EdF to challenge Brussels tax ruling

Resumen de Prensa            Enervía, jueves, 15 abril 2004

FUENTE: Financial Times


Electricité de France, the world's biggest power company, is planning to contest a European Commission ruling forcing it to repay €1.2bn ($1.4bn) of tax breaks and interest to the French state.



The move pitches Paris and Brussels in another dispute over state aid.

François Roussely, EdF chairman, said the public power utility would launch an appeal against the ruling at the Court of First Instance, the EU's second-highest court, during the next two weeks "with the full support of the government".

In a move described at the time as "questionable" by the French government, the Commission in November said its preliminary findings in the case against EdF called on Paris to recover €888m of illegal tax benefits plus interest.

The biggest state aid refund in European history forced EdF to record a €328m charge in its 2003 results, hampering its attempts to shore up its balance sheet ahead of a planned partial flotation as early as next year.

The Commission said EdF had not paid sufficient taxes.

But the company is understood to be preparing a case based on its belief that the subsidies were a form of state investment in the national power network.

EdF's court fight is unlikely to anger Brussels. Appeals against state aid decisions are part of normal EU procedure, although Paris last year enraged the Commission by breaking a deadline for its Bull subsidy and initially failing to consult over plans to bail out Alstom.

The EdF issue is a further test for Nicolas Sarkozy, who took over as finance minister in a cabinet reshuffle two weeks ago.

He is trying to manage the conflicting demands of tight budget discipline demanded by Brussels and rising state spending commitments.

Mr Sarkozy, who hopes to establish a less abrasive relationship with Brussels than his predecessor Francis Mer, this week met with powerful EdF trades unions to outline plans for changing its legal status ahead of an eventual flotation.

The government plans to introduce a bill at the start of June proposing a legal transformation of EdF and a reform of its deficit burdened pension regime with a vote by parliament expected before the end of July.

EdF unions, worried about losing their generous pension rights, are threatening to disrupt the plans.

A strike last week saw more than 800 areas suffer black-outs and unions have called for a nationwide day of action on April 22.