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- Point in Time (29/06/2011)
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Point in time view as at 29/06/2011.
There are currently no known outstanding effects for the Commission Decision of 29 June 2011 on State aid granted by France to the Institut Français du Pétrole (Case C 35/08 (ex NN 11/08)) (notified under document C(2011) 4483) (Only the French text is authentic) (Text with EEA relevance) (2012/26/EU).
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THE EUROPEAN COMMISSION,
Having regard to the Treaty on the Functioning of the European Union(1), and in particular the first subparagraph of Article 108(2) thereof,
Having regard to the Agreement on the European Economic Area(2), and in particular Article 62(1)(a) thereof,
Having called on interested parties to submit their comments pursuant to the provisions cited above(3),
Whereas:
1 PROCEDURE
2 THE IFP GROUP
research and development in the fields of oil and gas prospecting and refining and petrochemicals technologies,
the training of engineers and technicians, and
the provision of sector information and documentation.
A contract of objectives with the State lays down the broad lines of its work for five years at a time.
3 DESCRIPTION OF THE MEASURE
4 REASONS FOR INITIATING THE FORMAL INVESTIGATION PROCEDURE
EPICs, as legal entities governed by public law, are not subject to insolvency and bankruptcy procedures, by virtue of the general principle of the immunity from seizure of the assets of legal entities governed by public law, which has been recognised by the French courts, including the Court of Cassation(18), since the late nineteenth century. For further details, the Commission refers to section 3.2.1.1 of the opening decision, recitals 38 to 40(19).
EPICs are subject to the Law of 16 July 1980 and its implementing rules. These expressly identify the State as the authority responsible for covering the debts of publicly owned establishments. They confer on it important prerogatives, such as the issuing of a mandatory payment order and the creation of sufficient resources, and organise a principle of last-resort State liability for the debts of legal entities governed by public law. For further details, the Commission refers to section 3.2.1.2 of the opening decision, recitals 41 to 45(20).
In the event of the winding up of an EPIC, the general principle applies that its debts will be transferred to the State or to another public entity(21), which means that creditors of an EPIC have an assurance that they will not lose the money they are owed by a publicly owned establishment. For further details, the Commission refers to section 3.2.1.3 of the opening decision, recitals 46 to 51(22).
EPICs may possibly also have preferential access to Treasury imprest accounts. For further details, the Commission refers to section 3.2.1.4 of the opening decision, recital 52(23).
5 OBSERVATIONS AND PROPOSALS PUT FORWARD BY THE FRENCH AUTHORITIES
If there is no requirement for continuity of the public service, in the event of lack of assets of the publicly owned establishment, application of the procedure introduced by the Law of 1980 would not place the creditors in a more favourable position than if the procedure under ordinary law had been applied: they would recover the same amount as the creditors of an entity subject to commercial law, i.e. the proceeds from the sale of the assets, and would no longer have any redress at the end of the procedure(41), since, according to France, the State cannot be held liable solely on the ground of lack of assets. Only two aspects would be different:
The absence of a single procedure for all creditors: unlike the procedure under private law, whereby claims are processed en masse and creditors are satisfied in decreasing order of priority and pro rata from the amounts available, the procedure introduced by the Law of 16 July 1980 requires creditors to take action to protect their rights. The approach of the Law of 16 July 1980 is ‘first come, first served’.
It is the representative of the State who, under the supervision of the administrative court (monitoring for gross negligence as established by the Council of State in the Campoloro judgment cited above), takes on the role equivalent to that of the liquidator and court-appointed administrator.
In the event that the continuity of the public service has to be guaranteed, the French authorities admit that the representative of the State, when exercising the powers conferred by the Law of 16 July 1980, could decide not to sell certain assets needed to perform a public service task. This failure to sell certain assets would then be reflected, if the State did not pay compensation, in lower proceeds from the assets and a corresponding reduction in the amounts recoverable by creditors. According to the French authorities, such a procedure would not confer on IFP’s creditors rights greater than those they would have had under commercial law. However, the French authorities admit that, in such an event, the State might incur strict liability, and would have to compensate creditors for the loss they had suffered (not exceeding the market value of the assets retained by the State for the continuity of the public service). The creditors would therefore potentially be reinstated in the same situation as that which would have resulted from the application of ordinary law. The French authorities conclude that the procedure introduced by the Law of 16 July 1980 does not confer any advantage over the procedure under ordinary law and that there is therefore no justification for subjecting IFP directly to a procedure such as that which applies under ordinary law.
On the one hand, the Commission commits an error in its reasoning regarding any support that IFP could provide to its subsidiaries through an intra-group transfer, since the conditions on which the parent of a group can support one of its subsidiaries in difficulty are strictly regulated by company law, even if it is a legal person governed by public law(42), and are totally unrelated to the concept of undertaking within the meaning of competition law.
On the other hand, the French authorities deny that the EPIC status of IFP, with any possible State guarantee that such a status might imply, enables it to recapitalise its subsidiaries more easily than group parent companies with a legal form governed by private law. According to the French authorities, the fact that a company temporarily bears the losses of one of its subsidiaries is part of the normal operation of a group, as the European Union court has already recognised(43), and the intervention of a public investor acting according to the same rules of conduct as a private investor is not considered to contain State aid elements within the meaning of Article 107(1) TFEU(44). This is the case in particular for IFP, which has the legal possibility (and not the obligation) to recapitalise a subsidiary in difficulties according to the same assessment criteria as any prudent investor. Finally, the French authorities deny that EPICs have any possibility at all of ‘direct access’ to ‘Treasury imprest accounts’. They say that the budgetary mechanism of the ‘financial assistance account’, regulated by Article 24 of the Organic Law governing the Finance Act, provides for the constitution of appropriations accounts, capped by the Finance Act, which allow the State to grant advance payments to various bodies, if it wishes and if it is able to do so (in particular in the light of European Union law). According to the French authorities, EPICs have not got ‘direct access’ to these accounts.
Firstly, the French authorities deny that IFP, as an EPIC, possesses a legal status which rules out any bankruptcy or insolvency proceedings. In any event, they say, the Commission has not proved this, but provided evidence to show only that IFP’s status would not allow the application of one specific procedure (namely the procedure introduced by the Law of 25 January 1985).
Secondly, the French authorities deny that the fact that under the law and its own constitution a body cannot be made the subject of bankruptcy or insolvency proceedings automatically secures it more favourable funding terms on the market. In order to conclude that an enterprise is receiving aid in the form of a guarantee, the Commission must first, in application of point 1.2 of the Guarantees Notice cited above, demonstrate that it dos indeed receive more favourable funding terms.
the financial situation of IFP and its subsidiaries is sound, which makes the question of possible bankruptcy and consequently last-resort State intervention irrelevant;
the terms for the short-term funding of IFP and its subsidiaries are different for each of these entities, and result from specific negotiations conducted on a one-to-one basis with their respective banks;
the relations that IFP and its subsidiaries maintain with their suppliers and customers do not give rise to preferential conditions resulting from an expectation on the part of these suppliers and customers of a State guarantee.
the analysis set out by the Commission in its opening decision is questionable: IFP and its subsidiaries do not enjoy any State guarantee;
the Commission has not demonstrated the existence of an advantage to IFP and its subsidiaries deriving from IFP’s EPIC status;
the Commission has not, therefore, demonstrated the existence of State aid to IFP and its subsidiaries.
clarification of the Decree implementing the Law of 16 July 1980;
incorporation of a reference spelling out the absence of a guarantee in IFP’s contracts involving a claim;
incorporation of a reference spelling out the absence of a guarantee in the financing contracts of IFP’s subsidiaries.
‘The issue/programme/loan does not enjoy any form of direct or indirect State guarantee. In the event of insolvency, the State would not be obliged to act as financial substitute for IFP for payment of the claim.’
The French authorities consider that the Commission’s first objection would seem to say that even if there is no actual provision to this effect in the national law of a Member State, the mere risk of a change in the case-law, i.e. a change in national law, is enough to create State aid. The Commission cannot argue that there is State aid because of a possible change in the law, which in this case is highly improbable, the plea of accepted risk being a general principle of public law that has been confirmed by case-law on many occasions, has never been contradicted, and has been widely commented.
Concerning the second objection, the French authorities recognise that statute law and regulations take precedence over contracts, and that a disputed clause can always be annulled. However, they consider that the objection does not in fact refer to any higher-ranking text, that it is not substantiated, and therefore has no weight.
Finally, as regards the third objection, the French authorities consider that it is based on a mere supposition of a possible belief or expectation among suppliers that their claims enjoy a State guarantee, a supposition which cannot by itself serve to demonstrate the existence of an advantage, but must be corroborated by information establishing that IFP and its subsidiaries have actually benefited from an economic advantage of this kind.
6 COMMENTS FROM THIRD PARTIES AND FROM THE FRENCH AUTHORITIES
IFP/Axens, consisting of the publicly owned establishment and its subsidiary Axens, is undeniably perceived by the market as a public entity (5.1.1);
the award of EPIC status to IFP/Axens has allowed and continues to allow significant distortion of competition in the process technologies market in which UOP operates, as it confers advantages in relations with suppliers, capital providers and customers (5.1.2).
IFP and Axens present themselves on the market as a single economic entity, ‘IFP/Axens’. Axens’s Internet site mentions in particular that the company is ‘backed by nearly fifty years of R&D and industrial success’(60). Axens’s advertisements for its technology refer to IFP. Axens and IFP staff sometimes visit their licensees together.
The industrial press illustrates the market perception of IFP/Axens as a single economic entity. UOP encloses extracts from press cuttings referring to the activities of ‘IFP/Axens’ in the field of process technology licences, or alternatively referring to such licences being provided by IFP via its subsidiary Axens. UOP also provides examples of articles or presentations in which Axens staff have given the impression that Axens is seen by IFP as comprising the entire activities of the industrial and procatalysis divisions.
firstly, ‘IFP/Axens’ is not a State body with unlimited resources at its disposal; moreover, there is no proof that this entity is perceived as such on the market (6.2.1);
secondly, IFP’s EPIC status confers no market advantage on Axens (6.2.2).
in the event of default by Axens, the capacity offered by its civil liability insurers through the various insurance policies under its world programme is well in excess of the maximum liability of Axens contractually agreed with its licensees;
the capacity for immediate or rapid mobilisation of Axens’ resources is also very considerable, in particular because of its low debt level;
the agreements between IFP and Axens explicitly limit IFP’s liability in the event of default on the part of one of Axens’ licensees to sums which are necessarily small, as they are correlated to the fee received by IFP;
Axens’ civil liability insurer expressly waives any recourse against IFP, for any reason whatsoever.
7 ASSESSMENT
As regards the publicly owned establishment IFP, the impact of the unlimited guarantee arises directly from its EPIC status: as a legal person governed by public law, IFP is not subject to the ordinary law governing the administration and winding up of firms in difficulty. In the light of this particularity, the parent of the IFP group may carry on economic activities itself, under more advantageous conditions than other market participants not benefiting from comparable protection (7.1.1.1).
As regards the activities carried out directly by the IFP subsidiaries governed by private law, which, for their part, are entirely subject to the ordinary law of bankruptcy, any direct liability of the publicly owned establishment, and therefore of the State, seems impossible. If a subsidiary’s assets are insufficient, therefore, it has to be considered whether the creditors of Axens, Prosernat and Beicip-Franlab could benefit from an indirect mechanism whereby the parent would be liable for its subsidiaries, equivalent to a guarantee mechanism (7.1.1.2).
The Commission emphasises that the change of legal form of the publicly owned establishment IFP occurred on 7 July 2006, i.e. after the entry into force of the Organic Law governing the Finance Act. Under such circumstances, it is not necessary to examine the arguments put forward by the French authorities’ expert in the postal case regarding debts contracted before 1 January 2005, despite the fact that the French authorities refer to this mutatis mutandis in their comments. Debts contracted by IFP before 1 January 2005 were contracted by a trade body within the meaning of Law No 43-612 of 17 November 1943 on the management of trade interests, and therefore by a legal person governed by private law, and consequently could not be covered, at the time they were entered into(75), by the unlimited guarantee conferred by the EPIC status.
