
an example. Its aim was to develop […] (*) and to
(315) The Commission also takes note of the continuation
improve certain processes […] (*). Thanks to the public
between 2007 and 2009 of the positive trend in
funding, […] (*) could be studied, which allowed a
indicators of the R&D efforts of IFP and its subsidiaries
significant improvement to the […] (*). The project
Axens and Prosernat which it noted in recital 200 of
[…] (*) was able, thanks to the public financing, to
decision C 51/2005.
Table 7
Progression of the indicators measuring the effort of IFP and its subsidiaries Axens and Prosernat in 2007, 2008
and 2009
Progression of the indicators IFP/Axens IFP/Prosernat
2007/2003 2008/2003 2009/2003 2007/2003 2008/2003 2009/2003
Expenditure allocated to R&D in the exclusive field […]
(*) […]
(*) […]
(*) […]
(*) […]
(*) […]
(*)
Staff allocated to R&D in the exclusive field […]
(*) […]
(*) […]
(*) […]
(*) […]
(*) […]
(*)
(316) In addition, the Commission reiterates the findings it
and the functioning of competition on the refining and
summarised in recitals 201 to 203 of decision
petrochemicals market ( 248 ). Certain competitors enjoy a
C 51/2005: the proportion of the IFP groups’ turnover
far more comfortable competitive position than that of
accounted for by R&D expenditure is particularly high,
the IFP group: UOP, for example, possesses a world
even though it works in a context subject to a large
market share in the order of 57 % in terms of value,
number of constantly evolving national regulations,
compared to only 7
% for the IFP group. The
especially with regard to environmental standards and
Commission therefore considers that the State aid
intellectual property protection regimes.
granted to the R&D projects conducted by the IFP
group is not, by its nature or proportions, such as to
impair the dynamic incentives of the refining tech
(317) As in recital 204 of decision C 51/2005, the
nologies market. Moreover, it is clear that trading
Commission notes the diversity and structure of supply
( 246 ) This process […] (*) allows […] (*). This is a key component of the
( 248 ) The Commission notes in particular that price competition is not
chains […] (*) which are intended to […] (*). The chain […] (*)
the main argument for differentiation between the offers available
also offers the advantage of […] (*).
on the market, since customers select a technology on the basis of
( 247 ) Post-combustion capture is one of the processes that can prevent
various criteria, some of which, such as the installation cost
the discharge of CO 2 into the atmosphere on combustion of a
involved and the profitability of the investment, are considered
hydrocarbon or carbon.
to be critical, but are totally exogenous to the research projects.

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partners of the European Union, and especially the
must be applied equally to private and public enterprises.
United States, devote large budgets to financing
Neither of these two types of enterprise may be placed at
research into energy which have allowed support to be
an advantage or disadvantage by the application of those
given to the R&D projects carried out by the IFP group’s
rules.
competitors. For instance, certain competitors of the IFP
group, and in particular UOP, enjoy substantial State
support ( 249 ) or have benefited from indirect State
support through partnerships with research institutes
(324) In the present case, the guarantee enjoyed by the publicly
and universities.
owned establishment IFP stems not from the ownership
of the enterprise but from its legal form. The Member
States are free to choose the legal form of enterprises, but
they must, when making their choice, comply with the
(318) In conclusion, the Commission considers that the State
competition rules of the Treaty. In particular, the mere
aid for the IFP group in the exclusive field of its
fact that a State guarantee automatically derives from a
subsidiaries Axens and Prosernat had an incentive effect
particular legal form does not prevent the guarantee from
in 2006, 2007, 2008 and 2009.
constituting State aid within the meaning of
Article 107(1) TFEU if the necessary conditions are
met ( 250 ),
(319) From 2010, the annual reports that are to be submitted
by France to the Commission, until the exclusive
agreements between the publicly owned establishment
HAS ADOPTED THIS DECISION:
IFP and its subsidiaries Axens and Prosernat expire, will
have to show that the aid still has an incentive effect.
Article 1
1. The
status
of
publicly
owned
industrial
and
commercial
(320) In the light of all the above considerations, the
establishment granted by France to IFP conferred on IFP, from
Commission concludes that the State aid granted to the
7 July 2006 onward, an unlimited public guarantee (‘the State
IFP group for activities in the exclusive fields of its
guarantee’) covering the totality of its activities.
subsidiaries Axens and Prosernat, including the aid
component deriving from the effects of the unlimited
guarantee enjoyed by the publicly owned establishment
IFP, is in keeping with the provisions of the 1996 R&D
2. The cover provided by the State guarantee for the non-
Framework and those of the R&D&I Framework, subject
economic activities of the publicly owned establishment IFP, in
to compliance with the conditions set forth therein.
particular its training activities with a view to increased, better
qualified human resources, its independent R&D activities with a
view to more extensive knowledge and better understanding,
and its activities for the dissemination of research results,
7.3.3 CONCLUSION ON THE COMPATIBILITY OF THE
does not constitute State aid within the meaning of
MEASURE
Article 107(1) TFEU.
