Commission Decision (EU) 2018/1616 of 18 May 2018 on the measure SA.12594 (C13a/2003) (ex NN/2002) implemented by France for Orange (France Télécom) (notified under document C(2018) 2882)Text with EEA relevance.

(93) The third report focuses on the economic rationale behind the State's conduct between 4 September 2002 (the announcement of the first six months' results) and 15 April 2003 (the carrying out of the capital increase). The report is based on an analysis of France Télécom's situation in September 2002 and draws a distinction between, on the one hand, France Télécom's operational performance (healthy activities with a potential for improving the operational cash flow) and, on the other, the amount of the operator's debt. The report concludes on this point that the time lag between the generation of the group's cash flow and the heavy short-term financial commitments (2003-2005) poses a problem of refinancing but not of solvency.

(94) HSBC also describes the background to the short-term liquidity crisis, worsened as it was by a crisis of confidence on the part of the market vis-à-vis the group. It states that, in a situation such as that, reason demanded that urgent steps be taken and required the introduction of a plan to improve the operational results, an increase in capital, a rescheduling of debt and a targeted policy of disposing of assets. It argues that, in the present case, the Ambition 2005 plan is a complete and rational coherent plan as it permits among other things the generation of a EUR 15 billion cash flow via an operational improvement and a disposal of assets that does not involve any amputation of core businesses. It stresses that a capital increase in support of a company introducing an operational recovery plan is a natural way of rebalancing the accounts. It points out that the oral

support of a majority shareholder is also usual and rational and that it is normal practice for reference shareholders to announce their decision before other shareholders do. It also points out that in this case the shareholder loan was a low-risk, profitable and normal transaction — pending a capital increase — aimed at safeguarding the majority shareholder's financial interests at a time (the month of December) when it was not possible to recapitalise the company for reasons of scheduling. It adds that the loan was to be made on market conditions.

(95) The HSBC report mentions also the trend in the price of France Télécom shares on the stock exchange, pointing out that the shares had risen in July 2002 as a result of rumours of nationalisation, only to fall again in September because, although the market had got wind of a possible EUR 15 billion capital increase, the practical arrangements were not as yet clear. It points out that France Télécom's financial projections presage, for the State, a highly satisfactory return: according to the DCF — discounted cash flow — method, the recapitalisation involves an annual rate of return of 25 %, whereas the average rate on the telecommunications market is 9,9 %.

(96) In response to the dispatch of the NERA report, France Télécom notes that the conditions required for the State's responsibility to be incurred for non-compliance with its promise are not met in the present case. In no way does the mere act of making a promise, even to pay certain sums of money, suffice in itself to commit public finances, to immobilise state resources, without a legal instrument. It concludes on this point that there is nothing in French case law to show that there has been a transfer of state resources in the present case due to the conditional promise of a shareholder loan.

(97) According to France Télécom, the State has not placed any credit line at France Télécom's disposal through ERAP. Declarations are not legally binding on the State, either vis-à-vis France Télécom or vis-à-vis third parties. The State, however, cannot commit itself without an act giving rise to a right, carried out in compliance with the rules on competence and on budgetary procedure.

(98) France Télécom emphasises more particularly the context in which the declarations were made, pointing out that this is necessary in order to measure their true scope. An analysis of the declarations in the light of events between late June and December 2002 thus shows that the declarations could not constitute a promise, and does not show that the appropriate measures planned by the State were financial measures. There were differences of opinion within the Government at the time and the Minister for Economic Affairs and Finance did not represent the Government standpoint. A study of the facts reveals that there was no such intention on the part of those responsible, who were at a loss how to solve the problem, and that operators had never said they believed the State had committed itself to one or other solution.

(99) France Télécom concludes by saying that the consultant's conclusions are wrong because:

Analysis of the France Télécom group's situation at the time of the announcement of the results for the first half of 2002 shows that the group has an unbalanced balance sheet and a short-term liquidity problem, but the business's operating results are very good.

Analysis of the range of measures a prudent shareholder must envisage in a situation of heavy indebtedness indicates that it was rational to introduce a recovery plan, including a recapitalisation, for a group with healthy assets whose intrinsic worth is greater than the sum of its market capitalisation and its net debt.

Analysis of value creation and profitability prospects suggest that the State is making a very good investment by participating in a capital increase and that it is taking little risk in providing a shareholder loan.

1. COMMENTS BY FRANCE

(100) The French authorities state by way of introduction that they have behaved in accordance with the prudent private investor principle from the outset. Since the announcement of France Télécom's results for the first half of 2002, which highlighted an unbalanced financial structure and significant capital needs despite good operating results, the State has drawn the necessary conclusions, placing a new CEO at the head of the Company and gathering together a banking syndicate which undertook from September 2002 to underwrite a capital increase when the time came. At the same time, the State asked the new management to carry out an in-depth audit of the Company. On the basis of the Ambition 2005 plan, about which the majority shareholder was kept regularly informed, and of the banking syndicate's commitment, the State announced, on 4 December 2002, its decision to

participate in the strengthening of the Company's capital base to the tune of EUR 9 billion and the fact that it was prepared to place at France Télécom's disposal, through ERAP, an advance on this subscription remunerated at market rates. However, in view of the financial terms of grant of this advance by the French authorities and of the Commission's misgivings about the presence of aid elements in the measure, France Télécom preferred to resort directly to the bond market.

4.1.

France Télécom's financial situation

(101) The French authorities maintain that, when the decision to invest was taken, France Télécom was not a firm in difficulty within the meaning of the Guidelines

Community guidelines on State aid for rescuing and restructuring firms in difficulty (OJ C 244, 1.10.2004, p. 2).

. The Company's turnover was increasing steadily (by 10 % between the first half of 2001 and the first half of 2002), and its gross cash flow was high and growing faster than its turnover. The French authorities refer to the Company's unbalanced financial structure as at 30 June 2002 and point out that the losses were mainly due to the exceptional provisions and write-downs linked to the depreciation of assets acquired prior to the entirely unforeseeable reversal of the markets. France Télécom's operating costs were increasing more slowly than its turnover, which meant that its profitability was improving. Moreover, operating results and cash flow were increasing (with cash flow up 15 % on the first half of 2001). France Télécom's very good performance prospects were further improved by the TOP plan. This performance was confirmed when the 2002 accounts were published, showing as they did the virtuous dynamic triggered within the Company by the new management.

(102) On the criterion concerning the movement in company capital referred to in point 5(a) of the Guidelines, the French authorities point out that the relevant indicator is, pursuant to Article L225-248 of the Commercial Code, the company capital of France Télécom SA, which has always remained positive and has never fallen by half. France Télécom was therefore not in the situation referred to in the Guidelines in which shareholders' funds fall below the company capital.