The Commission nevertheless notes, as its expert pointed out in the postal case, and as it explained in recital 130 of decision C 56/2007, to which it refers mutatis mutandis, that the obligation to enter State guarantees in a Finance Act is confined to the ‘giving’ (octroi) of such guarantees. To ‘give’ a guarantee the State must confer a guarantee on an organisation or an operation by an express manifestation of its intention. The scope of the obligation to enter guarantees in the Finance Act does not extend to guarantees that arise out of the legal form of an organisation, or out of an obligation established in case-law, which are guarantees of an implied and automatic character. This category is not the result of a decision of the State, but of the fact that the State places itself in an existing legal framework, the guarantee being only one effect of that framework(76).
The Commission concludes, as it did in recital 131 of decision C 56/2007, to which it refers mutatis mutandis, that the argument put forward by the French authorities on the basis of the Organic Law governing the Finance Act is not convincing, because the fact that it is not stated in any Finance Act that the State extends a guarantee to IFP by virtue of its legal form does not mean that there is no implied guarantee. The Commission is not in any event bound by the description of the measure as a ‘guarantee’ for purposes of French law, or by the fact that a guarantee is or is not caught by the Organic Law governing the Finance Act. The only relevant consideration is how the measure is to be described for purposes of Union law. Union law recognises the existence of an implied guarantee once a Member State legally has to repay a claim on another person in the event of that person’s defaulting(77).
As pointed out by the Commission’s expert in the postal case, and as recalled in recital 133 of decision C 56/2007, to which it refers mutatis mutandis, the Commission considers that this assertion is based on too broad an interpretation of the constitutional protection of the right of property.
The Commission takes the view, as it did in recital 134 of decision C 56/2007, to which it refers mutatis mutandis, that in the same way, when an EPIC is converted into a company that can be made the subject of court proceedings for administration or winding up, the right of property does not require that a specific measure be taken to preserve the entitlements of creditors, and that the fact that no such measure has been taken does not constitute evidence that there is no implied guarantee.
The Commission adds that, as explained in recitals 135 and 136 of decision C 56/2007, to which it refers mutatis mutandis, the fact that the French authorities decided to give an express guarantee to La Poste when it obtained a legal form equivalent to that of an EPIC in 1990(79) does not mean that there was no implied guarantee before that date.
unlike the creditors of undertakings governed by commercial law, creditors of IFP (which is not subject to the ordinary law governing the compulsory administration or winding up of firms in difficulty) are not in danger of seeing their claim cancelled in whole or in part as an outcome of compulsory winding-up proceedings;
the fact that IFP has legal personality is no bar to the existence of a guarantee given by the State;
in the absence of any express limitation on the State’s liability in respect of IFP, IFP’s creditors may legitimately act on the principle that the State will bear the debts of IFP, even though IFP possesses legal personality.
The French authorities propose to amend the Decree implementing the Law of 1980 as follows (the amendment is shown in italic): ‘If the notice given has had no effect by the time these deadlines expire, the representative of the State or the authority responsible for supervision shall enter the expenditure in the budget of the defaulting authority or publicly owned establishment. The representative of the State or the authority responsible for supervision shall, as appropriate, release the necessary resources from the budget of the defaulting authority or establishment either by reducing the appropriations allocated to other expenditures and still available or by increasing resources’.
However, as the Commission pointed out in recital 67 of the opening decision, neither in its present wording nor in the amended wording proposed by the French authorities does the legislation prevent an increase in resources from being made possible by a subsidy or injection of public funds.
The Commission notes more specifically that the ECHR rejected the arguments of the French authorities which attempted to base their case(93) on the absence of, firstly, an operative event imputable to the State and, secondly, a guarantee on the part of the State to public authorities possessing legal personality, and accepted the contrary arguments of the applicants(94).
The ECHR found that there had been a breach of Article 6-1 of the European Convention on Human Rights (‘the Convention’), and added that the judgments had to be implemented and that a State authority could not use lack of resources as a pretext for not honouring a debt based on a judicial decision. The ECHR also found that there had been a breach of Article 1 of Protocol No 1 to the Convention, the applicants having suffered interference with their property rights on account of a huge and special burden due to the non-payment of the sums which they should have received(95). In the light of the above, the ECHR charged the whole of the debtor communes’ debt to the State(96).
The Commission considers that this judgment has three important implications:
Subject to the applicants obtaining a court judgment recognising their claim, the liability of the State functions as an implied guarantee(97), in so far as the French State is required to pay the whole of the debt of the public body(98) and no distinction is made between debt conceivably due to the public authority’s insolvency and possible defaults imputable to the State (the ECHR did not at any time seek to identify an act or omission imputable to the State, and looked no further than the debtor’s insolvent status).
This liability covers the debts of public authorities possessed, however, of legal personality. The existence of legal personality and of assets specific to the authority was expressly invoked by the French Government in its opposition to holding the French State liable, but this argument was rejected by the ECHR.
The scope of the State guarantee extends to include public authorities dependent on the State. The guarantee is therefore intrinsically connected with the debtor’s public-law legal form.
On the basis of this expert report, it can be considered firstly that although there is no overall judicial scheme for organising the closing down of publicly owned establishments, experience shows that the legislation always provides for transferring the rights and obligations of the establishment that is to be closed either to the State or to the body that is to take over its task(105).
Secondly, there is generally a transfer of ‘rights and obligations’ (with the term ‘obligations’ undoubtedly referring to debts), sometimes a transfer of ‘assets’(106) (a formulation that would also include debts). The only example found of the pure and simple closing down of a publicly owned establishment involved, in any case, the transfer of the ‘debts’ themselves to other entities governed by public law(107).
Thirdly, even when the task disappears, the publicly owned establishment’s rights and obligations are, in practice, taken over by another body.
Fourthly and finally, the practice described in the study is in accordance with codifying instruction No 02-060-M95 of 18 July 2002 and the guide to the financial organisation of the creation, conversion and abolition of national publicly owned establishments, cited above(108), namely that the rights and obligations of a wound-up EPIC go either to the State or to the legal entity that will take over the establishment’s task.
the creditors of IFP do not encounter the usual private and public law limitations on the payment of a claim in full;
in recovering the sums owed to them, the creditors of IFP may have recourse to specific procedures authorising the State to force the debtor body to settle the claim;
nowhere does French law give the creditors of IFP to understand that IFP could face, for good, a situation in which it had a shortage of funds;
the budgetary documents give the impression that, if there is a shortage of funds, the State could give an exceptional grant to public sector bodies, of which IFP is one;
if the procedures described above do not enable the creditor to obtain satisfaction, he can hold the State liable in order to obtain the payment of his claim in full;
if the actions envisaged above were to be spread out over time, the creditor can be certain that his claim will not be cancelled, even if IFP were to be subject to structural development.
Where an administrative public service is involved, the old rule, based on de jure or de facto management, seems to have been abandoned by the Court of Conflicts of Jurisdiction(128) in its Département de la Dordogne decision(129), where the Court decided that the administrative courts had jurisdiction because the service involved was an administrative public service, regardless of whether the legal person governed by public law was the de jure or de facto manager of the person governed by private law that actually performed the public service task. The Court recalled that in line with its judgment in Blanco (130)‘the liability which may lie with the State or with other legal persons governed by public law by reason of damage attributed to their administrative public services is governed by public law’ (emphasis added), and that the situation was otherwise only where the law expressly so provided; the Court went on to find that in Law of 25 January 1985 on compulsory administration and winding-up procedures, (now codified in Articles L. 624-3 et seq. of the Commercial Code) the legislature had not, ‘by way of exception to the principles governing the liability of public-law persons, intended to confer jurisdiction on the ordinary courts for determining the civil liability of the State or other legal persons governed by public law in the performance of a duty to provide an administrative public service’ (emphasis added).
Conversely, where an industrial or commercial activity is concerned, jurisdiction to determine the civil liability of a legal person governed by public law controlling a private person in liquidation clearly rests with the ordinary courts. In its judgment in Société d’Économie Mixte Olympique d’Alès en Cévennes (131), the Court of Conflicts of Jurisdiction held in particular that ‘although jurisdiction to determine the civil liability of the State or of other legal persons governed by public law in respect of the performance of a duty to provide an administrative public service rests with the administrative courts, such proceedings come under the jurisdiction of the ordinary courts where it is shown that the State or the legal person governed by public law is liable in respect of an industrial or commercial activity; there is no necessity to determine whether the public authority acted as manager de jure or de facto’ (emphasis added). In the case before it the Court of Conflicts of Jurisdiction ruled that the activities conducted by a public limited company with a board of directors and supervisory board (SEM Olympique d’Alès en Cévennes) were not of an administrative public service nature, on the basis of two considerations: the company’s object(132) and its financing(133).
The publicly owned establishment IFP is registered in the Nanterre Trade and Companies Register (‘RCS’) under number B 775 729 155 and its registered office is located in Rueil-Malmaison(149). IFP owns two establishments in France, in Solaize(150) and Pau(151) respectively.
Axens is registered in the Nanterre RCS under number B 599 815 073 and its registered office is also located in Rueil-Malmaison, but at a different address from its parent(152). Its operating centres are also located in different sites from those of its parent, mostly outside France: in the United States, in Houston, Texas; Princeton, New Jersey; Savannah, Georgia; and Calvert City, Kentucky; in Canada, in Brockville, Ontario: in China, in Beijing; in Japan, in Tokyo; in India, in New Delhi; in Bahrain; and in Russia, in Moscow.
Beicip-Franlab is registered in the Nanterre RCS under number B 679 804 047, and its registered office is also located in Rueil-Malmaison, but at a different address from its parent and Axens(153). It has subsidiaries and offices in a large number of countries in the world, in particular in Bahrain; in Abu Dhabi; in Tripoli in Libya; in Kuala Lumpur in Malaysia; in Houston, Texas, in the United States; in Villahermosa in Mexico; in Rio de Janeiro in Brazil; and in Moscow in Russia.
Prosernat is registered in the Nanterre RCS under number B 315 251 330 and its registered office is located in Puteaux(154). The company states(155) that it is present in some twenty countries throughout the world, including in South America (Argentina, Brazil, and Venezuela), Europe (United Kingdom, Italy, and Norway), North Africa (Algeria and Egypt), the Gulf countries (Saudi Arabia, United Arab Emirates, Kuwait, Oman, and Qatar), Iran, Russia, the Commonwealth of Independent States and South-East Asia.
Axens, set up in 2001, engages in an economic activity in the market for catalysts and technologies for the refining and petrochemicals industries, for which it employs more than 600 people and through which it achieves an annual turnover of approximately EUR 300 million.
Beicip-Franlab, set up in 1967, engages in a real activity in the publication and distribution of exploration-deposits software and in consultancy and advisory services. This activity involves over 100 employees and provides an annual turnover of approximately EUR 40 million.
Prosernat, acquired in 2001, provides consultancy and other services and supplies gas treatment and sulphur recovery plants. The company employs about 70 people to carry out this activity and has a turnover of approximately EUR 50 million.
A person shall be liable automatically for the damage caused by those whose way of life he regulates, or whose activity he organises, directs or controls in his own interest …’
… Likewise, a person shall also be liable where he controls the economic activity or assets of a professional person who is in a situation of dependence even though acting for his own account, if the victim shows that the act giving rise to the damage is related to the exercise of control. This shall apply in particular to parent companies in respect of damage caused by their subsidiaries, and to licensors for damage caused by their licensees’ (emphasis added.)
remain subject to the ordinary-law procedures regarding the administration and winding up of undertakings;
are unable, in the current state of French law, to rely on an automatic liability of the controlling shareholder of the subsidiaries, the publicly owned establishment IFP, and hence of the French State, for the actions of IFP’s subsidiaries: they must first show that there has been a fault on the part of the publicly owned establishment, which means that any liability is not automatic and cannot be likened to a guarantee mechanism.
research and development in the fields of oil and gas prospecting and refining and petrochemicals technologies,
the training of engineers and technicians,
the provision of sector information and documentation.
education for more and better skilled human resources;
the conduct of independent R&D for more knowledge and better understanding, including collaborative R&D;
the dissemination of research results.
