EU examines French aid to news agency AFP

AP News
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Posted: Aug 31, 2011 1:49 PM
EU examines French aid to news agency AFP

The European Union's competition regulators are examining whether France is providing tens of millions of euros in unfair state aid to Agence France-Presse, sparking deep concern among officials of the French news agency.

AFP Chief Executive Emmanuel Hoog said the agency was hoping to avoid the "darkest scenario," in which it would be forced to return to the French government the portion of 10 years worth of payments deemed illegal. The French government pays the agency euro111.65 million ($161.3 million) a year in subscriptions for its ministries and administrations, which the European Commission says accounts for 40 percent of the agency's revenue.

In an Aug. 22 letter to France's mission to the EU, seen Wednesday by The Associated Press, the European Commission said a preliminary evaluation found the government money "could constitute state aid," meaning it could be incompatible with EU rules.

The Commission, it said, "at this point views that possible aid to AFP would have the potential to distort competition and affect exchanges between member states."

Amelia Torres, a spokeswoman for the competition department, stressed that the investigation is in a preliminary stage.

An unfavorable decision would deal a heavy blow to AFP, the world's third-largest news agency by revenue, which employs some 2,900 people and is active in 165 countries. The Paris-based AFP competes globally with AP and Reuters.

If the payments are deemed illegal, the European Commission "could order the immediate end to public financing ... and force AFP to repay the state" for subsidies dating back 10 years, Hoog wrote to union leaders Monday. "This would obviously be the darkest scenario for us."

Hoog said, however, that he doesn't expect the watchdog to make such a drastic move, saying a more likely outcome would be an order to stop future illegal payments from the state. AFP unions and management are meeting Friday to discuss the issue, and unions are calling for a half-day strike to coincide with the meeting.

France, which is already overhauling its relationship with AFP, could also try to get subsidies to the agency approved as compensation for a public service provided by the agency, as it has successfully done with TV news channel France 24.

But EU regulators question whether France's current subscription payments to AFP are aid in disguise, given that the agency sells similar services to other organizations for far less. In contrast to the French government's nine-figure annual bill, AFP charges the European Union only euro323,374 ($467,280) for a five-year subscription, the Commission noted.

The letter noted that the German government pays only euro3.75 million ($5.4 million) per year for its subscription to the German news agencies dpa and dapd.

The Commission letter, which asks for more information from French authorities on their relationship with AFP and the income the agency gets from large corporate customers, follows a complaint by dapd. The German news agency, created in 2009 when the ddp news agency purchased AP's former German service, competes with AFP in some European markets.

The Commission has sent letters to the EU's other 26 nations to inquire about the funding of news agencies there, a person familiar with the matter told the AP. He spoke on condition of anonymity because of the sensibility of the matter.

Other European governments make large payments to national news agencies as well.

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Greg Keller in Paris contributed to this story.