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IP/08/862

Brussels, 5 June 2008

Freedom of establishment: the Commission challenges the French hydroelectric concession system

The European Commission has decided to take France to the European Court of Justice for its legislation giving preference to outgoing concession-holders when concessions for works using hydraulic power come up for renewal.

The Commission has decided to take France to the Court of Justice on account of Article 29 of French Decree No 94/894 of 13 October 1994 which grants preference to outgoing concession-holders when concessions for works using hydraulic power are renewed and awarded. By benefitting companies which already hold a concession and which are thus already established in France, this system is consequently incompatible with the principle of the freedom of establishment which prohibits restrictions on the cross-border exercise of economic activities, including in particular any form of direct or indirect discrimination between Community operators.

Such a system is likely to ensure that existing holders retain their concessions for an indefinite period, and it becomes extremely difficult if not purely theoretical for other operators to bid for such concessions.

The French authorities, having amended the law of 16 October 1919 on which Decree No 94/894 is based in December 2006, had also undertaken to amend the Decree. In the absence of such a review, however, the Commission has decided to take France to the Court.

As a reminder, the same type of preference was also provided for under Italian legislation, but it was abolished following infringement proceedings brought by the Commission (see press releases IP/07/912 of 27.6.2007 and IP/06/889 of 29.6.2006).

The latest information on infringement proceedings concerning all Member States is available at:

http://ec.europa.eu/community_law/index_fr.htm


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