Report backs France Telecom aid probe

A preliminary report by economic consultancy Nera has backed up a European Commission inquiry into alleged state aid given to telecommunications flagship France Telecom.

According to a report in French daily Les Echos, Nera's analysis – yet to be sent formally to commission state aid regulators -  has endorsed concerns from Brussels that the French government subsidised FT in contravention of strict EU rules.

The commission hired Nera to gather facts into the alleged aid, as part of their analysis in the investigation.

The paper also says the report questions whether government announcements in support of FT in 2002 may have constituted state aid by helping to boost ailing share prices in the company.

The commission is not expected to receive a final version of the report until April or May.

The state aid inquiry is not the only issue troubling EU competition officials involving the French telecommunications giant.

Brussels antitrust regulators are also showing concern over prospective new laws in France that would ease pricing regulation on FT.

The European Commission is worried the new law would soften the powers of the French telecoms watchdog, Autorité de Regulation des Telecommunications (ART), to regulate tariff pricing and future commercial services launched by FT.

The law would allow regulatory intervention by ART only after the launch of offerings and tariff pricing plans; potentially after complaints by rival telecoms operators.

EU competition chief Mario Monti and information commissioner Erkki Liikanen have written to French finance minister Francis Mer and industry minister Nicole Fontaine to complain about the measures.

Although the legislation was passed on Thursday last week, the new system still has to be formally adopted by the French senate – after which EU intervention could become more urgent.

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