(Recasts lead, adds EDF comment, updates shares)
BRUSSELS, June 5 (Reuters) - French power giant EDF won a 15-year legal battle to keep 1 billion euros in state aid on Tuesday when Europe’s highest court said the European Commission was wrong to rule the payment was illegal.
The case goes back to 1997, when, according to the European Commission, France waived a tax claim against the then wholly state-owned company, valued at the time at 888.89 million euros ($1.11 billion).
The Commission ruled in 2003 that the waiver strengthened EDF’s competitive position with peers and constituted improper state aid, and ordered EDF to pay 1.22 billion euros ($1.52 billion) after interest to the French state.
EDF successfully appealed to the General Court, the European Union’s second highest court, in 2009 and the French state returned the money to EDF.
The Court of Justice said on Tuesday the Commission’s subsequent appeal should have considered whether the French state had acted as a shareholder in EDF in granting the payment waiver - something that would affect the question of whether or not the waiver constituted state aid.
“The Commission erred in law by refusing, simply because the measure was fiscal, to consider whether the French state had acted as a private investor,” the Court of Justice said in its statement.
EDF said the decision meant it would keep the money returned to it by the French government in December 2009 but that it would not affect its earnings as it had not made any provisions in its accounts.
EDF’s shares fell 0.40 percent to 15.07 euros by 1350 GMT on Tuesday, underperforming the utilities index which lost 0.3 percent. ($1 = 0.8003 euros) (Reporting By Sebastian Moffett, additional reporting by Caroline Jacobs in Paris.; Editing by David Cowell)