Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Not-so-mainstream pending cases (II)

with 2 comments

I am back with a reference to another ‘not-so-mainstream’ case (you could all see that Alfonso cannot control his blogging urges)

This one is probably more mainstream than the previous one, but the whole field of State aid remains conveniently ‘underground’, so it probably belongs here too (incidentally, my State aid seminar has just started). This case brings us back to the good all days of the dot-com bubble (and we all thought that was a recession). As many other ‘convergent’ firms, France Telecom was in big trouble. In those dramatic circumstances, the French government stepped in and essentially announced that it would do anything to save the company. The goal was to stabilise the credit ratings of the firm. Now that we are undergoing a dramatic recession we understand the importance of ratings much better (just think of Mario Draghi’s bold statement in July last year).

The question raised in the case was that of whether the steps taken by the French government to preserve the viability and creditworthiness of France Telecom amounted to State aid. The General Court disagreed with the Commission and concluded that, while granting an advantage, such steps did not involve the use of State resources, as consistently required by the ECJ since Preussen Elektra. In an interesting opinion (in French only) issued in June last year, AG Mengozzi proposes to set aside the GC judgment. He considers that the interpretation given by the GC (at least as far as some of the measures are concerned) is excessively formalistic. I am looking forward to the judgment. If one considers the case law on guarantees and similar measures, AG Mengozzi is probably right.

A couple of thoughts in relation to the judgment:

  • This is a good reminder of why the Trinko doctrine will never carry the day in Europe. I think Trinko is a sensible and thoughtful opinion that is widely misunderstood. However, if one takes account of the links between incumbent operators and Member States, it probably makes sense to leave room for the application of competition law in Europe. Let us not forget that the facts giving rise to the Wanadoo decision (predatory pricing) took place at roughly the same time.
  • The GC and the ECJ have recently and notoriously disagreed on some high profile State aid cases. These cases relate to the notion of selectivity (British Aggregates, Gibraltar, NOx). The GC tends to side with Member States and the ECJ with the Commission. AG Mengozzi’s opinion suggests that this will be the case here. We will see

Pablo

Written by Alfonso Lamadrid

16 January 2013 at 9:33 pm

Posted in Uncategorized

2 Responses

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  1. You are right. The concept of State Aid is sure the “clé de but” of the EU State Aids control. And, unfortunatly, it is not a solved question. From the Sloman Neptum Case the interpretation of the ECJ is wrong, from my point of view, because reduce the notion of State Aid unnecessary.

    As you said, tto, once again the AG’s try offer the ECJ the best doctrine, but I’m not sure that, as happened in EDF case, the Court will get it.

    When I said the best doctrine I was thinking in Slotboom, M. M. («State Aid in Communty Law: A Broad or Narrow Definition?», in ELR, vol. 20, nº 3, june 1995, pp. 289 a 301), and more recently in Thomas Jaeger («Goodbye Old Friend: Article 107’s Double Control Criterion», in EStAL 3|2012 Editorial, p. 535).

    “Ojalá” the ECJ change its mind in such essentials matters ¡¡¡

    José Antonio Rodríguez Miguez

    José Antonio Rodríguez Miguez

    18 January 2013 at 12:52 pm

  2. […] readers wll remember that during my short-lived tenure as a substitute blogger a few months ago, I wrote about a pending State aid case involving France Telecom. I guess that at least a fraction on those readers will be interested in […]


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