High-Speed Network Gets Green Light in EU Court
(CN) - The European Commission did not violate state aid rules by approving a fiber-optic broadband network outside Paris that's funded by the French government, a European court ruled Monday.
French authorities awarded a $77 million contract for the project to Sequalum after a competitive bidding process and approval by European Union regulators. Several communications companies -- including Colt Telecommunications, France Telecom, Illiad and Free -- lodged objections with the commission that the project violated EU rules on state aid.
In 2009, the commission held that the planned fiber optic network did not violate EU law. The telecom companies sued to overturn the commission's approval, accusing regulators of not thoroughly investigating their complaints of unfair economic intervention by the French government.
But the General Court of the European Union held that despite an unusually long 15-month preliminary investigation, the commission correctly concluded that the project financing did not constitute illegal state aid. Therefore, the project did not warrant a formal investigation by the agency, according to the court.
The Luxembourg-based court also noted in its French-only opinion that member states have wide latitude in funding projects of general economic interest. In this case, the lack of high-speed internet in the Hauts-de-Seine neighborhood targeted by the project justified the use of government money, according to the court.
"In addition, the general court finds that, in respect of the Hauts-de-Seine department, no commercial operator had deployed a very high speed broadband network serving domestic and professional users as a whole," the court said in a statement. "Consequently, the commission had not erred in law in finding that there was a market failure, which is a prerequisite for classifying an activity as a service of general economic interest, and therefore in finding that there was no state aid."
The court also rejected the companies' accusation that France planned to pay Sequalum too much for its work. Regulators determined the winning bid was fair, the court said.
"In that regard, the General Court holds that the commission correctly ascertained that the public service delegation agreement sought to ensure that the concessionary would not receive more than was necessary to cover the costs incurred as a result of the public service in question, plus a reasonable profit," according to the statement.