(103) France Télécom was not in a cessation of payments situation; there were merely signs of a possible liquidity requirement by the first half of 2003 should the expected market recovery not occur. The French authorities add that France Télécom had anticipated reserves of EUR 6,9 billion as at 31 December 2002 and could have crossed the threshold of the year 2003 without resorting to the financial market. The French authorities indicated that France Télécom had had recourse to the syndicated loan, which was less expensive than the bond market and out of which EUR 4 billion had been made available to the Company.

(104) The French authorities observe, inter alia, that France Télécom had access to the financial markets during the course of 2002 and describe all of the financing instruments at the Company's disposal between 11 July 2002 and 15 January 2003

The French authorities mention, among other things, bond issues, credit lines, treasury bills, short-term loans and securitisation and derivatives operations.

. They mention the fact that, on 14 February 2002, France Télécom negotiated the provision of a syndicated credit line of EUR 15 billion and that during the course of 2002 the Company issued bonds

From 26 July 2002 until the presentation of the Ambition 2005 plan on 4 December 2002, France Télécom made a EUR 70 million bond issue on 26 July 2002 and issued a fungible tranche of EUR 150 million with the EUR 3,5 billion debenture loan issued in March 2001.

, EUR 442,2 million worth of which was repayable in shares.

(105) The French authorities also state that France Télécom was not open to any financial risk owing to the downgrading of its credit rating by the rating agencies as there was no early repayment clause in the covenants.

(106) Moreover, according to the concordant opinion of several banks consulted between June and November 2002, France Télécom was, prior to the announcement of the Ambition 2005 plan and of the majority shareholder's support, able to refinance itself on the bond markets. The French authorities thus indicate that, in July and September 2002 respectively, Barclays and Dresdner Kleinwort Wasserstein offered to refinance, through swap programmes starting in October or November, France Télécom's bond debts maturing between 2003 and 2005.

4.2.

Rationality of the TOP plan

(107) The French authorities stress that, in the light of the above, the increase in the cash flow and the strengthening of the capital base provided for in the Ambition 2005 plan are components of a strategy that would have been followed by any prudent majority shareholder.

(108) As to the rationality of the TOP plan, the French authorities state that the plan in question represents a considerable effort on France Télécom's part. It is an overall plan for a change of management direction based on specific actions which has already produced its first positive results. The French authorities stress in this connection that the plan is an extremely precise one which makes possible an increase in the Company's profitability with a rate of return on investment (RRI) of 43 % in 2005 for those investors who participated in the April 2003 capital increase, that is, a much higher return than the reference RRI (11 %) expected by a private investor in the telecommunications sector. The TOP plan also includes a staff management optimisation chapter. As to the disposal plan, the French authorities state that the disposal of assets at the end of 2002 made it possible to carry forward any liquidity constraint to the end of 2003 without even having to resort to the financial markets.

(109) The French authorities stress, lastly, that the strategies followed by competing operators are no more prudent and that a plan must be assessed, not in the light of the scope or strategic character of the assets whose disposal is being contemplated, but in that of the rationality of the plan as a whole. Moreover, the success of the December 2002 and January 2003 bond issues confirmed a posteriori the confidence private investors place in France Télécom's operational potential.

4.3.

Application of the prudent investor principle to the participation in the strengthening of the Company's capital base

(110) With regard to the application of the prudent private investor principle to the announcement by the State of its anticipated participation in the strengthening of the Company's capital base, the French authorities observe that they made their agreement conditional on the presentation, by the new management, of a new, credible rebalancing plan and on participation by the banks.

(111) On compliance with the concomitance principle, the French authorities point out that, from the outset, the State shareholder took every step to ensure the concomitant participation of public and private shareholders and that it took no risk before private investors did. Thus, the announcement of the State's intention to participate in the strengthening of the Company's capital base dates from 12 September 2002, and on that date a banking syndicate had already undertaken to underwrite, when the time came, that part of a capital increase which was intended for private investors alongside the public shareholder, on condition that a credible rebalancing plan was announced to the market. The French authorities stress that this condition was normal in view of France Télécom's unbalanced financial situation, the State's participation also being conditional on the announcement of a plan considered by the market to be credible. If the private investors had not stood as guarantors, the State would not have made such an announcement.

(112) The French authorities also state that the private financing predated the public financing inasmuch as the financial contributions by private investors — in the form of debenture loans and the rescheduling of bank loans between December 2002 and February 2003 — took place in significant proportions. The analysis of any making available of state funds must, in the French authorities' view, be carried out in the light of such private financing.

(113) The French authorities stress that, in accordance with the judgment in Alitalia

Judgment of the Court of First Instance of 12 December 2000, Alitalia v Commission, T-296/97, ECLI:EU:T:2000:289.

, the State did not commit itself formally prior to the banks' formal undertaking. The private shareholder participation is significant at 40 %.

(114) As regards the expected return, the French authorities state that, as has already been indicated, compliance with the prudent private investor principle is also demonstrated by the high profitability prospects of the TOP plan, as confirmed by the plan's favourable reception by the market.

(115) The French authorities stress that the capital increase was effected as soon as it was technically possible to present to the State and to investors updated data on the Company's operational prospects, which demonstrates the State's choice of high-quality investors motivated by long-term return prospects.

4.4.

The shareholder loan

(116) The French authorities maintain that the loan proposal was never signed by France Télécom owing to the excessive cost of the financial terms proposed to it and the fact that the Commission was raising doubts about the measure's lawfulness under the Treaty. Consequently, no state resources were placed at the Company's disposal via the shareholder loan proposal. The French authorities argue that the entry into force of the loan

cannot be deduced from the announcement made by the State on 4 December 2002, which concerns only the commitment by the State shareholder to participate in the operation to strengthen the Company's capital base, mention being made only of the possible provision of a shareholder loan.

(117) The French authorities observe that, at all events, the loan proposal conferred no advantage on France Télécom.

(118) The French authorities thus make clear that, insofar as it has not entered into force, the loan has not been used by France Télécom and therefore has not been able to postpone the Company's liquidity needs. They maintain that the loan announcement does not constitute a guarantee. French law does not recognise an implicit guarantee: any guarantee provided by the State must be enshrined in a law. It is wrong to treat the announcement of a possible state loan as a guarantee. The French authorities insist that the guarantee which the State provided to ERAP to enable it to finance its participation in the strengthening of France Télécom's capital base must not be equated with a guarantee given to France Télécom. As far as ERAP is concerned, the French authorities state categorically that its role was entirely neutral and that it intervened only for budgetary reasons.

