French court rejects union challenge over EDF price caps ruling

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EDF logo is seen displayed in this illustration taken, May 3, 2022. REUTERS/Dado Ruvic/Illustration

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PARIS, May 6 (Reuters) - France's highest administrative court on Friday rejected a challenge from trade unions at EDF (EDF.PA) against a government decision which forced the utility to sell power to smaller rivals at below-market prices.

The government, which owns more than 80% of EDF, took the decision earlier this year to limit electricity price rises.

The move came ahead of presidential elections won by President Emmanuel Macron in April. read more

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The Conseil d'Etat said in a statement it was a "public interest" measure to "significantly limit a rise in electricity prices".

It therefore rejected a demand from EDF trade unions to suspend it.

Unions had argued the measure was financially crippling for the company and could threaten jobs.

EDF shares were down by around 1% in mid-session trading.

In March, EDF warned on its 2022 profit outlook, estimating the price curbs could lower its 2022 earnings before interest, taxes, depreciation and amortization (EBITDA) by around 10.2 billion euros.

This week, EDF reported a 61% jump in first-quarter sales to 35.58 billion euros ($37.59 billion) on higher power prices but remained cautious about its EBITDA outlook.

It said the increase in sales would have only a limited impact on core earnings as a decline in its nuclear production due to reactor outages would force it to buy power on wholesale markets where prices are high.

($1 = 0.9466 euros)

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Reporting by Dominique Vidalon; editing by Sudip Kar-Gupta and Jason Neely

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