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Brussels, 30 September 2009

State aid: Commission approves public financing worth €59 million for broadband project in the French Hauts-de-Seine department

Under the EC Treaty rules on state aid, the European Commission has approved public co-financing of the roll-out of a passive, neutral and open broadband network covering the entire French department of Hauts-de-Seine, including the non-profitable areas. The Commission concluded that the public funding amounting to €59 million would be used to offset the cost of complying with the obligations of a service of general economic interest imposed following an open and transparent tendering procedure, and did not therefore constitute state aid. In particular, the compensation does not exceed the cost of rolling-out the network in the non-profitable areas of the French department. The Commission's examination found that the plan is in accordance with the precedent established in the Court of Justice 'Altmark' case and with the new Guidelines on the application of state aid rules to the financing of high-speed and very high-speed broadband networks (see IP/09/1332 ).

Competition Commissioner Neelie Kroes commented: "In six years' time the French project will have made it possible to roll out a very high-speed, neutral and passive network in Hauts-de-Seine while offering all operators effective, non-discriminatory access. This will further stimulate competition and the provision of new innovative services, thus benefiting all those living in this department".

The notified project consists of the construction and operation of a very high-speed public network throughout the department of Hauts-de-Seine. With this network, all electronic communication providers will be able to offer services to all citizens, companies and public institutions in the department under transparent, objective and non-discriminatory conditions.

The construction and operation of the broadband infrastructure will be implemented by means of a 'public service delegation' in the form of a concession under French law lasting for 25 years.

The Commission has examined the project in the light of the case law of the Court of Justice relating to services of general economic interest (Altmark judgment) and the EU rules on state aid to finance high and very-high speed networks (see IP/09/1332 and MEMO/09/396 ).

According to the Altmark judgment, compensation for public service obligations does not constitute state aid provided that the following four criteria are met:

  • the beneficiary must be entrusted with a clearly-defined public service mission;

  • the parameters for calculating the compensation must be established in advance in an objective and transparent manner;

  • the compensation must not exceed the cost incurred in discharging the public service obligations; and

  • either the undertaking selected is chosen pursuant to a public procurement procedure or, failing this, the level of compensation is determined on the basis of what it would cost a typical, well-run undertaking to discharge these public service obligations .

The Commission has concluded that the project complies with the 'Altmark' criteria and the Broadband Guidelines.

In particular, the public service concession holder chosen as a result of a prior announcement and competition procedure will have the status of 'operator of operators' and will not be able to deal directly with or sell services to final consumers. The availability of 'dark fibre' (an optical fibre that is sold and installed but not connected to active equipment) will make real competition possible at every level. The compensation granted (€59 million) is intended solely to offset the costs arising from the roll-out of such a network in non-profitable areas of the Hauts-de-Seine department.

The non-confidential version of today's decision will be made available under case number N331/2008 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. The electronic newsletter "State aid Weekly e-News" lists the most recent decisions on state aid published in the Official Journal and on the website.

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