(119) Likewise, the announcement by the State of a loan proposal did not facilitate France Télécom's access to the bond market. First of all, the debenture loans are not covered by any sort of guarantee, their duration being longer than that of the shareholder loan. Moreover, bondholders have no recourse in the event of non-payment upon maturity. Secondly, it is not possible to compare the announcement, by the State, of the possibility of its making an upfront prepayment towards the strengthening of the Company's capital base with the guarantee given in Commission Decision 2001/89/EC

Commission Decision 2001/89/EC of 23 June 1999 conditionally approving aid granted by France to Crédit Foncier de France (OJ L 34, 3.2.2001, p. 36).

(Crédit Foncier de France) because, inasmuch as the loan envisaged in the present case was hypothetical and strictly limited in duration and amount, it could not by itself resolve the Company's financial problems having regard to its debt repayment schedule. Thirdly, the bond issues were determined solely by the market's perception of France Télécom's capacity to honour its commitments unaided by any state guarantee. The confidence shown by the market at the time of the said bond issues is thus due essentially to the change in the management team and the favourable reception accorded to the new strategy revealed when the Ambition 2005 plan was presented.

(120) As to compliance with the prudent investor principle in relation to any shareholder loan, the French authorities stress that, when the decision to take part in a capital increase was taken and the conditions therefor were met, it was logical that the State should make an upfront prepayment. The first discussions about the loan proposal date back to November 2002. The French authorities also stress that the legitimacy of such a measure could not be challenged because, as is mentioned above, it was based on a credible, detailed plan the content of which was mostly known at the time of the announcement of the loan proposal on 4 December 2002. Moreover, the State had already received the undertaking, conditional on the presentation to the market of a credible plan, from the banking syndicate and it knew full well at the end of November that that condition would be met given the market's positive reaction to the appointment of the new management. The French authorities stress in this connection that it is not pertinent to assess the amount involved in the present case but that, in accordance with the Alitalia judgment, it is necessary to examine the conformity of the conditions of financing the operation for a company of comparable size.

(121) As to the remuneration of the potential loan, the French authorities stress that it was granted on normal market terms and that it was increased by a premium to reflect its subordinate nature. The proposal provided for a non-utilisation commission and the absence of security was in keeping with the practice of a prudent investor in the case of a short-term loan granted by a shareholder upfront of his subscription to a capital increase. The repayment of the sum in shares was customary and was based on the cash value.

4.5.

The announcements made by the State

(122) The French authorities stress the context which must be taken into account when analysing the declarations made by the State in its capacity as a prudent shareholder. Thus, between the months of September and December 2002, the State engineered a change in management, the key feature of which was the change in France Télécom's CEO, and closely monitored the drafting of a rebalancing plan while at the same time ensuring the support of private investors with an eye to the launch of a possible capital increase. According to the French authorities, these operational measures had a decisive financial impact, were very well received by the financial markets and led to the recovery in France Télécom's share price.

(123) The French authorities stress that the State never indicated or suggested that it would give France Télécom its unconditional and unlimited support. They add that the State … emphasised in the summer that it would act like a prudent private shareholder and not as a public authority and that it intended to intervene as a shareholder in a way (still to be defined) which would be no different from that which a private investor would choose, which necessarily ruled out the possibility that the State had already decided to intervene in an unconditional and irrevocable manner

French authorities' comments of 29 July 2003, p. 8.

. This declaration that the conditions would not differ from those of a private investor, excludes de facto any unconditional and irrevocable support. The French authorities also argue that the declarations made by the French authorities between July and October 2002 constituted vague prior declarations without any corresponding practical measures

French authorities' comments of 29 July 2003, p. 9.

. The French authorities state in this connection that the subsequent declarations were to be assessed in the light of the first declaration and that it is wrong to assert that as of 12 July 2002 the State had committed itself irrevocably to supporting France Télécom and had, on that occasion, entered into an irrevocable commitment to participate in the strengthening of the capital base. The French authorities point out that the State shareholder announced its intention to participate in the strengthening of the Company's capital base for the first time in September 2002 and that this would take the form of a transaction followed by the market (reference to a timetable to be defined in the light of market conditions)

French authorities' comments of 29 July 2003, p. 8.

.

(124) Concerning the declaration of 2 October 2002, the French authorities argue that this confirmed that the presentation of a credible plan was a precondition for the State's participation.

(125) The French authorities maintain that the only specific measures envisaged by the State in its capacity as majority shareholder in France Télécom are those set out in the information/notification dossier forwarded to the Commission and announced publicly on 5 December 2002, namely the participation alongside private shareholders in a EUR 15 billion capital increase in proportion to the share held by the State in France Télécom's capital and a possible shareholder loan remunerated at market rates upfront of the capital increase. The indication by the State that it would play its role of prudent shareholder in no way constitutes a state guarantee. If the declarations made by the State between July and October 2002 had really been legally equivalent to, or even simply perceived by the market and the rating agencies as being, a promise to provide France Télécom with an unlimited guarantee, then there would not have been any downgrading of France Télécom's rating in July and the company's spreads and rating during that period would have reflected the state risk (AAA rating and very low spread). Lastly, any factoring in by the rating agencies of the State's presence as majority shareholder irrespective of any implicit or explicit guarantee or of any specific measure and irrespective of the company's specific financial situation at any given moment cannot in itself be considered State aid. Such an approach would be contrary to the principle of neutrality of Community law as recognised by Article 295 of the EC Treaty.

French authorities' comments of 29 July 2003, p. 9.

4.6.

Movements in France Télécom's share price

(126) The French authorities argue that only the operational measures had an impact on France Télécom's share price. Thus, the Company's share price rebounded on 2 October 2002 (up more than 10,4 % on the previous week) following the announcement of the appointment of the new CEO, and the share price's progress continued upwards with the announcement of the TOP plan and of the new executive board on 5 December 2002, which led to a rise of more than 25 % in two days. The declarations of principle made by the State between July and October 2002 were not the determining factor in this increase and as long as there were no operational measures the share price fluctuated, reflecting the market's uncertainty about the Company's situation. This perception led to a fall in the share price, which reached its lowest point on 30 September 2002 following a period of relative stability during the summer in the absence of any specific announcements or rumours. During that period, the State's declarations as to its intention to play fully its role of shareholder did not stop the downward trend in France Télécom's share price.

4.7.

