• Professional News
  • 04 April 2013

French state guarantee was illegal state aid

An exception from the general rules on restructuring and voluntary liquidation may constitute a state guarantee covered by EU state aid rules. This was the conclusion of the General Court in a case concerning the French postal services, La Poste.

The General Court held that the French state has granted illegal state aid distorting competition to the French postal services, La Poste, by means of an unlimited state guarantee. The state guarantee was granted without consideration and enabled La Poste to enjoy more favourable financing terms, for example lower interest rates and the provision of lower levels of security.

According to French law, La Poste was not covered by the general rules on restructuring and voluntary liquidation. This, among other things, means that La Poste’s creditors will not be met by the usual privat and public law obstacles to the payment of claims. As a result La Poste’s creditors will enjoy a more favourable position than the creditors of private individuals. According to EU’s state aid rules this distorts competition. The French state has appealed the judgment to the European Court of Justice.

(Judgment of the General Court of 20 September 2012 in case no. T-154/10, the French Republic v the European Commission)

(Link to the decision)

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