Debt of the publicly owned establishment IFP over the period 2005-2010
Entity: | IFP | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 |
---|---|---|---|---|---|---|---|
EUR thousand | EUR thousand | EUR thousand | EUR thousand | EUR thousand | EUR thousand | ||
Loans and debts with credit institutionsa | Amounts payable within one year (1) | […]a | […]a | […]a | […]a | […]a | […]a |
Amounts payable at over one year | […]a | […]a | […]a | […]a | […]a | […]a | |
(1) of which bank loans and overdrafts and bank credit balances | […]a | […]a | […]a | […]a | […]a | […]a |
a net of consolidation adjustments of the leasing components | |||||||
b since the data are presented as at 31/12 for each year, the figures for 2010 are not yet known. | |||||||
Interest rate on loans and debts contracted with credit institutions: | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | |
---|---|---|---|---|---|---|---|
Interest rate + margin | Interest rate + margin | Interest rate + margin | Interest rate + margin | Interest rate + margin | Interest rate + margin | ||
Medium and long-term loans | […]a | […]a | […]a | […]a | […]a | […]a | […]a |
Bank loans and overdrafts and short-term credit facilities | [Bank No 1]b | EONIA + […]a | EONIA + […]a | ||||
[Bank No 2]b | EONIA + […]a | EONIA + […]a | |||||
[Bank No 3]b | EONIA + […]a | ||||||
[Bank No 4]b | EONIA + […]a | ||||||
‘The issue/programme/loan does not enjoy any form of direct or indirect State guarantee. In the event of insolvency, the State would not be obliged to act as financial substitute for IFP for payment of the claim.’
a financing fee (or debit interest) calculated in proportion to the time involved, to cover the funding of the advance granted to the supplier, which depends in particular on the interest rate in force at the time the claims are transferred;
a factoring fee proper, varying between 0,7 % and 2,5 % of the turnover assigned, with an average rate of 1,5 %(197), calculated on the value of the claims transferred, to pay for the accounting management, collection and performance bond services.
Recourse to factoring by IFP’s suppliers over the period 2004-2010
a Over the first 10 months of the year. | |||
Year | Number of suppliers concerned | Payments to factors(in euros) | Number of invoices concerned |
---|---|---|---|
2004 | […] (*) | […] (*) | […] (*) |
2005 | […] (*) | […] (*) | […] (*) |
2006 | […] (*) | […] (*) | […] (*) |
2007 | […] (*) | […] (*) | […] (*) |
2008 | […] (*) | […] (*) | […] (*) |
2009 | […] (*) | […] (*) | […] (*) |
2010a | […] (*) | […] (*) | […] (*) |
Period as a whole (2004-2010) | […] (*) | […] (*) |
in the exclusive field of Axens, IFP carried out economic activities comprising technical feasibility studies prior to industrial research amounting to EUR […] (*) and industrial research work amounting to EUR […] (*), i.e. in total EUR […] (*).
in the exclusive field of Prosernat, IFP carried out economic activities comprising technical feasibility studies amounting to EUR […] (*) and industrial research work amounting to EUR […] (*), i.e. in total EUR […] (*).
In total, IFP carried out research work in the exclusive fields of its subsidiaries amounting to EUR 56,4 million (EUR 7,4 million for technical feasibility studies and EUR 49,0 million for industrial research work), whereas the volume of its own resources was only EUR […] (*), and the Commission accordingly considered that these research activities had been subsidised by public funds to the amount of EUR 11,3 million (an aid intensity of 20 %)(210).
Activities of lFP in the exclusive fields of Axens between 2007 and 2009
(EUR thousand) | |||
Total | Total charges | Total own resources | Public resources (+) or benefit (–) |
---|---|---|---|
2007 | […] (*) | […] (*) | […] (*) |
2008 | […] (*) | […] (*) | […] (*) |
2009 | […] (*) | […] (*) | […] (*) |
Activities of IFP in the exclusive fields of Prosernat between 2007 and 2009
(EUR thousand) | |||
Total | Total charges | Total own resources | Public resources (+) or benefit (–) |
---|---|---|---|
2007 | […] (*) | […] (*) | […] (*) |
2008 | […] (*) | […] (*) | […] (*) |
2009 | […] (*) | […] (*) | […] (*) |
Upper bounds to economic advantage derived by IFP from the unlimited guarantee in its customer relations between 2006 and 2009
a These figures are arrived at by multiplying the turnover recorded each year by the maximum rate applied to cover the performance bond (5 %). For 2006, it would be appropriate in theory to apply a rate of 48,5 % (= (365-188)/365) to this product in proportion to the time involved, since the guarantee started only from 7 July 2006, the 188th day of the year 2006, which was the date of conversion of IFP’s legal form. | ||||||||
2006 | 2007 | 2008 | 2009 | |||||
---|---|---|---|---|---|---|---|---|
Research services (outside the exclusive fields of the subsidiaries) | Turnover(EUR million) | Upper bounda(insurance premium) | Turnover(EUR million) | Upper bound(insurance premium) | Turnover(EUR million) | Upper bound(insurance premium) | Turnover(EUR million) | Upper bound(insurance premium) |
On behalf of subsidiaries | […] (*) | EUR […] (*) | […] (*) | EUR […] (*) | […] (*) | EUR […] (*) | […] (*) | EUR […] (*) |
On behalf of third parties | […] (*) | EUR […] (*) | […] (*) | EUR […] (*) | […] (*) | EUR […] (*) | […] (*) | EUR […] (*) |
Administrative services provided | ||||||||
Invoicing of staff provided | […] (*) | EUR […] (*) | […] (*) | EUR […] (*) | […] (*) | EUR […] (*) | […] (*) | EUR […] (*) |
Invoicing of premises and ancillary services | […] (*) | EUR […] (*) | […] (*) | EUR […] (*) | […] (*) | EUR […] (*) | […] (*) | EUR […] (*) |
Services in the exclusive field of Axens | […] (*) | EUR […] (*) million | […] (*) | EUR […] (*) million | […] (*) | EUR […] (*) million | […] (*) | EUR […] (*) million |
Services in the exclusive field of Prosernat | […] (*) | EUR […] (*) | […] (*) | EUR […] (*) | […] (*) | EUR […] (*) | […] (*) | EUR […] (*) |
Total for the subsidiaries | […] (*) | EUR […] (*) million | […] (*) | EUR […] (*) million | […] (*) | EUR […] (*) million | […] (*) | EUR […] (*) million |
Total for third parties | […] (*) | EUR […] (*) | […] (*) | EUR […] (*) | […] (*) | EUR […] (*) | […] (*) | EUR […] (*) |
services linked to specific infrastructures with very few if any equivalents in the world(220);
interpretation of cases using software developed by IFP which is not yet marketed or which in the particular context can be used only with specific expertise and IFP skills(221);
use of special IFP expertise(222);
use of expertise under development to validate the competency, technologies and methodologies developed(223).
in the former case, the compatibility of the aid is examined in this section;
in the latter case, the Commission refers to the analysis of compatibility presented in section 7.3.2, which, as a precaution, will include the amounts at stake in the estimate of the advantage potentially transferred to the subsidiaries.
to finance non-economic activities of the publicly owned establishment, which would not entail State aid;
or to finance other contract research activities on behalf of third parties or subsidiaries: this case is analysed in detail in section 7.3.1.2;
or to finance research carried out by the publicly owned establishment in the exclusive field of activity of its subsidiaries, which could consequently be added to the amounts of State aid already transferred to the subsidiaries: this hypothesis is analysed in detail in section 7.3.2.
do not prejudice the normal operation, the independence or the neutrality of the research organisation;
are performed on normal market terms, and in particular at a market price or, in the absence of a market price, at a price that reflects all the organisation’s costs (net of the impact of the guarantee) plus a reasonable margin;
are the subject of accounting separate from that of the independent public research activities, especially as regards their respective costs and funding;
are intrinsically linked to the principal activity of independent public research, so that it is not technically possible to separate them, by reason in particular of the use of the same infrastructures, equipment, materials or technologies, or the use of the same researchers, scientists, engineers, designers or technicians.
Maximum estimate of the total amount of public funding contributed by lFP to the activities carried out in the exclusive fields of activity of Axens and Prosernat between 2006 and 2009
a Data from decision C 51/2005 for 2006 and the annual reports submitted by the French authorities for 2007 to 2009. | ||||
b See the last two lines of Table 5 in recital 236. | ||||
c Weighted average of the permissible aid intensities for industrial research and feasibility studies. | ||||
(EUR million) | ||||
2006 | 2007 | 2008 | 2009 | |
---|---|---|---|---|
Annual cost of technical feasibility studies (EUR million) | ||||
Area of activity IFP/Axens | […] (*) | […] (*) | […] (*) | […] (*) |
Area of activity IFP/Prosernat | […] (*) | […] (*) | […] (*) | […] (*) |
Total | 7,4 | 3,5 | 0,9 | 0,9 |
Annual cost of industrial research work (EUR million) | ||||
Area of activity IFP/Axens | […] (*) | […] (*) | […] (*) | […] (*) |
Area of activity IFP/Prosernat | […] (*) | […] (*) | […] (*) | […] (*) |
Total | 49,0 | 45,5 | 52,8 | 55,2 |
Own resources (EUR million) | ||||
Amount | […] (*) | […] (*) | […] (*) | […] (*) |
Annual State aid (EUR million) | ||||
Amount of public fundinga | 11,3 | 6,4 | 7,7 | 11,1 |
Upper bound to the impact of the guarantee in dealings between IFP and its suppliers | […] (*) | […] (*) | […] (*) | […] (*) |
Upper bound to the impact of the guarantee in dealings between IFP and its customersb | […] (*) | […] (*) | […] (*) | […] (*) |
— in the exclusive field of the subsidiaries | […] (*) | […] (*) | […] (*) | […] (*) |
— outside the exclusive field of the subsidiaries | […] (*) | […] (*) | […] (*) | […] (*) |
Maximum amount of public funding(including the upper bound to the impact of the guarantee) | 13,1 | 9,8 | 11,3 | 14,7 |
Intensity of the aid(net of upper bound to the impact of the guarantee) | 20,0 % | 13,0 % | 14,3 % | 19,8 % |
Upper bound to the intensity of the aid(including upper bound to the impact of the guarantee) | 23,2 % | 20,0 % | 21,0 % | 26,2 % |
Maximum permissible intensityc | ||||
— 1996 R&D Framework | 53 % | 51,8 % | 50,4 % | 50,4 % |
— R&D&I Framework | — | 51,1 % | 50,3 % | 50,2 % |
Progression of the indicators measuring the effort of IFP and its subsidiaries Axens and Prosernat in 2007, 2008 and 2009
Progression of the indicators | IFP/Axens | IFP/Prosernat | ||||
---|---|---|---|---|---|---|
2007/2003 | 2008/2003 | 2009/2003 | 2007/2003 | 2008/2003 | 2009/2003 | |
Expenditure allocated to R&D in the exclusive field | […] (*) | […] (*) | […] (*) | […] (*) | […] (*) | […] (*) |
Staff allocated to R&D in the exclusive field | […] (*) | […] (*) | […] (*) | […] (*) | […] (*) | […] (*) |
8 NEUTRALITY WITH REGARD TO THE RULES GOVERNING THE SYSTEM OF PROPERTY OWNERSHIP
HAS ADOPTED THIS DECISION:
1.The status of publicly owned industrial and commercial establishment granted by France to IFP conferred on IFP, from 7 July 2006 onward, an unlimited public guarantee (‘the State guarantee’) covering the totality of its activities.
2.The cover provided by the State guarantee for the non-economic activities of the publicly owned establishment IFP, in particular its training activities with a view to increased, better qualified human resources, its independent R&D activities with a view to more extensive knowledge and better understanding, and its activities for the dissemination of research results, does not constitute State aid within the meaning of Article 107(1) TFEU.