Comments on the NERA report

(127) The French authorities have presented the following comments on the legal part of the NERA report:

the legal report is based on an erroneous (not to say tendentious) interpretation of the facts. In particular, … the report manifestly twists — albeit clear — remarks made by the Minister for Economic Affairs in the course of an interview with a journalist published in July 2002. The French authorities strongly contest that it is possible to propose interpretations as unfounded as these in order to draw legal conclusions and in

particular to assert that there exists any guarantee granted by the State to France Télécom. What is involved here is not even an official communiqué from the Government or from France Télécom, but merely a press article reproducing the text of an interview with the Minister for Economic Affairs in the wider context of the Government's priorities and therefore lacking any probative force.

The State as shareholder in France Télécom has not only always intended to behave like a prudent investor with regard to France Télécom but has also chosen to express clearly and publicly that this position would be the point of departure for all of its potential actions in this area …. The Minister's July 2002 interview makes no mention of any decision being taken.… [W]hile remaining confident in the company's viability, the State was merely taking note of the market's doubts about France Télécom's situation and, in its capacity as majority shareholder, was trying to refine its analysis without being able, at that stage, to make an accurate diagnosis or take any decision. Moreover, there was no reason to suppose a priori that the phrase appropriate steps referred specifically to financial measures.

The French authorities have also noted numerous inaccuracies in the reasoning set out in the legal report. The report is thus manifestly short on objectivity, adopting highly contestable legal analyses (for example regarding the characterisation of letters of intent and the scope of a unilateral commitment in civil and commercial law) and making an unjustified application to the facts at issue of certain irrelevant legal precepts (this is the case, for example, with the application of the theory of business management or of the rules of public international law in relations between a company and its majority shareholder).

The legal report's finding of the existence of an unlimited guarantee, granted by the State to France Télécom, is in any event totally baseless in Community law. In accordance with the Compagnie nationale Air France judgment

Judgment of the Court of First Instance of 12 December 1996, Compagnie nationale Air France v Commission, T-358/94, ECLI:EU:T:1996:194; see also Commission Decision 94/662/EC of 27 July 1994 concerning the subscription by CDC participations to bonds issued by Air France (OJ L 258, 6.10.1994, p. 26).

, the remarks in question cannot give rise to any firm and unconditional commitment on the part of the State.

With regard to the comparison between the Minister's July declarations and a letter of intent, the French authorities stress that (i) firstly, it is of the essence of the letter of intent that it is addressed to a beneficiary; (ii) secondly, and as an extension of the preceding observation, the effectiveness of the method is dependent on acceptance by the said beneficiary; and (iii), lastly, the scope of the commitment given (both as regards its object and as regards the force which its author wishes to give to it) depends exclusively on the terms employed. Thus … the general — to say the least — character of the Minister's remarks … rules out without doubt any commitment in favour of France Télécom or its creditors, and a fortiori any obligation as to the result to be achieved (and hence any idea of guarantee) as well as any obligation as to the means. The Minister's reply … only confirms that no decision — other than to act like a prudent investor — had as yet been taken by the State shareholder, which, while trusting in the operational quality of the company, was not at that time able to make a sufficiently accurate diagnosis or to take any decision. The courts have … never held that a guarantee commitment without a specific beneficiary or beneficiaries may thus be relied upon by any person who might have an interest therein. This is not surprising as it is in the nature of a guarantee or of a letter of intent that it is addressed to one or more beneficiaries. Nor is it surprising, since it was not intended for any specific beneficiary, that the alleged commitment was not accepted. As for the business management hypothesis, this concept is entirely inapplicable to the present case.

As far as administrative law is concerned, [f]irst of all, mere remarks made to a journalist — such as those made by the Minister for Economic Affairs on 12 July 2002 — do not constitute a tortious act capable of giving rise to rights and obligations, and even less a guarantee granted to France Télécom by the State.

The legal consultant's conclusions clearly fly in the face of the Commission's decision-making practice and of Community case law in the field of State aid, which make the existence of aid conditional on proof of a firm, precise and unconditional commitment on the part of the State concerned — something which the Minister's remarks of 12 July 2002 could in no way be construed as being. A state measure, in whatever form, must be sufficiently precise and concrete for the Commission to be able to determine the very existence of an advantage.

(128) As regards the economic report, the French authorities argue that France Télécom was not a firm in difficulty at the time of the events in question (as it had access to the capital markets and no long-term viability problem) and that the participation by the State shareholder in the plan to rebalance the company's balance sheet was in keeping with the private investor criterion.

1. ASSESSMENT OF THE MEASURE IN THE LIGHT OF ARTICLE 107(1) OF THE TREATY

(129) Article 107(1) TFEU defines as being incompatible with the internal market, in so far as it affects trade between Member States, aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods. According to well established case law, the concept of aid embraces not only subsidies themselves, but also interventions which, in various forms, mitigate the charges which are normally included in the budget of an undertaking and which, without therefore being subsidies in the strict meaning of the word, are similar in character and have the same effect

Judgment of the Court of 15 March 1994, Banco Exterior de España SA, C-387/92, ECLI:EU:C:1994:100, paragraph 13; judgment of the Court of 19 September 2000, Federal Republic of Germany v Commission, C-156/98, ECLI:EU:C:2000:467, paragraph 25; judgment of the Court of First Instance of 13 June 2000, EPAC v Commission, T-204/97 and T-270/97, ECLI:EU:T:2000:148.

. It follows from the above that the concept of aid is based on the economic concept of advantage, the formal criterion being therefore immaterial

Judgment of the Court of 14 November 1984, SA Intermills v Commission, C-323/82, ECLI:EU:C:1984:345, paragraph 31; Judgment of the Court of First Instance of 27 January 1998, Ladbroke Racing Ltd v Commission, T-67/94, ECLI:EU:T:1998:7, paragraph 52.

.

(130) It is settled case law that classification as State aid for the purposes of Article 107(1) TFEU requires that all the conditions set out are fulfilled

Judgment of the Court of 2 September 2010, European Commission v Deutsche Post AG, C-399/08 P, ECLI:EU:C:2010:481, paragraph 38 and case law cited; judgment of the Court of 21 December 2016, European Commission v Hansestadt Lübeck, C-524/14 P, ECLI:EU:C:2016:971, paragraph 40; judgment of the Court of 21 December 2016, European Commission v World Duty Free Group SA and Others, C-20/15 P and C-21/15 P, ECLI:EU:C:2016:981, paragraph 53; judgment of the Court of 20 September 2017, European Commission v Frucona Košice a.s., C-300/16 P, ECLI:EU:C:2017:706, paragraph 19.

