France Telecom Loses EU Appeal Over $1.37 Billion Tax Benefits

France Telecom SA, France’s largest phone company, lost an appeal at the European Union’s highest court against an EU order that forced it to pay about 1.02 billion euros ($1.37 billion) in back taxes to the French government.

The EU regulator’s “decision finding that that aid existed and ordering its recovery is valid,” the EU Court of Justice in Luxembourg said in a ruling today. It upheld a lower EU court’s ruling in 2009 “that the special tax regime to which France Telecom was subject constituted state aid.” The European Commission, which checks whether government aid distorts competition, had probed France’s support for the phone company when it was close to bankruptcy in 2002. It decided that France Telecom received improper tax benefits from 1994 through 2004. A lower EU court in 2009 sided with the regulator.