3.The cover provided by the State guarantee for the technology transfer activities carried out by the publicly owned establishment IFP in the fields provided for by the exclusive development, marketing and use agreement concluded with its subsidiary Beicip-Franlab does not constitute State aid within the meaning of Article 107(1) TFEU.
4.The cover provided by the State guarantee for the technology transfer activities carried out by the publicly owned establishment IFP in the fields provided for by the exclusive agreements concluded with its subsidiaries Axens and Prosernat referred to in Article 3(1) of the Commission decision of 16 July 2008 on the aid measure implemented by France for the IFP group (‘decision C 51/2005’) constitutes State aid within the meaning of Article 107(1) TFEU.
5.The cover provided by the State guarantee for the contract research and other services performed by the publicly owned establishment IFP, on behalf of both third parties and the subsidiaries, constitutes State aid within the meaning of Article 107(1) TFEU.
In the event of any amendment of the agreement between the publicly owned establishment IFP and its subsidiary Beicip-Franlab referred to in Article 1(3), France shall notify the agreement to the Commission, taking account of any impact of the State guarantee in order to assess the total amount of any public funding, unless the new contractual terms allow the presence of State aid to be ruled out.
In the period between 7 July 2006 and 31 December 2009, the cover provided by the State guarantee for the economic activities referred to in Article 1(4) and (5) constituted aid compatible with the internal market.
From 1 January 2010 onward, and until the date of expiry of the exclusive agreements between the publicly owned establishment IFP and its subsidiaries Axens and Prosernat referred to in Article 3(1) of decision C 51/2005, the cover provided by the State guarantee for the economic activities referred to in Article 1(4) of this decision constitutes aid compatible with the internal market, subject to compliance with the conditions in Articles 5 and 6 of this decision.
1.The annual financial report referred to in Article 4(2) of decision C 51/2005 shall include, in addition to the information already mentioned in Article 5(1) of that decision, the information listed in paragraphs 2, 3 and 4 of this Article.
2.The annual financial report shall include the value, interest rate and contractual terms of the loans subscribed to by the publicly owned establishment IFP during the year under review, and an estimate of the gross grant equivalent of any interest rate subsidy deriving from the State guarantee, unless proof is supplied that these loan contracts are in accordance with normal market conditions, either by comparing their terms with those obtained by the publicly owned establishment IFP before its change of legal form, or on the basis of a more precise methodology approved in advance by the Commission.
3.The annual financial report shall include the value of goods and services obtained by the publicly owned establishment IFP from suppliers to carry out the economic activities referred to in Article 1(4) and (5), during the year under review, and a maximum estimate of the gross grant equivalent of the aid resulting from a more favourable assessment by suppliers of the risk of default of the establishment. This estimate shall be made either by applying a flat rate of 2,5 % to the value of acquisitions made, or on the basis of a more precise methodology approved in advance by the Commission.
4.The annual financial report shall include the value of the economic activities referred to in Article 1(4) and (5) carried out by the publicly owned establishment IFP during the year under review, and a maximum estimate of the gross grant equivalent of the aid resulting from the lack of payment of a premium corresponding to a performance bond or, at the very least a best efforts guarantee, offered to the beneficiaries of the above-mentioned economic services. This estimate shall be made either by applying a flat rate of 5 % to the value of the services provided or on the basis of a more precise methodology approved in advance by the Commission.
1.The total amount of public funding allocated to the activities of the publicly owned establishment IFP in the exclusive fields of activity of Axens and Prosernat, including the maximum impact of the State guarantee as estimated in Article 5(2), (3) and (4), must be lower than the maximum intensity permitted by the Community framework for State aid for research and development and innovation.
2.If the threshold referred to in paragraph 1 is exceeded, the surplus aid shall, where appropriate, be refunded by the subsidiary concerned, Axens or Prosernat, to the publicly owned establishment IFP.
From 1 January 2010, the cover provided by the State guarantee for the economic activities referred to in Article 1(5) constitutes State aid which is compatible with the internal market, subject to compliance with the conditions in Article 8.
1.The contract research activities and the provision of services carried out by the publicly owned establishment IFP referred to in Article 1(5) shall remain ancillary to its principal activity of independent public research.
2.To be considered ancillary, the contract research activities and the provision of services by the publicly owned establishment IFP must:
not prejudice the normal functioning, independence and neutrality of the publicly owned establishment IFP;
be charged for at a market price, or in the absence of a market price, at a price which reflects the totality of the costs, plus a reasonable margin, net of the potential impact of the State guarantee;
be the subject of accounting separate from that of the independent public research activities (accounting separation of their respective costs and funding), and the profits they generate must be reinvested in full in the principal activity of independent public research;
be intrinsically linked to the principal activity of independent public research of the publicly owned establishment IFP by reason in particular of the use of the same infrastructures, equipment, materials or technologies, or the use of the same researchers, scientists, engineers, designers or technicians;
be outside the scope of the exclusive agreements concluded between the publicly owned establishment IFP and its subsidiaries Axens and Prosernat referred to in Article 3(1) of decision C 51/2005, where appropriate extended or amended in accordance with Article 3(2) of decision C 51/2005 and Article 12(2) of the present decision;
represent only a residual proportion of the budget devoted by the publicly owned establishment IFP to its independent public research activities.
3.France shall submit each year to the Commission a report on the contract research activities and provision of services carried out by the publicly owned establishment IFP which specifies the ratio of their value to the budget devoted by the publicly owned establishment IFP to its independent public research activities.
1.The French authorities and the publicly owned establishment IFP shall include the following written statement in the financing contract for each transaction (for all instruments covered by a contract):
‘The issue/programme/loan does not enjoy any form of direct or indirect State guarantee. In the event of insolvency, the State would not be obliged to act as financial substitute for the publicly owned establishment IFP for payment of the claim.’
2.The French authorities shall have a similar clause, ruling out State liability, included in any contract relating to contract research services or other services referred to in Article 1(5).
3.The French authorities shall have a similar clause, ruling out liability of the publicly owned establishment IFP and the State, included in any contract involving a claim concluded by the public limited companies Axens, Beicip-Franlab and Prosernat.
4.The publicly owned establishment IFP shall refrain from issuing any form of suretyship, endorsement, guarantee, or letter of intent or comfort in favour of the public limited companies Axens, Beicip-Franlab and Prosernat which does not comply with normal market terms.
France shall notify individually to the Commission any aid of an amount in excess of the thresholds laid down in the Community framework for State aid for research and development and innovation, taking account of any impact of the State guarantee.
France shall inform the Commission, within two months from the date of notification of this decision, of the measures it has taken to comply herewith.
1.Articles 4, 5 and 6 of the present decision shall apply until the date of expiry of the exclusive agreements referred to in Article 3(1) of decision C 51/2005 between the publicly owned establishment IFP and its subsidiaries Axens and Prosernat.
2.Where they notify the Commission of an extension of, or amendment to, the above-mentioned exclusive agreements, in accordance with Article 3(2) of decision C 51/2005, the French authorities shall take account of the impact of the State guarantee in order to assess the total amount of public funding.
This decision is addressed to the French Republic.
Done at Brussels, 29 June 2011.
For the Commission
Joaquín Almunia
Vice-President
OJ C 83, 30.3.2010, p. 47. With effect from 1 December 2009, Articles 87 and 88 of the EC Treaty have become Articles 107 and 108, respectively, of the Treaty on the Functioning of the European Union (‘TFEU’); the two sets of provisions are, in substance, identical. For the purposes of this decision, references to Articles 107 and 108 of the TFEU should be understood as references to Articles 87 and 88, respectively, of the EC Treaty where appropriate. A certain number of changes in terminology have also been made by the TFEU, such as the change from ‘Community’ to ‘Union’ and from ‘common market’ to ‘internal market’.
The Institut Français du Pétrole has since been renamed the ‘Institut Français du Pétrole Énergies Nouvelles’, with effect from 13 July 2010. This name change was made by Article 81 of Law No 2010-788 of 12 July 2010 on national commitment to the environment (loi portant engagement national pour l’environnement) (the ‘Grenelle 2 Law’). (IFP press release of 13 July 2010, available at Internet site http://www.ifpenergiesnouvelles.fr/actualites/communiques-de-presse/, site consulted on 28 June 2011).
Commission Decision 2009/157/EC of 16 July 2008 on the aid measure implemented by France for the IFP Group (C 51/05 (ex NN 84/05)) (OJ L 53, 26.2.2009, p. 13).
Commission Decision of 16 July 2008 on State aid C 35/08 (ex NN 11/08) – Unlimited State guarantee for the IFP – Invitation to submit comments pursuant to Article 108(2) of the TFEU (OJ C 259, 11.10.2008, p. 12).
On this question, see in particular recital 19 of decision C 56/2007. Before its conversion into a public limited company in 2010, the EPIC status of La Poste derived from a case-law classification: in a judgment of 18 January 2001, the Court of Cassation (Second Civil Division) found that La Poste was to be deemed equivalent to an EPIC, thereby upholding the findings of a judgment of the Douai Court of Appeal of 22 October 1998. Moreover, in a report submitted to the French Senate in 2003, the Senate Economic Affairs Committee stated that it was common knowledge that, since the reform of 1990, the parent, La Poste, had a legal form similar to that of an EPIC.
See part 2.1 (‘The IFP Group’) in both the opening decision and decision C 51/2005.
This refers to:
a ten-year exclusive framework licensing agreement under which the subsidiary may use IFP’s present and future intellectual property rights essentially in processes in its field of activity to provide engineering services to customers in connection with those processes and to transmit to them the right to use the related technologies in the form of patent licence sub-grants;
a ten-year exclusive product licensing agreement under which the subsidiary may use IFP’s present and future technology in its field of activity to manufacture and sell to its customers catalysts, adsorbents, captation masses, equipment, and other products and software developed by IFP; and
a ten-year industrial research agreement under which [IFP offers its subsidiary the results of its research in the field of refining and petrochemicals in order that it may, if it so wishes, pursue the research in a joint project with IFP and then exploit the said results.]a Failing that, IFP can offer these results to another enterprise. Each partner bears the costs of its participation in the research project, and at project end IFP holds the ownership rights to the products and processes while its subsidiary holds the ownership rights to the industrialisation stages of the products and processes.
To ensure that confidential information is not disclosed, parts of this text have been omitted. Those parts are indicated by three full stops enclosed in square brackets and marked with an asterisk.
By letter dated 18 June 2009, the French authorities sent the Commission a copy of the amendments to the contracts between IFP and its subsidiaries Axens and Prosernat in accordance with Article 6 of decision C 51/2005. Concerning Axens, the amendment […] (*) was signed [in] (**) 2009 by […] (*) IFP and […] (*) Axens. Concerning Prosernat, the amendment […] (*) was signed [in] (**) 2009 by […] (*) IFP and […] (*) Prosernat.
Communication from the Commission – Community framework for State aid for research and development (OJ C 45, 17.2.1996, p. 5).
This minimum remuneration in fact limits the aid to each subsidiary to a maximum of 75 % of the costs of feasibility studies preparatory to industrial research activities, 50 % of the costs of industrial research and, where appropriate, 25 % of the costs of pre-competitive development activities.
Recital 18 of the opening decision states that the Commission intends to examine the effects of the conversion of IFP into an EPIC on the publicly owned establishment IFP and its subsidiaries, as a single market operator. Recital 36 of the opening decision states that this single entity is considered to be a potential beneficiary of the unlimited State guarantee.
In France, in addition to the public authorities proper, such as the State and the local authorities, there are two main categories of legal entities governed by public law, namely publicly owned establishments and public interest groups, introduced by the Law of 15 July 1982. Within publicly owned establishments, a distinction of principle can be drawn between publicly owned administrative establishments (EPAs), which perform traditional administrative tasks, and publicly owned industrial and commercial establishments (EPICs), which perform economic activities.
