Électricité de France, the state-owned power group, must repay the French state about €1 billion ($1.2 billion) and phase out government guarantees, the European Commission is set to rule in a decision tomorrow.

But the Commission is also expected tomorrow to take the Italian government to court for legislation that limits EdF's voting rights over its part-owned Italian subsidiary. It is actively considering suing Spain over a similar law.

The case, one of the most politically charged under scrutiny in Brussels, shows the difficulties of phasing out alleged illegal subsidies and follows a series of other conflicts with Paris, most notably over a bail-out for Alstom, the troubled engineering group.

Mr Mario Monti, competition commissioner, argues that the French state-owned power group is unique among European companies in enjoying a triple A credit rating as a direct result of government guarantees, which gives it an unfair advantage in raising capital.

He also says he is not going to negotiate the amount the company must repay for allegedly avoiding tax through underestimating its income. - (Financial Times Service)