France Telecom faces billion-euroEU cash-back demand

15th July 2004, Comments 0 comments

BRUSSELS, July 15 (AFP) - European Competition Commissioner Mario Monti will ask the EU commission next week to demand that France Telecom repay tax benefits of EUR 1.1 billion (USD 1.4 billion) plus interest, an EU source said here Thursday.

BRUSSELS, July 15 (AFP) - European Competition Commissioner Mario Monti will ask the EU commission next week to demand that France Telecom repay tax benefits of EUR 1.1 billion (USD 1.4 billion) plus interest, an EU source said here Thursday.  

The source said Monti did not intend to press France Telecom to pay back EUR 9.0 billion made available by the French state.  

The European Commission was ready, after several days of wavering, to conclude the whole investigation into France Telecom which began in January 2003.  

Monti is expected to make his recommendation to the commission on Tuesday.  

The first part of the 17-month investigation focused on whether France Telecom benefited from improper exemption from a tax that companies in France pay to local authorities in the areas where they have installations.  

The commission could demand that France Telecom pay EUR 1.1 billion calculated as the amount it gained from this arrangement, plus interest, although some commissioners have questioned the figure.  

EU sources said earlier this month that the commission had concluded that the special arrangements amounted to an unfair advantage for France Telecom.  

The arrangements applied from January 1994 to the end of 2002.  

The second part concerns EUR 9 billion made available by the French state in 2002, and - more generally - verbal expressions of support from French authorities for the state-controlled telecom operator that had run into a debt crisis after the collapse of the high-tech bubble.  

The EU source said Monti held this support also amounted to state aid but that he did not intend to ask for any repayment.  

Despite the impression given by his team that they wanted to pursue this aspect, Monti had decided to wind up the whole issue without going further.  

His officials had wanted to extend the second part of the probe to take account of remarks in July 2002 by the then French Economy Minister Francis Mer giving support to the company.  

But the commission's legal officials had opposed this line of action, arguing that it was too risky.  

The case of France Telecom is just one of a string of disputes between the commission and France over competition issues and state aid.  

The French government and France Telecom disagree with each point of the argument put forward by the commission.  

France Telecom said recently that it would not comply with any request for repayment.   On Thursday the company declined to comment on reports that Monti planned to press for reimbursement.

 

 

© AFP

 

Subject: French news

 

 

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