See judgment of 21 December 1987 (First Civil Division).
The same arguments are developed at greater length in section 2.1 of decision C 56/2007, recitals 20 to 22.
See also section 2.2 of decision C 56/2007, recitals 23 to 30.
Pursuant to Article 21 of the Decree of 6 July 2006, ‘In matters of financial management and accounting, the publicly owned establishment IFP is subject to the rules applicable to industrial and commercial establishments.’ Even though the publicly owned establishment IFP does not have a public accountant, there is evidence to suggest that EPICs which do not have a public accountant would also, in the event of their being closed down, have their debts transferred to the State or to another publicly owned establishment. The Commission refers to the examples of Charbonnages de France and ERAP, cited in recitals 49 and 50 of the opening decision, which show that where an EPIC is to be wound up — even an EPIC without a public accountant — a transfer of its rights and obligations to another public entity or to the State is not only possible, but clearly expected by the market.
See also section 2.3 of decision C 56/2007, recitals 31 to 36.
See also section 2.4 of decision C 56/2007, recital 37.
See in particular. the letters from the French authorities dated 18 July 2006, 30 January 2008 and 26 June 2008.
The Commission emphasises that these arguments have already been presented in section 3 (‘Observations and proposals by the French authorities’) of decision C 56/2007. To simplify the presentation, the Commission will therefore refer to that decision as often as possible.
Council of State judgment, Société de l’hôtel d’Albe, 1 April 1938, reported in Receuil, p. 341.
Council of State judgments in the Campoloro case (10 November 1999 and 18 November 2005). See recital 59 of the opening decision.
See the observations submitted by the French authorities in the postal case on 23 January 2008 and 27 October 2009, to which they have referred mutatis mutandis in the present IFP case.
See 2006 Council of State report, p. 69.
See the observations submitted by the French authorities on 27 October 2009 in connection with decision C 56/2007.
The French authorities emphasise that an express guarantee had to be granted when the Administration of Posts and Telecommunications was converted into an independent legal person in 1991, whereas that would not have been necessary if the new La Poste, as an establishment equivalent to an EPIC, had enjoyed a State guarantee by virtue of its legal form. Likewise, express guarantees have been granted to ERAP and the French Development Agency (Agence Française du Développement), which are both EPICs.
D. Labetoulle, ‘La responsabilité des AAI dotées de la personnalité morale: coup d’arrêt à l’idée de “garantie de l’État” ’, RJEP/CJEG No 635, October 2006.
See the observations submitted by the French authorities in the postal case on 23 January 2008.
Council of State, Société de gestion du port de Campoloro, 10 November 1999, reported in Recueil p. 3409
Council of State, Société de gestion du port de Campoloro, 18 November 2005.
P. Bon, ‘Le Préfet face à l’inexécution par une collectivité territoriale d’un jugement la condamnant pécuniairement’, RFDA, March-April 2006, p. 341. C. Landais & F. Lenica, ‘Le pouvoir de substitution du préfet en cas d’inexécution de la chose jugée par les collectivités territoriales’, AJDA, 23 January 2006, p. 137.
Commission Notice on the application of Articles 87 and 88 of the EC Treaty to State aid in the form of guarantees, OJ C 71, 11.3.2000, p. 14.
The procedure which would be followed in the event of the insolvency of IFP should be defined and publicised.
This procedure should be either the private-law procedure or a procedure which confers on the creditors of the publicly owned establishment IFP rights no greater than those they would have had under commercial law.
According to the French authorities, compliance with these criteria is sufficient, albeit not necessary, to rule out the existence of any advantage. In their opinion, it would be counter-intuitive to regard the alleged existence of a doubt about the procedure applicable in the event of insolvency to be reflected in more favourable funding terms.
According to France, in such circumstances, the undertaking would initially be required to open negotiations with its creditors in order to establish a plan for rescheduling liabilities. Next, if the plan were judged unsatisfactory or if it did not bring the financial difficulties to an end, and in the absence of a new agreement with creditors, the creditors – or some of them – could refer the case to the competent court to obtain a judgment against the debtor and therefore have their claim recognised. The procedure introduced by the Law of 16 July 1980 would then be implemented. Where necessary, the procedure could result in the supervising authority stepping into the shoes of the executive of IFP to take the decisions needed for the payment of its debts using IFP’s resources. According to the French authorities, if the procedure introduced by the Law of 16 July 1980 were to founder for lack of assets at IFP, and if the supervising authority were therefore faced with an impossible task, not having any more assets to sell in order to generate the resources needed to pay the amount due, the procedure provided for by the Law of 16 July 1980 would be terminated.
Pursuant to Article L. 225-248 of the Commercial Code, if a company’s equity capital falls below half of its share capital, the general meeting must record this and decide whether the company should be prematurely dissolved. If it is decided to continue the activity of the company, the company must, no later than the end of the second financial year after that in which the losses were recorded, reconstitute its equity to a value at least equivalent to half the share capital, and reduce the share capital if the equity has not been reconstituted otherwise.
Court of Justice in Case C-303/88 Italy v Commission [1991] ECR I-1433, paragraph 21.
See in particular Court of Justice in Case C-482/99 France v Commission (Stardust Marine) [2002] ECR I-4397, paragraphs 68 to 83.
European Commission, 21 December 2005, State aid measure No N 531/2005 – France – Measures relating to the creation and operation of Banque Postale.
Court of First Instance in Case T-68/03 Olympiaki Aeroporia Ypiresies AE v Commission, not yet reported in the ECR; to the same effect see also Court of First Instance in Case T-266/02 Deutsche Post AG v. Commission, not yet reported in the ECR, paragraph 92: ‘Moreover, the Commission must check whether the beneficiary of aid has received an actual advantage’.
Decree No 81-501. When the French authorities made their proposal, the implementing decree was Decree No 81-501 of 12 May 1981 implementing the Law of 16 July 1980 on penalties imposed in administrative cases and compliance with judgments by legal persons governed by public law and on the Reports and Studies Section of the Council of State.
As amended, the provision in the Decree would read:
“If the notice given has had no effect by the time these deadlines expire, the representative of the State or the authority responsible for supervision shall enter the expenditure in the budget of the defaulting authority or publicly owned establishment. The representative of the State or the authority responsible for supervision shall, as appropriate, release the necessary resources from the budget of the defaulting authority or establishment, either by reducing the appropriations allocated to other expenditures and still available or by increasing resources” (the amendment is shown in italic).
The French authorities refer to recital 68 of the opening decision, in which the Commission takes the view that the proposal by the French authorities to amend the Decree implementing the Law of 16 July 1980‘does not exclude the possibility that, where the resources of the publicly owned establishment IFP are exhausted, the creditor who has not obtained repayment of his claim under application of the Law of 16 July 1980 could bring legal action to render the State liable on the basis of a breach of the principle of equality before public burdens’.
Council of State, Sille, 16 November 1998: ‘First, as the judges in the court of first instance decided, while the public authorities can be held liable, even without fault, on the grounds of the principle of the equality of citizens before public burdens, where a measure lawfully adopted has the effect of causing a special loss of a certain degree of gravity to a natural or legal person, that does not hold true in this case, because Mr Sille, in his capacity as a real-estate professional, could not be unaware of the risks necessarily involved in the execution of a building project such as that projected, in respect of which it was necessary, in particular, to amend the provisions of the land-use plan and obtain the agreement of the local council. Mr Sille should have contemplated the possibility that if the findings of the public enquiry were negative or if the project encountered hostility it might be abandoned by the local authority. Having taken the risk in full knowledge of the facts, he cannot to any purpose maintain that he has suffered an abnormal loss and that the local authority must bear the substantial consequences for him arising from the shelving of the project’.
Council of State, Meunier, 10 July 1996: ‘When it concluded from the choice of such a place for the location of the business and from a letter from the mayor concerning the possibility of land slip that the interested party had accepted in full knowledge of the facts the risks of instability to which his establishment was exposed, the Administrative Appeal Court made a final decision on the facts. When it took the view that the loss resulting from a situation to which the interested party had knowingly exposed himself did not give him grounds for compensation, the Court did not fail to apply the rules governing the liability of legal persons governed by public law’.
General Court in Joined Cases T-425/04, T-444/04, T-450/04 and T-456/04 France and Others v Commission, 21 May 2010, not yet reported in the ECR. The Court found that the Commission had failed to show that a draft contract for a shareholders’ loan that had not been signed or put into effect by France Télécom might have produced an improvement in France Télécom’s economic position by comparison with the situation in which it found itself (paragraph 254), and that the Commission could not presume, on the sole basis of a unilateral offer by the State to grant a loan of a certain amount, that that offer would confer economic advantages on the beneficiary, without taking account of the conditions governing the performance of the loan contract, in particular those regarding the granting and the repayment of the loan, especially as the beneficiary had not accepted the offer but had confined itself to funding on the terms prevailing in the market (paragraph 255).
Case C-69/88 [1990] ECR I-583.
Case C-399/08, 2 September 2010, not yet reported in the ECR.
The French authorities refer to their letters dated 7 May and 9 June 2008.
The French authorities refer to their reply to the Commission letter dated 3 August 2007.
European Commission, A Report on the Functioning of Public Procurement Markets in the EU, 3 February 2004.
UOP states that it operates in the markets for the supply of products and services to the petroleum refining, gas treatment and petrochemicals production industries and to most manufacturing industries. More specifically, it indicates that it designs, implements and authorises the exploitation of licences, and provides maintenance of process technologies for such things as oil conversion, clean fuel production, fuel desulphurisation and petrochemicals. It also states that it produces catalysts, molecular filters, adsorbents and other specialised equipment. It states that it is present in various European Union Member States (Austria, Belgium, the Czech Republic, Denmark, France, Germany, Hungry, Ireland, Italy, Netherlands, Portugal, Poland, Slovak Republic, Spain, Sweden and the United Kingdom), that it has representations in Belgium, France and Germany, and that it has two production plants, one in Brimsdown, Enfield, United Kingdom, and the other in Reggio Calabria, Italy.
UOP refers to the web page http://www.axens.net/about/history.html, consulted on 20 November 2008.
For example, regarding the volume and purity of the product flows, or the consumption of raw materials.
The French authorities refer to footnote 3 to decision N 531/2005 cited above.
This memo has been in existence since […] (*), and has been updated and endorsed regularly by […] (*). The French authorities forwarded version […] (*) as an annex to their letter.
The French authorities refer to the letter from UOP dated 23 January 2009, which they say takes up the arguments developed under point 3(b) of the letter dated 28 November 2008.
Under this framework licensing system Axens may use IFP’s present and future intellectual property rights essentially in processes in its field of activity to provide engineering services to customers in connection with those processes and to transmit to them the right to use the related technologies in the form of patent licence sub-grants.
Under this product licensing system Axens may use IFP’s present and future technology in its field of activity to manufacture and sell to its customers catalysts, adsorbents, captation masses, equipment, and other products and software developed by IFP.
[…] (*).
Letter from the French authorities dated 13 October 2008, paragraph 203.
See section 4.1.1 C, ‘Conclusion regarding the existence of a state guarantee in favour of La Poste’, recitals 251 to 255 of decision C 56/2007,
As specified in recital 12 (footnote No 11), this legal status was likened to an EPIC before the change in form of La Poste to that of a public limited company.
Council of State, Société de l’hôtel d’Albe, 1 April 1938, Recueil p. 341.
Council of State judgments in the Campoloro case, 10 November 1999 and 18 November 2005.
In this judgment, the Council of State merely refused to grant an application brought by a creditor directly against the Minister for Public Works It found that a guarantee would come into play in the event of insolvency; a guarantee mechanism did not require the State to pay a debt of a publicly owned establishment whenever a creditor so requested.
The Commission refers to its analysis of the Campoloro case in section 4.1.1.A(b)(3) of decision C 56/2007.
However, in the case of insufficient assets of the publicly owned establishment IFP subsequent to its change in legal form, all its creditors, irrespective of when their claim arose, would be in a comparable situation, all finding that the ordinary law relating to compulsory administration or winding up of undertakings in difficulty did not apply to the publicly owned establishment IFP. All the creditors of the publicly owned establishment IFP would be assured of seeing their claims finally paid, as explained under point A(b).
