TELECOMS: PROBE INTO FRANCE TELECOM AID.

• Position: Brief Article

The European Commission is examining whether government statements of backing for France Telecomviolated European Union competition law, a spokesman said on May 12. He was responding to questions on a Financial Times article which said the Commission was arguing that France extended "psychological" state aid to the firm by pledging financial support for it, even if the cash itself was never paid.

"Our official position is that we look at hard economic facts, how does the behaviour of government affect the debt rating of state-held companies," said Commission competition spokesman Tilman Lueder. "This is true work of economists and has nothing to do with psychology." He said the Commission was looking at ministers' statements of support for the firm and whether this had influenced decisions by debt rating agencies to upgrade the company.

He gave no further details.

France Telecom veered into crisis in 2002 after running up Euro 70 billion euros in debt stemming from an expansion spree. The government pledged at the time to lend the company nine billion euros as an...