France Telecom (FT) must return €798 million (U.S. $1.1 billion) in illegal tax breaks that it received from the French government between 1994 and 2002, according to a ruling handed down last Thursday by the European Court of Justice. The court’s decision upholds a 2004 decree by the European Commission (EC), which determined that preferential tax status granted by France to FT during the period in question constituted an illegal form of state aid. The ruling deals a setback to the French government, which has yet to implement the EC directive and had urged the court to overturn the EC order. At the time of its initial ruling, the EC estimated that the total (plus interest) owed by FT could exceed $2.41 billion. Although the court said that FT must pay back a minimum of $1.1 billion, it noted that the EC could demand as much as $1.5 billion in principal plus interest. Hinting that the EC could take the French government back to court if it refuses to cooperate, an EC spokesman said “the next step is that we get in touch with the French authorities to ensure that they recover the money as quickly as possible.”