The fact that the existence of this second category is outside the scope of Article 34 of the Organic Law governing the Finance Act explains why the rule established by the case-law on guarantees given by concessionaires has continued beyond 2001. It also explains why when the State is a shareholder or partner in a company or grouping whose debts are covered under the Commercial Code by an unlimited guarantee, the State is not required to specify that fact in a Finance Act. The Commission wishes to point out in this respect that the guarantee examined here derives from the EPIC status of the publicly owned establishment IFP, that this is a guarantee operating between the State and the publicly owned establishment IFP (the latter’s creditors being only indirect beneficiaries thereof), and that this guarantee covers not only the payment of individual claims, but also the continued existence of IFP or its obligations or both.
General Court in Case T-442/03 SIC v Commission [2008] ECR II-1161, paragraphs 124-127. See also the Guarantees Notice.
In particular, no such mechanism was set up at the time of the conversion of IFP, France Télécom, Gaz de France, EDF or ADP.
Contrariwise, the French authorities argued that, if La Poste had enjoyed a State guarantee by virtue of its legal form, there would have been no need to give an express guarantee for the debts contracted by the old Administration of Posts and Telecommunications which were transferred to La Poste. But, they argued, such a guarantee was in fact given, in an order dated 31 December 1990.
D. Labetoulle, ‘La responsabilité des AAI dotées de la personnalité morale: coup d’arrêt à l’idée de “garantie de l’Etat” ’, RJEP/CJEG No 635, October 2006.
On this point, the Commission also refers to section 4.1.1.A(b)(3) of decision C 56/2007.
The Commission refers to recitals 139 to 141 of decision C 56/2007. The following part of the memorandum was published in the annual report for 1995 (p. 219): ‘In connection with the draft law on State involvement in the recovery plans for Crédit Lyonnais and Comptoir des Entrepreneurs, the Council of State … took the view that there was a State guarantee for this establishment which derived without any express legislative provision from the very fact that it was a publicly owned establishment’.
See point 5 in the annex to that memorandum, which lists different acts including for example ‘a ministerial letter, or any other basis’.
In an explanatory note attached to the memorandum, in part 3, under the heading ‘Experience of calls made on guarantees and the judgments of the Council have clarified a number of textbook cases of guarantees which need to be identified’, it is indicated that ‘Some legal forms by their structure entail a liability on the part of their shareholders; this is true in particular of [the forms of partnership known as] the société en nom collectif, or SNC, and the groupement momentané d’entreprises, or GIE. With these last two forms, third parties will always seek out the State shareholder. The same applies to the creation of publicly owned establishments and to some shareholdings in public limited companies’.
The section of this decision describing the measure explains the terms of the Law of 16 July 1980, the Decree of 20 May 2008 replacing the Decree of 12 May 1981, and the Circular of 16 October 1989.
The Law of 16 July 1980 provides that ‘if the decision-making body of the authority or establishment has not released or created the resources … the supervising authority shall do so, and if necessary shall issue a mandatory payment order’.
The Decree of 12 May 1981, which on this point remains unchanged by the amending Decree of 2008, states that the representative of the State or the authority responsible for supervision ‘shall, as appropriate, release the necessary resources, either by reducing the appropriations allocated to other expenditures and still available, or by increasing resources’.
The Commission refers to section 4.1.1.A(b)(3) of decision C 56/2007.
In a memorandum submitted on 27 October 2009 in the postal case, the French authorities denied that it was ‘impossible’ to mobilise own capital and reserves, on the basis of two arguments: the first of these, however, related to the prices charged by La Poste, and cannot be transposed to the circumstances of the present case, since IFP’s prices, unlike those of La Poste, are not subject to sectoral regulation.
The Commission refers to points 112 and 113 of the memorandum sent by the French authorities on 23 January 2008 in the postal case.
For further details on the position of the French authorities, see section 3.1.1.B(a)(2) of decision C 56/2007.
ECHR, Société de gestion du port de Campoloro and Société fermière de Campoloro v France, 6 December 2006, No 57516/00. In the Campoloro case the ECHR made the State liable for all of the sums owed to the applicant companies by the Commune of Santa-Maria-Poggio.
The judgment states that (Commission translation) ‘[The French Government] considers that only objective reasons concerned exclusively with its being materially impossible for the commune to release sufficient resources have delayed the complete enforcement of the judgments … The Government therefore maintains that the non-enforcement of the judgments given is not the result of a deliberate refusal to enforce them on the part of the national authorities, State or commune. The absence of funds is not a pretext, but a reality due to the insolvency of the debtor legal person … The non-payment of the debt is due entirely to the commune’s financial difficulties, and these circumstances do not appear to be such as either to release the authority from its obligations or to transfer the burden of its debt to the State (Council of State, commune of Batz-sur-Mer, 25 September 1970). There is no legal basis under national law for substituting the State for the commune where the payment of compensation is concerned. Nor can Article 6-1 of the Convention form the basis of any such substitution in so far as a solution of that kind would be contrary to the very concept of legal personality, which presupposes autonomy and a distinct set of assets’.
(Commission translation) ‘That is why no arrangements to soften the blow have been made under national law to confront a situation of default on the part of the commune The State cannot offload its obligation to implement judicial decisions by invoking the absence of funds or the autonomy of regional or local authorities – an autonomy that it has not been able to guarantee to date, since the commune is in no position to pay its debts. The applicants therefore denounce the State’s incapacity to adopt positive measures that would have enabled the commune to contribute in accordance with its obligation … The applicants note that, in its judgment of 18 November 2005, the Council of State held that the legislature intended to give the representative of the State, in the event of a local or regional authority’s not being able to implement a judicial decision, the power to take the place of that authority’s decision-making bodies in order to release or create the resources enabling the judicial decision concerned to be fully implemented. It is on the basis of these omissions on the part of the French State that the applicants demand both acknowledgement of Article 6-1’s having been breached and the resulting compensation – an initiative that no more contradicts the concept of legal personality than it does the concepts of independence and of a distinct set of assets’.
(Commission translation) ‘The interested parties’ inability to have these judgments implemented constitutes interference with those parties’ property rights – interference such as is referred to in the first sentence of the first paragraph of Article 1 of Protocol No 1. The Government has provided no justification at all for such interference, and the Court considers that lack of resources cannot legitimise the omission concerned … In sum, the Court considers that the applicant companies have been, and are still, subject to a huge and special burden due to the non-payment of the sums from which they should have benefited in implementation of the aforesaid judgments dated 10 July 1992. There has therefore been a breach of Article 1 of Protocol No 1’.
(Commission translation) ‘In view of the above, the Court holds that it is for the defendant State to pay the applicants or, if appropriate, their legal successors, the sums (including interest) due to them as from the delivery, on 10 July 1992, of the judgments of the Bastia administrative tribunal (ibid.) until the day on which this judgment is given’.
The Commission wishes to emphasise that the terms used by the ECHR do not refer to a possible liability on the part of the State but hold that it is the responsibility of the State to ‘ensure’ that payment is made. Such terms relate more to the concept of a guarantee than to that of liability.
A judicial mechanism under national law can therefore be interpreted as an implied guarantee.
ECHR, Artico v Italy, 13 May 1980, Series A, No 37: The ECHR decided that, where a failure to act was imputable to an entity other than the State, it was for the State, as giver of the guarantee provided for in Article 6-1, to act in such a way that the applicant in practice enjoyed the right conferred on him by that Article.
ECHR, Bourdov v Russia, 19 March 1997, No 59498/00: Here too the Court held that an authority of the State could not use lack of resources as a pretext for not honouring its debt.
The Commission refers in particular to its arguments presented in decision C 56/2007 relating to the effect on State liability of the absorption by a publicly owned establishment of another structure, the rights and obligations of which are transferred to it at the same time. If it were subsequently to meet that structure’s debts towards a third party, no contract or other legal document would have laid down that the State was not required to pay the debts of this publicly owned establishment towards creditors of the absorbed structure, since such a situation could not have been foreseen ex ante. Thus, through a mechanism (such as merger or absorption) for converting certain public sector structures, the publicly owned establishment IFP could acquire debts towards third parties, without its being possible contractually to provide in advance for a limitation of the guarantee on the part of the State.
As will be shown in section B of this part, a creditor of IFP who had not been able to have his individual claim met by requesting payment could always hope to obtain payment within the framework of an overall State-financed restructuring of the publicly owned establishment IFP.
The concept of legitimate error such as to impart legal effects is linked to the theory of appearance. According to Cornu’s Vocabulaire Juridique, appearance is ‘the aspect resulting – intentionally or otherwise – from the combination of external signs through which states and functions (status as representative, heir, owner, etc.) normally manifest themselves and that give rise to the belief that the person invested with these signs really does possess such a state or function’. The theory of appearance is a ‘theory of the courts according to which appearance alone is enough to produce effects in respect of third parties who, following a legitimate error, have been unaware of the real state of affairs’. The theory of appearance is used in case-law (ECHR, 7 June 2001, Kress) and in private law to impart legal effects to a contract in respect of which one of the parties has legitimately relied on simple appearance. The examples of apparent domicile or, in public law, of de facto officials whose decisions can remain legitimate may also be cited. This theory has the advantage of making it easier to demonstrate the existence of a legal attribute or legal effect not expressly and explicitly affirmed by any legislation.
Distinction drawn on the basis of the arguments in the thesis of S. Carpi-Petit, Les successions en droit administratif, PUR, 2006.
To the Commission’s knowledge, there are no instances of legal texts envisaging the extinction of the debts.
According to Cornu’s Vocabulaire juridique, by ‘assets’ (patrimoine) is meant a ‘collection of the property and obligations of one and the same person (that is to say of his duties and charges assessable in monetary terms)’.
The Commission expert in the postal case refers to the only known example of a publicly owned establishment which reached the end of its life: the winding up of the Université thématique d’Agen (Decree of 15 July 2002, Journal Officielle de la République Française, 23 July 2002). Article 1 of this Decree provides that the liquidator is responsible for ‘proposing to the Minister for Higher Education that the assets, claims, debts and balance of the liquidation account remaining at the end of the winding-up period be distributed between Bordeaux I and Bordeaux IV universities’. It is thus expressly provided that the debts of the publicly owned establishment which has been wound up are to be transferred to other legal persons governed by public law.
See recitals 25 (third indent) and 45, and footnote 20.
General Court, Joined Cases T-204/97 and T-270/97 EPAC v Commission [2000] ECR II-2267, paragraphs 80 and 81.
Section 7.1 of decision C 51/2005.
Articles 3-1, c) of the industrial research agreement between IFP and Axens and the industrial research agreement between IFP and Prosernat, and Article III.2 of the agreement between IFP and Beicip-Franlab.
It may be worth recalling that Article 2 of the Law of 25 January 1985, which has become Article L. 620-2 of the Commercial Code, provides that: ‘Administration and winding-up procedures shall apply to traders, persons registered with the craftsmen’s register, farmers and legal persons governed by private law’ (emphasis added).
Cf. Article L. 640-1, subparagraph 1 of the Commercial Code.
The simplified procedure introduced by the Law of 26 July 2005 would not be applicable to the subsidiaries Axens, Beicip-Franlab and Prosernat. As specified in Article L. 641-2 of the Commercial Code, this simplified procedure is applicable if the debtor’s assets include no immovable property, if the enterprise has employed no more than five employees during the six months prior to the commencement of the proceedings and if its turnover excluding tax is no more than EUR 750 000. In the case of compulsory winding up, these subsidiaries would therefore be subject to the ordinary-law procedure, which is summarised in recitals 143 and 144.
Cf. Article L. 640-4 of the Commercial Code.
Cf. Article L. 640-1 of the Commercial Code.
Cf. Article L. 641-1, second subparagraph, of the Commercial Code.
