registration document France Telecom 2009 - Orange.com

financial information concerning the issuer’s assets and liabilities, financial position and profits and losses
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CONSOLIDATED STATEMENTS
agreement, on January 7, 2010, France Telecom transferred
to the French State the amount in escrow together with
53 million euros of interest on the amount as of November 30,
2009 and not recognized as income, representing a total
amount of 1,017 million euros. See Note 30 for the impact
on cash fl ows.
■ The second procedure also follows an investigation opened
by the European Commission in January 2003, relating to
the fi nancial measures announced by the French State on
December 4, 2002. On that date, the French State announced
that it was prepared to extend a shareholder’s loan to France
Telecom in advance of its participation in a capital increase
alongside private investors. This shareholder’s loan was never
actually put in place. In 2004, the European Commission
found that these fi nancial measures were incompatible with
the common market but did not require any repayment of
State aid. The French State and France Telecom but also
Bouygues Telecom and the French association of network
operators and telecommunications services (AFORS
Telecom) lodged appeals against the Commission’s decision
before the General Court of the European Union . The hearings
before the General Court of the European Union occurred on
April 22, 2009 and its decision is expected during the fi rst
half of 2010. The General Court of the European Union might
conclude that the fi nancial measures constitute a State aid
which is reimbursable and ask the European Commission to
rule consistently with this position. However, France Telecom
believes that the participation of the French State, in its
capacity as a majority shareholder, in the company’s action
plan was consistent with the conduct of an informed private
investor and contained no element of State aid.
■ On May 20, 2008, the European Commission announced that
it had launched a formal investigation into the pension plan
for French civil servants employed by France Telecom. This
step followed a complaint by Bouygues Telecom in 2002.
The objective and effect of the pension plan implemented by
the French law of July 26, 1996 was to bring the fi nancing of
the pension plan for French civil servants employed by France
Telecom into line with pension plans applicable to employees
of France Telecom’s competitors. As part of the new regime
established by the 1996 law, France Telecom made an
exceptional payment of 5.7 billion euros to the French State
in 1997 and, since then, has made annual contributions in full
discharge of its liabilities.
France Telecom believes that the sole effect of the pension
plan system established in 1996 is to release the company
from a structural disadvantage and that this reform contains
no element of State aid. The company made observations as
a third party interested in the proceedings.
Broadband, High Capacity Broadband and
Contents
■ In July 2003, following a sector inquiry on the conditions for
unbundling the local loop and providing access to broadband
Internet services in the European Union member states, the
European Commission ordered Wanadoo to pay a fi ne of
10.35 million euros for abuse of a dominant position between
March 2001 and October 2002. On January 30, 2007, the
General Court of the European Union upheld this decision
and on April 2, 2009, the ECJ dismissed France Telecom’s
appeal. The decision of the European Commission thus
became fi nal.
This decision of the European Commission and decisions
from the French Competition Authority condemning similar
practices of France Telecom on the broadband access
market served as a basis for several legal actions, which are
currently pending before the Paris Commercial Court, from
competitors claiming compensation for the damages they
allegedly suffered because of these practices:
■ Free, which brought an action against France Telecom
in December 2006, accuses France Telecom of having
implemented a strategy that, between 2000 and 2002,
prevented it from deploying ADSL and recruiting potential
new customers to its narrowband Internet customer base,
and which, from 2003 to 2005, hampered its development
in this market. Free has asked the court to order France
Telecom to pay a provisional sum of 500 million euros. In
May 2008, in support of its claims, Free fi led an economic
report which speaks of theoretical damages of 1.9 billion
euros. In December 2008, France Telecom produced
an expert economic and fi nancial assessment which
concluded that Free incurred no loss. France Telecom
believes that Free has been able to take full advantage of
the development and dynamism of the French broadband
market.
■ Numericâble fi led a lawsuit against France Telecom on
November 9, 2009. Numericâble submitted an economic
report which values its prejudice at a minimum of 157 million
euros. France Telecom believes that Numericâble suffered
no loss and that its claims are unfounded.
■ In July 2007, Free fi led a complaint with the French Competition
Council against France Telecom concerning the rollout of fi ber
optic networks in France. This complaint included a claim for
injunctive relief to require France Telecom to provide access
to its civil engineering facilities for purposes of implementing
high capacity broadband, and to do so at cost-oriented
tariffs, while prohibiting France Telecom from marketing
its own retail service offering or rolling out its own facilities
outside Paris until such time as these measures are taken.
On February 12, 2008, the Competition Council rejected
Free’s request for injunctive relief concerning the conditions of
access to existing civil engineering infrastructure established
on the public domain for deploying new optical local loops
on the residential market (FTTH). The Competition Council
acknowledged that France Telecom had been engaged since
October 2007 before the Telecom and Postal Regulatory
Authority (ARCEP) in a constructive process to develop an
offer to access its cable ducts. It considered that there was
no serious and immediate threat to competition justifying the
pronouncement of the measures requested. Nevertheless, it
decided to pursue its investigation into the substance of the
case. This investigation should be extended to the issue of
sharing fi ber optic cabling in buildings which is the subject of
a further complaint from Free.
■ After failing in July 2008 to obtain in a summary procedure
the suspension of the sale of the “Orange Sport” service,
Free brought substantive proceedings before the Paris
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2009 REGISTRATION DOCUMENT / FRANCE TELECOM
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