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Brussels, 13th June 2007

State aid: Commission opens investigation into regulated electricity tariffs in France

The European Commission has opened under EC Treaty state aid rules a formal investigation into potential aid to large and medium-sized companies in France in the form of artificially low regulated electricity tariffs that are financed by the state directly or indirectly. The Commission will assess whether the regulated tariffs constituted state subsidies to large and medium-sized companies and if so, whether such aid could give rise to disproportionate distortions of trade and competition within the EU Single Market. The Commission's state aid investigation does not however concern regulated tariffs for households and small companies. The decision to open an investigation gives interested parties an opportunity to comment on the proposed measure. It does not prejudge the outcome of the investigation.

Competition Commissioner Neelie Kroes commented: “The state financing of certain companies' electricity costs could distort competition between European industries and prevent consumers from fully enjoying the benefits of the Single Market."

French electricity consumers can buy their electricity either on the liberalised market or on the regulated market. On the regulated market, they buy the electricity from distributors designated by the French State, at regulated prices. The regulated prices are currently considerably lower than the electricity prices on the liberalised market. Since the beginning of 2007, clients who had left the regulated market can return to it and pay electricity prices that are above the original regulated prices, but still below the market prices. The system appears to be financed mainly by the state-owned company Electricité de France (EDF) and by parafiscal contributions levied on all French electricity consumers and administered by the state.

The Commission is concerned in particular about the potential distortion of competition entailed in the "green" and "yellow" tariffs which are the lowest ones and applicable to medium and large companies, and can effect mostly in the markets for products made by energy-intensive companies. The investigation does not cover the "blue" tariffs (applicable mainly to households and small companies) since they do not seem to grant any economic advantage to the relevant companies.

The competition problems raised by artificially low state-regulated tariffs were highlighted by the conclusions of the Commission's energy sector competition inquiry (see IP/07/26 and MEMO/07/15). The Commission has already opened an infringement case against France concerning the regulated tariffs arrangements, which may be incompatible with the electricity liberalisation Directive 2003/54/EC (see IP/06/1768). The Commission opened already an in-depth investigation into regulated electricity tariffs in Spain on 25 January 2007 (see IP/07/93).

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