Cf. Article L. 641-4, first subparagraph, of the Commercial Code. The second subparagraph of the same Article specifies that unsecured claims (i.e. those not covered by any particular guarantee) are not verified in principle if it is clear that the proceeds of the asset sales will be totally absorbed by legal fees and preferential claims.
All creditors of the IFP subsidiary concerned whose claims predated the decision to open the proceedings have to send a statement of their claims to the representative of the creditors within a period of two months of the publication of the decision ordering the winding up in the Official Bulletin of Civil and Commercial Announcements (BODACC).
Cf. Articles L. 643-9 and following of the Commercial Code.
There are a few exceptions to the principle that proceedings against the debtor may not be resumed, in particular in the case of 1) personal bankruptcy of the debtor (faillite personnelle); 2) the debtor being found guilty of fraudulent or negligent bankruptcy (banqueroute); 3) previous compulsory winding up proceedings closed for lack of assets, less than five years before the opening of the current proceedings; 4) fraud in dealings with one or more creditors (the court then authorises the resumption of individual proceedings by any creditor against the debtor). Finally, proceedings may be resumed after closure on the grounds of insufficiency of assets if it appears that assets were not realised or that actions in the interests of the creditors were not taken during the proceedings.
According to Mestre (Lamy Sociétés Commerciales, 2003, No 1914), a letter of intent is defined as ‘a document sent by a parent company to its subsidiary’s creditor bank in which the parent company, in any of a number of ways, provides the bank with assurances regarding commitments given to the bank by the subsidiary’. According to Cozian, Viandier, and Deboissy, Droit des Sociétés, Litec, 16th edition, No 1992 et seq.), ‘by signing the letter of intent, the parent company promises the creditor to ensure that the subsidiary is in a position to meet its commitments’. According to the information sent by the French authorities, the commitments of IFP’s private-law subsidiaries are not explicitly guaranteed by the publicly owned establishment IFP.
B. Grimonprez, ‘Pour une responsabilité des sociétés mères du fait de leurs filiales’, Revue des sociétés, 2009, p. 715, point 8.
This is the general provision according to which a person must repair any damage caused through that person’s fault to another.
Cf. Article L. 651-2 of the Commercial Code.
Court of Conflicts of Jurisdiction, Commissaire de la République du Loiret v TGI d’Orléans, 2 July 1984, Recueil, p. 449; AJDA 1984.562, concl. Lateboulle.
Court of Conflicts of Jurisdiction, Préfet de la Loire v Tribunal de commerce de Saint-Étienne, 23 January 1989, Recueil, p. 291; D. 1989.367, concl. Ms F. Flipo; D. 1898.370, note P. Amselek and F. Derrida.
Submissions of Government Commissioner, Emmanuel Glaser, in Case CE (3/8 SSR) Département de la Dordogne, 5 December 2005, req. No 259748; see in particular ‘La faillite d’un comité d’expansion économique entraîne-t-elle la responsabilité du département qui l’a créé?’, Bulletin Juridique des Collectivités Locales No 2/06, p. 138-143.
Court of Conflicts of Jurisdiction, Comité d’expansion de la Dordogne v Département de la Dordogne, 15 November 1999, Rec., p. 479; AJDA 1999.992, chron. Ms P. Fombeur and M. Guyomar.
Court of Conflicts of Jurisdiction, 8 February 1873, Rec. 1er supplt 61, concl. David; GAJA, 15th edition, No 1.
Court of Conflicts of Jurisdiction, SEM Olympique d’Alès en Cévennes, 20 November 2006, Rec., concl. Stahl.
The object of SEM Olympique d’Alès en Cévennes was in particular to organise sports events for which an admission fee would be charged, the recruitment and training of players, and the promotion, by any appropriate means, of the town’s professional team.
The financing of SEM Olympique d’Alès en Cévennes was ensured largely from the proceeds of spectators’ entry tickets, advertising, sponsoring and subsidies from the National Football League and the French Football Federation.
In the case of Axens, marketing of catalysts and technologies for the refining and petrochemicals industries; in the case of Beicip-Franlab, publication and distribution of specialised software and consultancy and advisory services; and in the case of Prosernat, marketing of gas treatment and sulphur recovery plants and related services.
As a trade body, IFP did not have the character of a publicly owned establishment, but of a legal person governed by private law (Council of State, 5/3 SSR, 7 December 1984, 16900 22572, published in Recueil Lebon). This interpretation was confirmed by an opinion delivered by the Finance Section of the Council of State in 1997, following a referral by the Minister for the Economy, Finance and Industry (Finance Section – Opinion No 360 991 of 26 August 1997).
Cf. Article L. 621-2, second subparagraph, of the Commercial Code: ‘At the request of the administrator (court-registered or otherwise) or the public prosecution service, or by the court’s own motion, proceedings that have commenced may be extended to one or more other persons where their assets are inseparable from those of the debtor or where the legal person is fictitious. The court that has commenced the initial proceedings shall remain competent for this purpose’ (emphasis added).
B. Grelon and C. Dessus-Larrivé, ‘La confusion de patrimoines au sein d’un groupe’, Rev. sociétés 2006. 281, No 3.
See in particular recital 158.
Com. 16 October 2001, Act. proc. coll. 2001-20, No 256; Com. 8 January 2002, Act. proc. coll. 2002-6, No 70.
Court of Cassation, Commercial Division, Metaleurop, 19 April 2005, No 05-10094, D. 2005. AJ. 1225, comments A. Lienhard and summary 2013, comments F.-X. Lucas; JCP E 2005. 721, note B. Rolland and chron. 1274, comments P. Petel.
Com. 10 January 2006, Rev. sociétés 2006. 629, note P. Rousel Galle.
See footnote 117.
P. Roussel Galle, note cited above; P. Delmotte, ‘Les critères de la confusion de patrimoines dans la jurisprudence de la Cour de cassation’, RJDA 2006-6. 539, No 14.
Cf. recital 132 of Decision C 51/2005.
And hence the fact, mentioned by UOP in its comments, that the staff of Axens and IFP sometimes visit their customers together.
Com. 13 October 1998, Bull. Joly 1999. 58, note P. Seerlooten.
Therefore, according to the authors of the parliamentary report cited in recital 165, a company established for the purpose of settling the debts of another company which is the subject of collective proceedings, whose activity it has continued in the same premises, with the same managers, the same clientele and the same franchise contract, constitutes under the case-law a fictitious company, which justifies the extension of the compulsory administration procedure.
In particular from the following Internet sites: http://www.ifpenergiesnouvelles.fr; http://www.axens.net/; http://www.beicip.com/index.php/eng; http://www.prosernat.com/en/, consulted on 28 June 2011.
Address: 1 & 4, avenue de Bois-Préau, 92852 Rueil-Malmaison Cedex – France.
Address: Rond-point de l’échangeur de Solaize, BP 3, 69360 Solaize – France.
Address: Hélioparc Pau-Pyrénées, 2, avenue du Président Pierre Angot, 64000 Pau – France.
Address: 89, boulevard Franklin Roosevelt – BP 50802, 92508 Rueil-Malmaison Cedex – France.
Address: 232, Avenue Napoléon Bonaparte – P.O. Box 213, 92502 Rueil-Malmaison – France.
Address: 100 -101, Terrasse Boieldieu, 92800 Puteaux – France.
Information consulted on 28 June 2011 on the following Internet site: http://www.prosernat.com/en/contactus/zoom_image_img20080715219.php.
Court of Cassation, Commercial Division, 18 December 2007, No 06-14093.
P. Delebecque, ‘Groupes de sociétés et procédures collectives: confusion de patrimoines et responsabilités des membres du groupe’, Rev. proc. coll. 1998/2, p. 129, see in particular No 14.
Parliamentary report cited above, p. 63.
B. Grimonprez, ‘Pour une responsabilité des sociétés mères du fait de leurs filiales’, cited above, point 10.
Ibid., point 11.
D. Schmidt, ‘La responsabilité civile dans les relations de groupes de sociétés’, Rev. sociétés 1981, p. 725.
Liability in relation to third parties can in theory be incurred on the basis of Articles L. 223-22 and L. 225-251 of the Commercial Code.
As regards de facto management, it should be pointed out that a parent company will not systematically be considered a de facto manager, and the court considering the particular case will require precise actions which can be imputed to the parent company and which show that, without legal entitlement, it has directly or indirectly carried out a positive and independent activity in the administration of the subsidiary; see in particular Com. 9 May 1978, D. 1979. 419, note M. Vasseur. See also J.-L. Rives-Langes, ‘La notion de dirigeant de fait’, D. 1975. chron. 41; D. Tricot, ‘Les critères de la gestion de fait’, Dr. et patr. January 1996, p. 24, cited by B. Grimonprez, cited above, point 13.
Apart from the law on collective procedures, the Court of Cassation, Commercial Division, 26 March 2008, No 07-11.619, Ademe v. Elf Aquitaine, recently found that while a parent company that acted alongside its subsidiary might incur fault-based liability, a parent was not obliged, by the mere fact of its participation in its subsidiary, to finance the subsidiary in order to enable it to meet its obligations (even supposing the subsidiary was responsible for a public service, so that there might be a threat to the public interest).
Cf. Article L. 651-2 of the Commercial Code.
The authors of the parliamentary report cited above state, for example, that at the time of the Metaleurop judgment, handed down by the Court of Cassation on 19 April 2005, the Court’s Documentation and Study Service indicated that ‘certain conduct … on the part of a parent company in relation to its subsidiary could as a matter of fact constitute mismanagement such as to result in insufficient assets at the subsidiary’.
In the specific case of environmental damage, in view of the crucial nature for the community of environmental claims, and the risk of their non-enforcement, Article L. 512-17 of the Environmental Code concerning the rehabilitation of sites being taken out of operation was recently amended in order to allow action to be taken against the parent company for fault resulting in an insufficiency of assets preventing the subsidiary from meeting its environmental rehabilitation obligations. As amended by Law No 2010-788 of 12 July 2010 on national commitment to the environment (Article 277), Article 512-17 of the Environmental Code provides: ‘Where the operator is a subsidiary within the meaning of Article L. 233-1 of the Commercial Code and compulsory winding up has been initiated or ordered against it, the liquidator, the prosecution service or the representative of the State in the département may ask the court which has initiated or ordered the compulsory winding up to find that the parent company has committed a serious fault which has contributed to the subsidiary having insufficient assets and, if it is shown that such a fault has been committed, to make the parent company liable for all or part of the financing of the rehabilitation measures of the site or sites to be taken out of operation’ (emphasis added). As regards the causal relationship, see: Paris, 15 January 1999, Bull. Joly 1999. 626, § 137, note B. Saintourens.
Information report No 558 (2008-2009) on civil liability, by Mr Alain Anziani and Mr Laurent Béteille, drawn up on behalf of the Legal Affairs Committee, submitted to the Senate on 15 July 2009 (available at the Senate Internet site: http://www.senat.fr/rap/r08-558/r08-5581.pdf).
Parliamentary report cited above, p. 62.
According to the first paragraph of Article 1384 of the Civil Code: ‘A person is liable not only for the damage he causes by his own act, but also for that which is caused by the acts of persons for whom he is responsible, or by things which are in his custody.’ The authors of the parliamentary report cited above note that the courts have been creative in introducing systems of liability which are not provided for by any legislation, covering liability arising from things, vicarious liability, or liability for abnormal neighbourhood disturbance. So far, however, case-law has not established a vicarious liability of a parent company for the actions of its subsidiaries.
The associations Consommation, Logement et Cadre de Vie (CLCV) and UFC-Que choisir, see parliamentary report cited above, p. 62 and p. 65.
Report to the Minister for Justice, presented on 22 September 2005: ‘Preliminary draft reform of the law of obligations (Articles 1101 to 1386 of the Civil Code) and the statute of limitations (Articles 2234 to 2281 of the Civil Code)’.
Catala preliminary draft cited above, p. 166.
Catala preliminary draft cited above, p. 177.
Available online from the Senate Internet site: http://www.senat.fr/leg/ppl09-657.pdf.
