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Brussels, 10 May 2011

State aid: the procedure for awarding France's fourth 3G mobile phone licence did not involve state aid

The European Commission has ruled that the procedure for awarding France's fourth 3G mobile phone licence in 2009 did not involve any state aid under the EU rules. In the Commission's view, the award was made by way of a transparent and open procedure in accordance with European Union regulations and resulted in a competitive outcome. The Commission has therefore rejected the complaints filed by the three mobile phone operators currently active in the French market.

Joaquín Almunia, Commission Vice-President in charge of competition policy, said: 'The development of competition is one of the fundamental goals of the European Union's regulatory framework for electronic communications. It would be something of a paradox for a tender held in accordance with that framework, designed to increase the number of competitors and broaden consumer choice, to involve state aid. The Commission is satisfied in this instance that the procedure followed ruled out the granting of any selective advantage to the undertaking selected'.

For ten years France had been trying to bolster competition and foster growth in the mobile phone services market by authorising a fourth operator. A number of failed attempts demonstrated that the conditions previously on offer were dissuasive. In 2009 France therefore decided to subdivide the frequencies initially intended for a fourth operator into three batches and to launch separate calls for tender. The first, in 2009, was set aside for new entrants. The beneficiary, Free Mobile (Iliad SA), was chosen on the basis of a comparative procedure in which qualitative criteria such as the project's coherence and planned national coverage were assessed. Bidders also had to agree to pay a spectrum usage fee, comprising a fixed fee of €240 million and 1% of related turnover.

The three operators already active in the French market — Orange (France Telecom), SFR (Vivendi) and Bouygues Télécom — claimed that the fixed fee was not high enough and thus constituted state aid.

Role as regulator

The Commission, however, found that Member States, when allocating frequencies for mobile communications, act as regulators and are obliged to take into account the goal of facilitating increased competition. It follows from this that any loss in revenue for the State when awarding frequencies does not necessarily constitute state aid.

In this case, the Commission's investigation showed that the French authorities had taken sufficient precautions to ensure a competitive outcome. The call for tenders was carried out as a transparent process. Since only one undertaking responded to the call, the Commission noted, moreover, that a bidding procedure would probably have resulted in an even lower fee.

For these reasons, the Commission found that the fourth operator did not benefit from a selective economic advantage such as might constitute state aid.

The non-confidential version of today's decision will be made available under case number SA 29191 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the Internet and in the Official Journal are listed in the 'State aid Weekly e-News'.

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