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10/12/2016

Brussels orders EDF to return €1.37 billion in state aid

Competition

Brussels orders EDF to return €1.37 billion in state aid

EDF is the EU's largest producer of electricity.

[Campaign for Nuclear Disarmament/Flickr]

Tax breaks received by French energy giant EDF in 1997 violated European competition law, the European Commission has ruled. EurActiv France reports

The European executive on Wendesday (22 June) ordered French energy company EDF to pay back €1.37 billion it received in illegal state aid.

Margrethe Vestager, the European Commissioner for Competition, said, “The Commission’s investigation confirmed that EDF received an individual, unjustified tax exemption which gave it an advantage to the detriment of its competitors, in breach of EU state aid rules.”

The French authorities failed to apply corporation tax to unused EDF provisions that were converted into a capital endowment during a 1997 restructuring of the company’s balance sheet.

Tax break

This tax break coincided with electricity market liberalisation, at a time when EDF was investing heavily in upgrading its network.

The investigation had been re-opened in 2013 after an initial decision had been quashed by the Court of Justice of the EU.

“This tax exemption conferred on EDF an undue economic advantage compared with other operators on the market and so distorted competition. In order to remedy this distortion, EDF must now repay that aid,” the Commission concluded.

>>Read: Report: In EU, renewable energy is the first recipient of state aid

EDF must now reimburse the French state €889 million for the tax break and €488 million in interest: a total of €1.37 billion.

The news was received with remarkable calm in Paris. At a press conference at the presidential palace, Minister of Economy Emmanuel Macron invited journalists to “look at EDF’s balance sheet, the sheer scale of its profit margin, and you will see that this fine will not undermine [the company’s] financial structure”.

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