(321) In conclusion, the Commission considers that the
measure at issue is compatible with the internal
market, subject to compliance with the conditions set
forth in sections 7.3.1 and 7.3.2.
3. The cover provided by the State guarantee for the tech
nology transfer activities carried out by the publicly owned
establishment IFP in the fields provided for by the exclusive
development, marketing and use agreement concluded with its
subsidiary Beicip-Franlab does not constitute State aid within
8 NEUTRALITY WITH REGARD TO THE RULES
the meaning of Article 107(1) TFEU.
GOVERNING THE SYSTEM OF PROPERTY OWNERSHIP
(322) The Commission wishes to emphasis that it is in no way
disputing the State’s ownership of IFP, nor is it chall
enging its status as a legal entity governed by public
4. The cover provided by the State guarantee for the tech
law as such.
nology transfer activities carried out by the publicly owned
establishment IFP in the fields provided for by the exclusive
agreements concluded with its subsidiaries Axens and
Prosernat referred to in Article 3(1) of the Commission
decision of 16 July 2008 on the aid measure implemented by
(323) Under Article 345 TFEU the Union is neutral with regard
France for the IFP group (‘decision C 51/2005’) constitutes State
to the rules governing the system of property ownership
aid within the meaning of Article 107(1) TFEU.
in the Member States, and no provision of the Treaty
prevents a State from owning enterprises (whether
wholly or partly). That being so, the rules of competition
( 250 ) See in particular point 1.5 of the Guarantees Notice, which
confirms the principle of neutrality, and point 1.2, which
explains that a State guarantee may result from the simple fact
( 249 ) The Commission refers to recital 204 of decision C 51/2005.
of the legal form (second and fourth indents of that point).

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5. The
cover
provided
by
the
State
guarantee
for
the
contract and a maximum estimate of the gross grant equivalent of the
research and other services performed by the publicly owned
aid resulting from a more favourable assessment by suppliers of
establishment IFP, on behalf of both third parties and the
the risk of default of the establishment. This estimate shall be
subsidiaries, constitutes State aid within the meaning of
made either by applying a flat rate of 2,5 % to the value of
Article 107(1) TFEU.
acquisitions made, or on the basis of a more precise
methodology approved in advance by the Commission.
Article 2
4. The annual financial report shall include the value of the
In the event of any amendment of the agreement between the
economic activities referred to in Article 1(4) and (5) carried out
publicly owned establishment IFP and its subsidiary Beicip-
by the publicly owned establishment IFP during the year under
Franlab referred to in Article 1(3), France shall notify the
review, and a maximum estimate of the gross grant equivalent
agreement to the Commission, taking account of any impact
of the aid resulting from the lack of payment of a premium
of the State guarantee in order to assess the total amount of any
corresponding to a performance bond or, at the very least a
public funding, unless the new contractual terms allow the
best efforts guarantee, offered to the beneficiaries of the above-
presence of State aid to be ruled out.
mentioned economic services. This estimate shall be made either
by applying a flat rate of 5 % to the value of the services
provided or on the basis of a more precise methodology
approved in advance by the Commission.
Article 3
In the period between 7 July 2006 and 31 December 2009, the
cover provided by the State guarantee for the economic
Article 6
activities referred to in Article 1(4) and (5) constituted aid
compatible with the internal market.
1. The
total
amount
of
public
funding
allocated
to
the
activities of the publicly owned establishment IFP in the
exclusive fields of activity of Axens and Prosernat, including
the maximum impact of the State guarantee as estimated in
Article 4
Article 5(2), (3) and (4), must be lower than the maximum
intensity permitted by the Community framework for State
From 1 January 2010 onward, and until the date of expiry of
aid for research and development and innovation.
the exclusive agreements between the publicly owned estab
lishment IFP and its subsidiaries Axens and Prosernat referred
to in Article 3(1) of decision C 51/2005, the cover provided by
the State guarantee for the economic activities referred to in
2. If the threshold referred to in paragraph 1 is exceeded, the
Article 1(4) of this decision constitutes aid compatible with the
surplus aid shall, where appropriate, be refunded by the
internal market, subject to compliance with the conditions in
subsidiary concerned, Axens or Prosernat, to the publicly
Articles 5 and 6 of this decision.
owned establishment IFP.