. Thus, for a national measure to be classified as State aid for the purposes of Article 107(1) TFEU, first, there must be an intervention by the State or through State resources; second, that intervention must be liable to affect trade between Member States; third, it must confer a selective advantage on the recipient; and fourth, it must distort or threaten to distort competition

Judgment of the Court of 2 September 2010, European Commission v Deutsche Post AG, C-399/08 P, ECLI:EU:C:2010:481, paragraph 39 and case law cited; judgment of the Court of 21 December 2016, European Commission v Hansestadt Lübeck, C-524/14 P, ECLI:EU:C:2016:971, paragraph 40; judgment of the Court of 21 December 2016, European Commission v World Duty Free Group SA and Others, C-20/15 P and C-21/15 P, ECLI:EU:C:2016:981, paragraph 53; judgment of the Court of 20 September 2017, European Commission v Frucona Košice a.s., C-300/16 P, ECLI:EU:C:2017:706, paragraph 19.

.

(131) It is also settled case law that investment by the public authorities in the capital of undertakings, in whatever form, may constitute State aid within the meaning of Article 107 TFEU where the conditions set out in that Article are fulfilled

Judgment of the Court of 14 September 1994, Spain v Commission, C-278/92 to C-280/92, ECLI:EU:C:1994:325, paragraph 20 and case law cited, and Judgment of the Court of 8 May 2003, Italy and SIM 2 Multimedia v Commission, C-399/00 and C-328/99, EU:C:2003:252, paragraph 36 and case law cited.

.

(132) As regards the condition according to which the measure in question must be analysed as conferring an advantage on the recipient within the meaning of Article 107(1) TFEU, measures which, whatever their form, are likely directly or indirectly to favour certain undertakings or are to be regarded as an economic advantage which the recipient undertaking would not have obtained under normal market conditions are regarded as State aid

Judgment of the Court of 2 September 2010, European Commission v Deutsche Post AG, C-399/08 P, ECLI:EU:C:2010:481, paragraph 40 and case law cited.

.

(133) In the present case, it seems appropriate to examine, first, whether France Télécom obtained an advantage financed using state resources. If the Commission cannot conclude that such an advantage exists, or if it was not financed by state resources, it must conclude that the measure scrutinised does not constitute State aid, the conditions for the existence of State aid being cumulative.

(134) First, it is worth recalling the principles that apply to this analysis, as laid down in the Bouygues judgment. The Court considered that:

1. … it cannot be excluded … that several consecutive measures of State intervention must, for the purposes of Article 107(1) TFEU, be regarded as a single intervention.

1. That could be the case in particular where consecutive interventions, especially having regard to their chronology, their purpose and the circumstances of the undertaking at the time of those interventions, are so closely linked to each other that they are inseparable from one another …

1. It follows that, having found that it was necessary to identify a reduction of the State budget or a sufficiently concrete economic risk of burdens on that budget, closely linked and corresponding to, or having as a counterpart, a specific advantage deriving either from the announcement of 4 December 2002 or from the shareholder loan offer, the General Court erred in law by applying a test that immediately excludes those State interventions, depending on their links with one another and their effects, from being regarded as a single intervention.

1. Next, according to the case law of the Court, State intervention capable of both placing the undertakings which it applies to in a more favourable position than others and creating a sufficiently concrete risk of imposing an additional burden on the State in the future, may place a burden on the resources of the State …

1. In particular, the Court of Justice has had occasion to state that advantages given in the form of a State guarantee can entail an additional burden on the State …

1. Furthermore, the Court has already held that, where, in economic terms, the alteration of the market conditions which gives rise to an advantage given indirectly to certain undertakings is the consequence of the public authorities' loss of revenue, even the fact that investors then take independent decisions does not mean that the connection between the loss of revenue and the advantage given to the undertakings in question has been eliminated …

1. Consequently, for the purposes of establishing the existence of State aid, the Commission must establish a sufficiently direct link between, on the one hand, the advantage given to the beneficiary and, on the other, a reduction of the State budget or a sufficiently concrete economic risk of burdens on that budget …

1. However … it is not necessary that such a reduction, or even such a risk, should correspond or be equivalent to that advantage, or that the advantage has as its counterpoint such a reduction or such a risk, or that it is of the same nature as the commitment of State resources from which it derives.

(135) As regards the interpretation and scope of the decision to open the formal investigation procedure relating to the measure at issue, the Bouygues judgment notes that this opening decision solely concerns the measures notified and not whether the declarations from July 2002 constituted, in themselves, State aid

See paragraphs 70 to 72 of the Bouygues judgment.

. This final decision, whose subject matter is defined by the opening decision, does not therefore extend to that question.

(136) As a further preliminary point, the Commission notes that the assessments of fact or of law adopted by the General Court in its judgment of 2 July 2015

Judgment of the General Court of 2 July 2015, French Republic (T-425/04 RENV) and Orange (T-444/04 RENV) v European Commission, ECLI:EU:T:2015:450.

, in the light of the judgment on appeal of 30 November 2016 issued by the Court of Justice

Judgment of the Court of 30 November 2016, European Commission v French Republic, C-486/15 P, ECLI:EU:C:2016:912.

, have the force of res judicata, particularly as they form the grounds supporting its operative part.

5.1.

The measures taken by France between July and October 2002 had a significant effect on the market

(137) The declarations from July 2002 allowed FT's rating to be maintained at investment grade and enabled the financial markets to regain confidence. They made it possible, easier and cheaper for FT to gain access to new loans necessary to refinance its short-term debts for the amount of EUR 15 billion, and ultimately helped to stabilise its fragile financial situation which, in June and July 2002, was on the point of deteriorating substantially.

(138) During the first half of 2002, France Télécom saw its credit rating downgraded following the publication of its 2001 annual accounts. On 24 June 2002, Moody's downgraded the Company's rating to the lowest investment grade, just above that of junk bond, thereby making it very difficult for it to refinance its debt

See statements by France Télécom's previous CEO, Michel Bon, appearing in the press: article in La Tribune dated 16 September 2002, … the downgrading is preventing the planned refinancing; article in Le Monde dated 16 September 2002, the downgrading at the end of June of the rating attributed to FT's debt by the Moody's rating agency … has denied us access to the market; article in the Financial Times dated 16 September 2002, FT cannot continue to survive when no one wants to lend us money and, on the contrary, when everyone wants to be paid on the nail. In the current markets, the refinancing of our debt is simply out of the question.

.

