Brussels, 02/04/2003 (Agence Europe) - The European Commission has opened formal prosecution proceedings against Electricité de France (EDF). It considers the unlimited guarantees the French State grants to the company for all of its contractual loans on the basis of its status as an "industrial and commercial public undertaking" (EPIC) constitutes, at this stage, a state aid which is incompatible with European rules. Back in October, the Commission asked France to put an end to these guarantees, which it found dubious, and the French authorities' arguments justifying its existence failed to win it over. The guarantee allows France to side-step insolvency and bankruptcy laws and protects it against its commitments thanks to State intervention if it defaults, improving its rating and lowering the cost of the loans. Commissioner Monti states that "the Commission is questioning neither EDF's public character nor its EPIC status" and that, as such, the company has the right to financial compensation or to enjoy certain prerogatives in relation to the public service activities it carries out. However, the Commission doubts "that the State's commitment to EDF is proportionate", and suspects that the State is extending the guarantee to activities which do not come under public service obligations, especially on electricity production and distribution markets outside France, and on the energy service markets which are open to competition. France will now have one month in which to submit its comments.