The General Court upholds finding that the French government grant for very high-speed broadband network did not constitute S…

On 16 September 2013, the General Court rejected three applications for annulment and upheld the Commission's decision that the French government grant of €59 million to Sequalum did not constitute state aid (T-79/10 Colt Télécommunications France v. Commission, T 258/10 Orange v. Commission and T-325/10 Iliad, Free infrastructure and Free v. Commission).

On 30 September 2009, the Commission adopted a decision declaring that the compensation for public service charges of €59 million, granted by the French government to Sequalum SAS (a subsidiary of the Numericable group), for the establishment and operation of a very high-speed broadband electronic communications network in the French Hauts-de-Seine department does not constitute State aid. Three actions for annulment were introduced before the General Court against that decision by electronic communications operators active in the Hauts-de-Seine department.

The applicants first claimed that the Commission infringed their procedural rights, by not having initiated the formal investigation procedure provided for in Article 108(2) TFEU, despite the fact that it experienced serious difficulties in assessing whether the measure at stake was compatible with the common market. The applicants argued, inter alia, that the 15 month-long preliminary examination of the notified measure by the Commission constituted an indicator of the serious difficulties encountered. The GC rejected that argument, recalling that the duration of the preliminary examination must be calculated as from the date of receipt by the Commission of the complete notification. According to the Court, a notification can only be regarded as complete after the last transmission, by the notifying Member State, of information requested by the Commission. From that moment, the Commission has a maximum period of two months to adopt a decision. In the present case, the GC considered that the last additional information was sent on 10 August 2009 by the French government, and that the Commission’s decision, which was adopted on 30 September 2009, occurred within the two-month time limit.

The applicants also claimed that the Commission committed an error of law in applying the four Altmark criteria. Particularly, they argued that the contested measure does not respond to a market failure. The General Court confirmed that market failure is a necessary condition for the general economic interest criteria but concluded that the Commission did not err in law in finding that there was a market failure. This conclusion is in stark contrast to applicants' contention that several electronic communications operators, including Orange, were already present in the department at the time of the adoption of the contested decision or had announced their intention to deploy very high speed broadband networks. Notwithstanding these claims, the GC considered that there was a market deficiency justifying the public compensation. Accordingly, the GC confirmed the Commission’s decision and dismissed the three applications for annulment.