This downgrading caused considerable concern on the financial markets about France Télécom's financial situation (and in particular about its capacity to refinance its EUR 15 billion debt falling due at the end of 2003), and the markets expected a reaction from the State designed to reassure them. These circumstances show that the State had to act urgently to reassure the market and to prevent any further downgrading of France Télécom's credit rating to that of junk bond status, as this would have had a highly negative impact

Some even take the view that the Company would not have been able to find the necessary liquidity on the market in the event of a downgrading of its credit rating. See, for example, page 9 of the abovementioned report by Goldman Sachs of 22 July 2002: If these bonds moved from the investment grade segment of the fixed income market, to junk, i.e. high yield, they would swamp the current European high yield market … [and] we believe it would be difficult for the existing European investor base alone to absorb all France Telecom bonds.

on the Company's financial situation.

(139) The State thus retained this trust through successive declarations. In fact, the State's intervention had the effect of preventing any downgrading of France Télécom's credit rating to that of junk bond status, as is, moreover, clearly stated in S&P's press release of 12 July 2002, where the assurances provided by the State are hailed as being a key factor in France Télécom's not being reduced to junk bond status.

(140) As to the market's reaction, the announcement of 12 July 2002 led to an abnormal and not negligible increase in the value of France Télécom's shares and bonds. Thus, compared with a set of telecom indexes representative of the market, France Télécom's share price rose by between 37,8 % and 43,8 %. The abnormal increase in bond prices amounted, for its part, to between 3,2 % and 9,7 %. This reaction implies that the market believed that, by the announcement, the State was committing itself to offering France Télécom greater support

NERA report: The results of an event study analysing the effect on share and bond prices of the announcement on 12 July 2002. The study shows that there is a strong positive effect: as a result of the statement, market participants believed the cash flows that France Télécom would generate were going to be higher than they would have been otherwise. Moreover the effect is strongly statistically significant: it is not the result of random fluctuations in prices … The market believed that, as a result of the statement, the French Authorities would offer more support to France Télécom than they would do in the absence of any costs of non-performance.

. As to the comments by financial analysts, Deutsche Bank, for example, mentioned in a report published on 22 July 2002 that the market was convinced, in the light of the Government's declarations, of the state support that would be provided by the Government to France Télécom, even if the market did query the scope and modalities of that support

Deutsche Bank report of 22 July 2002 entitled France Télécom/Deutsche Telekom Debt Liquidity and possible solution, pp. 19-33.

. Similarly, S&P considered the Government's declarations to be credible to the point of influencing the Company's credit rating. On 12 July, S&P thus downgraded France Télécom's rating to BBB- but maintained its investment-grade rating with a stable outlook

France Télécom LT Rating cut to BBB-; Off Watch; Outlook Stable; Teleconf 3:30PM BST Today, Standard & Poor's Ratings Direct, 12 July 2002.

. The fact that the State's support was credible to the point of enabling France Télécom's credit rating to remain at investment-grade quality is also corroborated by France Télécom itself

Board meeting presentation, France Télécom stock-taking exercise, December 2002, p. 36.

.

(141) The declarations had a major impact on the market. A study of the comments and documents submitted by the French authorities and of the available parliamentary debates shows that the State's declarations helped to restore the financial markets' confidence

In a covering letter accompanying the financial protocol signed by the bank Morgan Stanley on 12 September 2002 concerning the bank's commitment in relation to the Company's planned capital increase, the bank's representative is unambiguous on this point: We feel that the planned transaction would be difficult under present conditions and that a favourable reaction by the markets to the declarations and official statements to be published at the end of the week will be a key factor in creating the necessary conditions for carrying out the transaction.

. In fact, ever since S&P's press release of 12 July 2002, the rating agencies were all agreed that the support shown by the State since July 2002 was decisive in maintaining France Télécom's investment-grade credit quality. The maintenance of France Télécom's investment-grade credit quality thus enabled France Télécom to avoid additional financial costs

See FT form 20-F, March 2003, P15-16 a decrease of one notch in its long-term debt rating by S&P's and Moody's would automatically increase its annual interest expense by approximately EUR 75 million.

on the funds it had already borrowed owing to the existence of step-up clauses

A step-up clause determines an increase in a bond's coupon rate and in the interest rates on credit lines as the credit rating declines.

in some bond issues and on future borrowings. The maintenance of the investment-grade rating enabled France Télécom, moreover, to put its finances back on to a sound footing through a recapitalisation operation. Back in September 2002, one of the conditions imposed by the banks for their participation in a recapitalisation operation was the maintenance of at least the current ratings investment-grade quality of the company's long-term debt by the Moody's and Standard & Poor's rating agencies; this condition will be included in the guarantee and investment contract.

Memoranda of understanding signed on 11 and 12 September 2002 between the State and the banks (condition h).

5.2.

Nevertheless, they are not inextricably linked to the December 2002 measures

(142) Following a sovereign assessment of the facts, the General Court held that the shareholder loan offer granted by the State to France Telecom came only in December 2002, that the French Government had made no firm commitment in July 2002, and that the decision to provide France Télécom with financial support through the shareholder loan offer had been taken not in July 2002 but in early December 2002

Judgment of the Court of 30 November 2016, European Commission v French Republic and Orange, C-486/15 P, ECLI:EU:C:2016:912, paragraph 142 and paragraphs of the judgment of the General Court of 2 July 2015, French Republic and Orange v European Commission, T-425/04 RENV and T-444/04 RENV, ECLI:EU:T:2015:450, to which it refers.

.

(143) The General Court also concluded that, between the months of July and December 2002, a private investor might have displayed behaviour similar to that displayed by the French State

Judgment of the Court of 30 November 2016, European Commission v French Republic and Orange, C-486/15 P, ECLI:EU:C:2016:912, paragraph 137 and paragraphs of the judgment of the General Court of 2 July 2015, French Republic and Orange v European Commission, T-425/04 RENV and T-444/04 RENV, ECLI:EU:T:2015:450, paragraph 247.

.

(144) It further emerges from the General Court's findings and assessments, in paragraphs 249 to 254 of the judgment of 2 July 2015

Judgment of the General Court of 2 July 2015, French Republic (T-425/04 RENV) and Orange (T-444/04 RENV) v European Commission, ECLI:EU:T:2015:450.

, that there was a significant break in the series of State measures taken by France for France Télécom between the months of July 2002 and December 2002.