Article 5
Article 7
1. The
annual
financial
report
referred
to
in
Article
4(2)
of From 1 January 2010, the cover provided by the State
decision C 51/2005 shall include, in addition to the information
guarantee for the economic activities referred to in
already mentioned in Article 5(1) of that decision, the
Article 1(5) constitutes State aid which is compatible with the
information listed in paragraphs 2, 3 and 4 of this Article.
internal market, subject to compliance with the conditions in
Article 8.
2. The
annual
financial
report
shall
include
the
value,
interest
rate and contractual terms of the loans subscribed to by the
Article 8
publicly owned establishment IFP during the year under review,
1. The
contract
research
activities
and
the
provision
of
and an estimate of the gross grant equivalent of any interest rate
services carried out by the publicly owned establishment IFP
subsidy deriving from the State guarantee, unless proof is
referred to in Article 1(5) shall remain ancillary to its
supplied that these loan contracts are in accordance with
principal activity of independent public research.
normal market conditions, either by comparing their terms
with those obtained by the publicly owned establishment IFP
before its change of legal form, or on the basis of a more
precise methodology approved in advance by the Commission.
2. To
be
considered
ancillary,
the
contract
research
activities
and the provision of services by the publicly owned estab
lishment IFP must:
3. The
annual
financial
report
shall
include
the
value
of
goods and services obtained by the publicly owned estab
lishment IFP from suppliers to carry out the economic activities
— not prejudice the normal functioning, independence and
referred to in Article 1(4) and (5), during the year under review,
neutrality of the publicly owned establishment IFP;

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— be charged for at a market price, or in the absence of a
3. The
French
authorities
shall
have
a
similar
clause,
ruling
market price, at a price which reflects the totality of the
out liability of the publicly owned establishment IFP and the
costs, plus a reasonable margin, net of the potential
State, included in any contract involving a claim concluded by
impact of the State guarantee;
the public limited companies Axens, Beicip-Franlab and
Prosernat.
— be the subject of accounting separate from that of the inde
pendent public research activities (accounting separation of
4. The publicly owned establishment IFP shall refrain from
their respective costs and funding), and the profits they
issuing any form of suretyship, endorsement, guarantee, or letter
generate must be reinvested in full in the principal activity
of intent or comfort in favour of the public limited companies
of independent public research;
Axens, Beicip-Franlab and Prosernat which does not comply
with normal market terms.
— be intrinsically linked to the principal activity of inde
pendent public research of the publicly owned establishment
IFP by reason in particular of the use of the same infra
Article 10
structures, equipment, materials or technologies, or the use
France shall notify individually to the Commission any aid of an
of the same researchers, scientists, engineers, designers or
amount in excess of the thresholds laid down in the
technicians;
Community framework for State aid for research and devel
opment and innovation, taking account of any impact of the
— be outside the scope of the exclusive agreements concluded
State guarantee.
between the publicly owned establishment IFP and its
subsidiaries Axens and Prosernat referred to in Article 3(1)
of decision C 51/2005, where appropriate extended or
Article 11
amended in accordance with Article 3(2) of decision
France shall inform the Commission, within two months from
C 51/2005 and Article 12(2) of the present decision;
the date of notification of this decision, of the measures it has
taken to comply herewith.
— represent only a residual proportion of the budget devoted
by the publicly owned establishment IFP to its independent
public research activities.
Article 12
1. Articles 4, 5 and 6 of the present decision shall apply
3. France
shall
submit
each
year
to
the
Commission
a
report until the date of expiry of the exclusive agreements referred
on the contract research activities and provision of services
to in Article 3(1) of decision C 51/2005 between the publicly
carried out by the publicly owned establishment IFP which
owned establishment IFP and its subsidiaries Axens and
specifies the ratio of their value to the budget devoted by the
Prosernat.
publicly owned establishment IFP to its independent public
research activities.
2. Where
they
notify
the
Commission
of
an
extension
of,
or
amendment to, the above-mentioned exclusive agreements, in
Article 9
accordance with Article 3(2) of decision C 51/2005, the French
authorities shall take account of the impact of the State
1. The
French
authorities
and
the
publicly
owned
estab
guarantee in order to assess the total amount of public funding.
lishment IFP shall include the following written statement in
the financing contract for each transaction (for all instruments
covered by a contract):
Article 13
‘The issue/programme/loan does not enjoy any form of direct
This decision is addressed to the French Republic.
or indirect State guarantee. In the event of insolvency, the
State would not be obliged to act as financial substitute for
the publicly owned establishment IFP for payment of the
Done at Brussels, 29 June 2011.
claim.’
For the Commission
2. The French authorities shall have a similar clause, ruling
out State liability, included in any contract relating to contract
Joaquín ALMUNIA
research services or other services referred to in Article 1(5).
Vice-President

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