The 9 billion euro shareholder loan offered to Orange by the French authorities at end 2002 cannot be classified as State aid: Orange, advised by Gide, obtains the annulment of the European Commission’s decision

New success for Orange (previously France Télécom) and the French State following the annulment by the General Court of the European Union, for the second time, of the decision rendered by the European Commission in the financial measures case. Following the Court of Justice’s ruling of 19 March 2013 annulling its previous judgment, the General Court’s ruling of 2 July 2015 considers that the European Commission was wrong to classify as State aid the 9 billion euro shareholder loan to Orange in December 2002, in the context of the company’s financial restructuring plan.

The General Court’s ruling is a landmark decision that specifies the application conditions for the “prudent private investor” test.

The General Court reminds that the prudent private investor test should be applied in relation to the time when the measure at issue was taken by the French State. In the case at hand, while the measure in question (shareholder loan offer first announced to the market and then sent to the company) was adopted in December 2002, the Commission applied the test on a situation that existed prior to the first declaration of support by the French authorities, i.e. July 2002. For the General Court, this appreciation of the situation is wrong. The Commission can of course have regard to prior events and objective facts that form part of the context of the measure in question. However, in this case, all events that took place before the adoption of the measure and that determined the French State’s decision in 2002 also had to be taken into account.

The General Court then highlights that the French State, just like any other investor or private shareholder, can make use of the financial markets’ specific operating rules. In this regard, the fact that the declarations of support by the French State may be perceived by the market as a commitment, is not sufficient to conclude that these declarations are likely to lead to economic or legal consequences and that that they are thus capable of committing State resources. In essence, the State must provide a clear, precise and firm commitment to support the company. In the case at hand, the declarations were, as regards the form, scope and conditions of potential future intervention by the French State, of an open, general and conditional character. They therefore contained no irrevocable commitment of support or investment by the State. Without commitment to act prior to December 2002, the State adopted the same prudent attitude as a prudent private investor who waits for all requisite conditions to be met before committing resources.

Orange was represented before the General Court and the Court of Justice by partner Stéphane Hautbourg and counsel Sophie Quesson from Gide’s Brussels office.