(145) In addition, at paragraph 230 of that judgment, the General Court noted a number of relevant factors which effectively determined the French State's decision in December 2002, that is, in addition to restoring the confidence of the financial markets and preserving FT's credit rating, primarily the restructuring and rebalancing measures taken within FT, including the Ambition 2005 plan drawn up by its new management between October and December 2002, which provided in particular for the implementation of a plan, the TOP plan. It also considered as key factors in the case the commitment given in September 2002 by a banking syndicate to underwrite that part of an increase in the capital of FT which was intended for private investors, the sale by FT of some EUR 2,5 billion in non-strategic assets between July and December 2002, the appointment of a new management team for the company in October 2002, and the resolution in November 2002 of the dispute between FT and the German operator Mobilcom. Taken as a whole, those factors brought about a marked improvement in FT's operational prospects and performance during the second half of 2002.

(146) In paragraph 143 of the judgment on the appeal of 30 November 2016

Judgment of the Court of 30 November 2016, European Commission v French Republic, C-486/15 P, ECLI:EU:C:2016:912.

, the Court found that as rightly held by the General Court in paragraph 230 of the judgment under appeal, deciding in advance in July 2002 the time when the prudent private investor criterion fell to be assessed would have necessarily excluded from that assessment relevant factors that occurred between July 2002 and December 2002.

(147) Consequently, in view of the particular circumstances of the case, there is no inextricable link between the measures that the French authorities took prior to December 2002 and the measures that they took in December 2002. It is necessary therefore to examine whether, between 4 December 2002 (when the State announced its shareholder loan to France Télécom) and 20 December 2002 (when the State sent France Télécom a signed and initialled draft shareholder loan agreement), the conditions for State aid were met, and in particular, whether the State acted in the same way as a prudent private investor in a market economy.

5.3.

The measures taken by France in December 2002 fulfilled the private investor criterion

(148) The December 2002 shareholder loan appears to confer an advantage on France Télécom, since it enables it to increase its means of financing and to reassure the market as to its ability to meet its maturities. Even if the loan agreement has never been signed, the appearance given to the market of the existence of such a loan is, a priori, likely to confer an advantage on France Télécom as the market has considered the Company's financial situation to be more secure

See, for example, Moody's now expects that a combination of this facility headroom under the existing EUR 15 billion syndicated facility and the free cash flow will enable debt maturities of EUR 15 billion to be repaid during the next 12 months, Moody's, 9 December 2002.

. This may have influenced France Télécom's borrowing terms. The advantageous effect of the measures taken by the State in December 2002 in favour of France Télécom is thus apparent.

(149) However, a measure is not deemed to constitute an advantage and so does not qualify as State aid if the recipient undertaking could, in circumstances which correspond to normal market conditions, obtain the same advantage as that which is made available to it through State resources. In the case of public undertakings, that assessment is made by applying, in principle, the prudent private operator test.

(150) In the present case, it is necessary to determine whether, in similar circumstances, in December 2002, a private investor of a comparable dimension could have been prevailed upon to make capital contributions of the same size, having regard in particular to the information available and foreseeable developments at the date of those contributions

Judgment of the General Court of 2 July 2015, French Republic (T-425/04 RENV) and Orange (T-444/04 RENV) v European Commission, ECLI:EU:T:2015:450, paragraph 220; Judgment of the Court of 8 May 2003, Italian Republic and SIM 2 Multimedia SpA v Commission of the European Communities, C-399/00 and C-328/99, ECLI:EU:C:2003:252, paragraph 38 and case law cited.

. The prudent private investor criterion must therefore be applied when the State financial support measure that may be characterised as State aid is adopted,

Judgment of the General Court of 2 July 2015, French Republic (T-425/04 RENV) and Orange (T-444/04 RENV) v European Commission, ECLI:EU:T:2015:450, paragraph 251.

that is between 4 December 2002 and 20 December 2002.

(151) The announcement of 4 December 2002 and the shareholder loan offer of 20 December 2002 must be jointly examined

Judgment of the Court of Justice of 19 March 2013, Bouygues SA and Bouygues Télécom SA v European Commission and Others and European Commission v French Republic and Others, C-399/10 P and C-401/10 P, ECLI:EU:C:2013:175, paragraphs 127 to 131.

.

(152) In December 2002, it appeared that the confidence of the financial markets in France Télécom's future had been largely restored and that France Télécom's credit rating had been preserved, mainly as a result of the restructuring and rebalancing measures taken within FT, including the appointment of new management and their development of the Ambition 2005 plan between October and December 2002, which included the implementation of a plan, the TOP plan, to improve the Company's operational performance.

(153) In assessing the shareholder loan, it is important to determine whether the participation in the strengthening of the Company's capital base satisfies normal market conditions.

5.3.1.

Participation in the strengthening of the Company's capital base

(154) France's participation in the strengthening of the Company's capital base was conditional on the presentation to the market of a credible plan for the restructuring of France Télécom. The Ambition 2005 plan and the TOP plan together form a complete and rational coherent plan. It permits among other things the generation of a EUR 15 billion cash flow via an operational improvement and a disposal of assets that does not involve any amputation of core businesses.

(155) The TOP plan represents a considerable effort on France Télécom's part. It is an overall plan for a change of management direction based on specific actions The French authorities stress that the plan makes possible an increase in the Company's profitability with a rate of return on investment (RRI) of 43 % in 2005 for those investors who participated in the April 2003 capital increase, that is, a much higher return than the reference RRI (11 %) expected by a private investor in the telecommunications sector. The TOP plan also includes a staff management optimisation chapter.

(156) As regards the expected return, the French authorities state that compliance with the prudent private investor principle is also demonstrated by the high profitability prospects of the TOP plan, as confirmed by the plan's favourable reception by the market. France Télécom's share price rebounded on 2 October 2002 (up more than 10,4 % on the previous week) following the announcement of the appointment of the new CEO, and the share price's progress continued upwards with the announcement of the TOP plan and of the new executive board on 5 December 2002, which led to a rise of more than 25 % in two days.

(157) The capital increase was initiated as soon as it was technically possible to present to investors updated data on France Télécom's operational prospects.

(158) The State had already received the undertaking, conditional on the presentation to the market of a credible plan, from the banking syndicate and it knew full well at the end of November that that condition would be met given the market's positive reaction to the appointment of the new management. In addition to the commitment given in September 2002 by the banking syndicate to underwrite that part of an increase in the capital of FT which was intended for private investors, consideration must be given to other key factors, namely the sale by FT of some EUR 2,5 billion in non-strategic assets between July and December 2002, the appointment of a new

management team for the company in October 2002, and the resolution in November 2002 of the dispute between FT and the German operator Mobilcom

These factors are relevant according to the judgment of the General Court of 2 July 2015, French Republic (T-425/04 RENV) and Orange (T-444/04 RENV) v European Commission, ECLI:EU:T:2015:450, paragraph 230.

. Taken as a whole, those factors brought about a marked improvement in FT's operational prospects and performance during the second half of 2002.

