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On 26 February 2015, the General Court of the European Union (hereinafter the GC or the General Court) handed down two judgments on the issue of compensation for 'structural' disadvantages. In line with recent case-law, the GC ruled that measures imposed by public authorities to compensate for 'structural' disadvantages entail an advantage for the beneficiary and can therefore be considered as State aid. The GC's approach effectively makes it impossible to invoke the argument of structural disadvantage at the stage of State aid qualification. Furthermore, this approach has the undesirable consequence of shifting the analysis of distortion of competition at the stage of compatibility, rather than qualification. The appeal brought by the French Republic and France Télécom in this case may give the ECJ the occasion to stir back closer to the letter of Article 107 TFEU.
Keywords: Structural Disadvantage, Pension Scheme, Proportionality, Privatisation
I. Background of the Cases
1. Facts
In the early 90s, the French State started a privatisation process of its historic public provider of telecommunication services, France Télécom (now rebranded Orange, hereinafter FT). This entailed the gradual alignment of FT's status to that of a private company. As a first step, French public authorities enacted a 1990 law that gave legal personality to FT, which then became a separate legal entity from the French State.
Civil servant staffemployed by FT retained the privileges they enjoyed as State employees, including pensions, which differed from those of ordinary employees. In this respect, the 1990 lawprovided that pensions of retired officials would be paid by the State, but fully financed by FT in form of social charges paid to the Public Treasury.
In 1996, the French State enacted a new law amending certain provisions of the 1990. The aim was inter alia to align FT's pension regime with that of its competitors. In particular, this law ended the systemof full funding of pensions by FT. Before 1996, FT had to pay a deduction made from the salary of the civil servants and an additional contribution that combined together to allow for the full funding of the pensions of its retired officials. The reformintroduced amodification on the second contribution, effectively lowering it to a levelwhere the contribution of FT alone did not allow...