In this respect, the Commission points out that the recapitalisation of the subsidiary Prosernat, mentioned by the French authorities in the observations referred to in recital 46, took place in March 2006, i.e. before the change in IFP’s legal form on 7 July 2006, and therefore occurred at a time when IFP was not yet covered by an unlimited State guarantee.
Commission Decision 2005/145/EC of 16 December 2003 on the State aid granted by France to EDF and the electricity and gas industries (OJ L 49, 22.2.2005, p. 9). See in particular recital 135 of the decision: ‘The Commission considers that making EDF subject to the ordinary law on bankruptcy will have the effect of withdrawing the unlimited State guarantee which it enjoyed’ (emphasis added.)
See Article 2 of decision C 56/2007: ‘the effective conversion of La Poste into a public limited company will result in the unlimited guarantee which La Poste enjoys being withdrawn’ (emphasis added.)
The Commission refers to footnote 3 to decision N 531/2005 cited above, where it said that as a public limited company, Banque Postale would be subject to the provisions of ordinary law, and especially Law No 85-98 on the compulsory administration and winding-up of undertakings, and consequently would not enjoy an unlimited State guarantee.
See recital 18 of decision C 51/2005, and recital 6 of the opening decision.
As defined in point 2.2(e) of the R&D&I Framework.
As defined in point 2.2(f) of the R&D&I Framework.
As defined in point 2.2(g) of the R&D&I Framework.
Court of Justice in Case C-41/90 Hoefner & Elser [1991] ECR I-1979, paragraph 21, and Case C-309/99 Wouters [2002] ECR I-157, paragraphs 46 et seq.
Provided the other conditions laid down in Article 107(1) TFEU are also met.
Case 118/85 Commission v Italy [1987] ECR 2599, paragraph 7; Case C-35/96 Commission v Italy (CNSD) [1998] ECR I-3851, paragraph 36; and Case C-309/99 Wouters [2002] ECR I-1577, paragraph 46.
This practice is summarised in particular in point 3.1.1 of the R&D&I Framework.
See footnote 25 to the R&D&I Framework: ‘By internal nature, the Commission means a situation where the management of the knowledge of the research organisation(s) is conducted either by a department or a subsidiary of the research organisation or jointly with other research organisations’.
See footnote 24 to the R&D&I Framework.
See recital 151 of decision C 51/2005.
See recital 182 of decision C 51/2005: ‘the public financing concerns only the industrial research stages’.
See recitals 90 and 98 of the opening decision.
In the case of undertakings such as La Poste, which are the subject of a financial rating by independent agencies, the Commission showed, in point 4.1.2(a) of decision C 56/2007, that the guarantee conferred by the status of publicly owned establishment allowed the beneficiary establishment to obtain more favourable borrowing terms than those that it would have obtained on its own merits.
See recital 101 of the opening decision, and also recital 102, where the Commission cites in particular a report to the French Senate in which the Finance Committee declared on the subject of Réseau Ferré National (national rail network): ‘This [financial] mechanism, combined with the unlimited and unconditional implied State guarantee resulting from its EPIC status, may give Réseau Ferré National significant borrowing capacity, at interest rates very close to those of the SNCF’.
It may be worth recalling that factoring is a contract by which a factor (i.e. a specialised credit institution) purchases, for a fee, the claims held by a supplier on his customers. The service provided to the supplier is three-fold: the factor pays him a cash advance, frees him from need to recover the debts, and guarantees their payment (in the event of non-payment, notably if the customer defaults, the factor bears the risk). Regarding this final point, it should be pointed out that such a guarantee is a performance bond, in so far as the factor undertakes to pay the seller the invoices he has issued. The risk of insolvency of the purchaser and the risk of non-payment on the due date are borne by the factor.
The Commission bases this estimate on publicly available information. See in particular the financial information sites http://www.netpme.fr and http://www.banque-info.com, and in particular the article on factoring by Mr Luc Bernet-Rollande, consultant and instructor in banking and finance, on the following Internet sites: http://www.banque-info.com/fiches-pratiques-bancaires/l-affacturage and http://www.netpme.fr/banque-entreprise/2-affacturage.html (consulted on 28 June 2011).
On the basis of information supplied by the Banque de France, the French authorities state that the proportion of transactions comprising a comprehensive offer covering all the above-mentioned services is still falling, from 45 % in 2008 to 35 % in 2009, in favour of delegated management, which has risen from 35 % to 49 %. According to the same study, the distribution of factoring by type of transaction in 2009 is as follows: collection, financing and guarantee (without delegated management): 35,5 %; collection and financing (without delegated management): 6,9 %; delegated management: 49.1 %; collection and guarantee: 0,3 %; reverse factoring: 3,8 % (this is a formula which allows a debtor to ask the factor to pay his main suppliers in his place; for the supplier, it provides a guarantee of being paid cash without recourse, while the purchaser has the same time for payment, secures the loyalty of his suppliers, supports their cash position, and obtains a discount for cash payment); syndication: 3,8 %; other: 2,5 %.
The French authorities rightly point out that it is not possible, when suppliers are paid directly, to determine whether or not they have concluded a factoring agreement for delegated management, and that it is not possible, if a factor is paid in place of the supplier, to know the precise scope of the services subcontracted to the factor by the supplier, and in particular whether or not the supplier has contracted a factoring service with guarantee.
As explained in decision C 51/2005, the costs attached to the various acquisitions and staff expenses are then the subject of separate accounting, so that the two types of activities (economic and non-economic) and their costs and financing are clearly distinguished in IFP’s accounts.
This low level (in the order of […] (*) %) is explained by the fact that the goods and services specifically allocated to the pursuit of economic activities relate essentially to fees, sub-contracting, travel and purchases of consumables directly linked to the corresponding research service (and are invoiced on to the customer).
This figure is arrived at by multiplying the turnover recorded each year (EUR […] (*)) by the maximum rate adopted to cover the risk of default of IFP (2,5 %). For each year, using the same calculation method, and taking account of the variations in turnover, the figures are as follows: EUR […] (*) in 2007, EUR […] (*) in 2008, and EUR […] (*) in 2009. For 2006, it would also be appropriate in theory to apply a rate of 48,5 % (= (365-188)/365) in proportion to the time involved, since the guarantee started only from 7 July 2006, the 188th day of the year 2006, which was the date of conversion of IFP’s legal form, i.e. a maximum of EUR […] (*).
Moreover, the conditions for tortious liability are strictly regulated: there must be (i) fault, (ii) damage and (iii) a causal link between fault and damage.
On account of the significance of this risk, IFP has concluded a contract with a lead insurer which has taken a co-insurer to share the benefits and risks associated with the contract.
Judgment Cass. civ. 2o, 9 June 1993: ‘this provision [Article 1382 of the Civil Code] is not applicable to compensation for damage relating to the performance of a contractual commitment’.
According to the site specialising in performance bonds http://www.performancesuretybonds.com, consulted on 28 June 2011.
See recitals 149 to 151 of decision C 51/2005.
See recital 149 of decision C 51/2005.
These are the financial flows generated by renting out equipment or premises (laboratories) and by ancillary services (legal services).
Aid intensity is the ratio between public funds used and the total cost of the research project, i.e. here 11,3/56,4 = 20 %.
See recital 104 of the opening decision.
See recital 8 of decision N 531/2005 cited above, according to which the unlimited State guarantee to La Poste was to be the subject of separate proceedings, while that decision would deal with the effects of the guarantee on Banque Postale.
See recitals 88 to 91 of decision N 531/2005 cited above.
Clerical error: for ‘Beicip-Prosernat’ read ‘Beicip-Franlab’.
See recital 96 of decision N 531/2005 cited above.
See recital 132 of the decision.
See recital 154 of decision C 51/2005.
It may be worth recalling that when contract research is carried out on behalf of subsidiaries, it relates to topics outside the exclusive fields of Axens and Prosernat.
The French authorities explain that this might, for example, take the form of a geological study based on information supplied by the customer, laboratory testing for […] (*), or a performance calculation for a material provided by the customer.
The French authorities cite the following examples of uses in particular:
research equipment […] (*) for an evaluation […] (*) or to carry out tests […] (*);
research equipment […] (*) to carry out a testing programme of […] (*) or to test a […] (*);
a […] (*) specifically adapted by IFP for its research work in […] (*) and […] (*) for […] (*);
methodology for […] (*) developed by IFP to carry out a study of […] (*);
test cells adapted for […] (*) or […] (*);
The French authorities cite in particular the example of use of a […] (*) for […] (*).
The French authorities cite the following examples of uses in particular:
expertise […] (*);
feasibility study concerning […] (*);
The French authorities cite the following examples of uses in particular:
feasibility study […] (*), feasibility study […] (*): expertise in […] (*) developed with […] (*);
study […] (*) on the site of […] (*), project […] (*): expertise in the field of […] (*) – validation and improvement of […] (*);
[…] (*) under the project […] (*) (validation of the concept of […] (*)) on behalf of […] (*).
This involved […] (*), a university recently set up in […] (*), for which the contract research services were invoiced in the context of a research consortium involving IFP, […] (*) acting on behalf of […] (*).
The research work was carried out on behalf of […] (*). The […] (*) in particular enable […] (*) on the basis of […] (*).
The study was carried out on behalf of […] (*): IFP in particular checked […] (*) and made recommendations on […] (*), used for […] (*).
[…] (*), who was aware of this tool, asked IFP to apply it to […] (*).
[…] (*) asked IFP to adapt […] (*) allowing testing […] (*).
[…] (*) asked IFP to apply its knowhow concerning […] (*) to validate […] (*).
[…] (*).
Commission Regulation (EC) No 1998/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to de minimis aid (OJ L 379, 28.12.2006, p. 5).
The Commission refers in particular to point 4.1.b of the Guarantees Notice and to points 118 to 123 of the Community guidelines on State aid for railway undertakings (OJ C 184, 22.7.2008, p. 13) (‘the Railway Guidelines’).
See in particular point 120 of the Railway Guidelines, recital 127 of the EDF decision cited above, and recital 311 of decision C 56/2007.
Although the expression ‘services of general economic interest’ is not defined in the Treaty, ‘there is broad agreement that the term refers to services of an economic nature which the Member States or the Community subject to specific public service obligations by virtue of a general interest criterion’ (Commission, Green Paper on Services of General Interest, 21 May 2003, point 17, emphasis added).
The compatibility of such a use of the aid is analysed in section 7.3.2.
In particular on account of their nature as ‘prototypes’ or ‘pilot projects’ within the meaning of point 2.2(g) of the R&D&I Framework, production of which would be too expensive to allow them to be used only for demonstration and validation by IFP’s customers.
See recitals 168 to 171 of the decision.
See in this connection SINTEF’s website http://www.sintef.no/default.aspx?id=490 (site consulted on 28 June 2011).
Organisation for Economic Cooperation and Development, The Measurement of Scientific and Technological Activities: Proposed standard practice for surveys on research and experimental development, 2002.
See recitals 168 to 171 of the decision.
See recitals 168 to 171 of the decision.
Own resources consist of dividends, royalties and other proceeds such as the income from patents filed by IFP. In its examination the Commission has taken into account only remuneration paid by Axens and Prosernat.
See point 6 of the R&D&I Framework.
[…] (*).
[…] (*).
This process […] (*) allows […] (*). This is a key component of the chains […] (*) which are intended to […] (*). The chain […] (*) also offers the advantage of […] (*).
Post-combustion capture is one of the processes that can prevent the discharge of CO2 into the atmosphere on combustion of a hydrocarbon or carbon.
The Commission notes in particular that price competition is not the main argument for differentiation between the offers available on the market, since customers select a technology on the basis of various criteria, some of which, such as the installation cost involved and the profitability of the investment, are considered to be critical, but are totally exogenous to the research projects.
The Commission refers to recital 204 of decision C 51/2005.
See in particular point 1.5 of the Guarantees Notice, which confirms the principle of neutrality, and point 1.2, which explains that a State guarantee may result from the simple fact of the legal form (second and fourth indents of that point).
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