(159) When the decision to invest was taken, France Télécom was not a firm in difficulty within the meaning of the Guidelines. The Company's turnover was increasing steadily (by 10 % between the first half of 2001 and the first half of 2002), and its gross cash flow was high and growing faster than its turnover. The French authorities point out that the losses were mainly due to the exceptional provisions and write-downs linked to the depreciation of assets acquired prior to the entirely unforeseeable reversal of the markets. France Télécom's operating costs were increasing more slowly than its turnover, which meant that its profitability was improving. Moreover, operating results and cash flow were increasing (with cash flow up 15 % on the first half of 2001). This performance was confirmed when the 2002 accounts were published. Furthermore, France Télécom was not in a cessation of payments situation.

(160) France Télécom had access to the financial markets during the course of 2002, and all of the financing instruments were at the Company's disposal between 11 July 2002 and 15 January 2003

The French authorities mention, among other things, bond issues, credit lines, treasury bills, short-term loans and securitisation and derivatives operations.

. The French authorities mention the fact that, on 14 February 2002, France Télécom negotiated the provision of a syndicated credit line of EUR 15 billion and that during the course of 2002 the Company issued bonds

From 26 July 2002 until the presentation of the Ambition 2005 plan on 4 December 2002, France Télécom made a EUR 70 million bond issue on 26 July 2002 and issued a fungible tranche of EUR 150 million with the EUR 3,5 billion debenture loan issued in March 2001.

, EUR 442,2 million worth of which was repayable in shares.

(161) Market confidence in a recovery of France Télécom's financial situation may also be based on the fact that the losses were mainly due to the exceptional provisions and write-downs linked to the depreciation of assets acquired prior to the entirely unforeseeable reversal of the markets and that France Télécom's operating costs were increasing more slowly than its turnover. Moreover, operating results and cash flow were increasing.

(162) The State shareholder took every step to ensure the participation of public and private shareholders in the strengthening of France Télécom's capital base. Thus, the announcement of the State's intention to participate in the strengthening of the Company's capital base dates from 12 September 2002

French authorities' comments of 29 July 2003, p. 8.

, and on that date the banking syndicate had already undertaken to underwrite, when the time came, that part of a capital increase which was intended for private investors alongside the public shareholder, on condition that a credible rebalancing plan was announced to the market. According to the French authorities, the State's participation was also conditional on the announcement of a plan considered by the market to be credible, and the State did not commit itself formally prior to the banks' formal undertaking. The terms of the operation were the same for the public bodies and all the private operators participating in the strengthening of the Company's capital base.

(163) In addition, the EUR 15 billion from the shareholders only represents a third of the funds mobilised in support of France Télécom's financial restructuring.

5.3.2.

The shareholder loan offer and its announcement on 4 December 2002

(164) On 4 December 2002, once the condition for the banking syndicate's commitment had been fulfilled — namely, the announcement to the market of a credible rebalancing plan — the State announced the shareholder loan to France Télécom.

(165) In this situation, it would have been rational for a prudent private operator in similar circumstances to the State (France Télécom's majority shareholder) to express its oral support for France Télécom. The loan granted by the State, as majority shareholder, in view of the planned investment, was in this case a low-risk, profitable and normal transaction — pending a capital increase (on equal terms) — aimed at safeguarding the majority shareholder's financial interests at a time (the month of December) when it was not possible to recapitalise France Télécom for reasons of scheduling.

(166) Indeed, as France Télécom explains, the market window virtually closes at the end of November, since investors have to take into account their financial year-end on 31 December and major deals can be difficult to arrange. In addition, a minimum of 15 days' notice must be given before holding an extraordinary general meeting to approve a capital increase, which takes a further 30 days to complete.

(167) The loan is temporary and provides bridging finance for the capital increase, which by many accounts is expected to be a success. France Télécom has cited several examples of shareholder loans dating from the time of the events as evidence that a loan from a majority shareholder to be converted into equity during a capital increase is standard practice.

(168) For example, the EUR 1 billion shareholder loan from Italenergia Bis to Edison was converted into equity during Edison's capital increase in 2003.

(169) In preparation for the restructuring and IPO of Thus on the London Stock Exchange, Scottish Power granted a loan of GBP 320 million, of which GBP 260 million was converted into equity; the undrawn balance was cancelled.

(170) In 2002, America Movil and Bell Canada International participated in the financial restructuring of their South American joint venture Telecom Americas, alongside another investor. In this case, USD 120 million was paid in the form of a shareholder loan which had to be refinanced two years later in Telecom Americas shares.

(171) During the Ericsson capital increase, the commitment of the main shareholder (Industrivärden and Investor) was announced by the company in April 2002, even though the deal was not approved until June 2002 and was not launched until August of that year.

(172) In the case of Fiat's capital increase in July 2003, the intention of the reference shareholders to subscribe to new shares in proportion to their shareholding was published in March 2003.

(173) In the light of these examples, and given France Télécom's position in December 2002, the Commission cannot rule out the possibility that in December 2002, the State acted towards France Télécom as a prudent private operator in a market economy would have done in similar circumstances, as France Télécom's majority shareholder.

5.3.3.

Conclusion

(174) The measure being scrutinised — namely, the announcement of the shareholder loan of 4 December 2002, coupled with the shareholder loan offer of 20 December 2002 — thus meets the criterion of the prudent private investor in a market economy. Therefore, this measure should not be considered as an advantage for France Télécom.

5.4.

The further conditions laid down by Article 107(1) TFEU

(175) It is settled case law that classification as State aid requires all the conditions set out in Article 107(1) TFEU to be fulfilled

Judgment of the Court, European Commission v Deutsche Post AG, C-399/08 P, ECLI:EU:C:2010:481, paragraph 38 and case law cited.

. In the absence of an advantage for France Télécom from state resources within the meaning of Article 107(1) TFEU, it is no longer necessary to analyse whether the other conditions required for determining the presence of aid are fulfilled.

1. CONCLUSION

(176) The Commission finds that the shareholder loan granted by France to France Télécom in December 2002 in the form of a EUR 9 billion credit line does not constitute State aid within the meaning of Article 107(1) TFEU,

HAS ADOPTED THIS DECISION:

Article 1

The shareholder loan granted by France to France Télécom in December 2002 in the form of a EUR 9 billion credit line does not constitute aid within the meaning of Article 107(1) of the Treaty on the Functioning of the European Union.

Article 2

This decision is addressed to the French Republic.

Done at Brussels, 18 May 2018.

For the Commission

Margrethe Vestager

Member of the Commission