(Bloomberg) -- French energy utility Engie SA faces a 120 million-euro ($139 million) tax bill after the European Union said it benefited from an unfair fiscal arrangement with Luxembourg.

Concluding a state aid probe into the tax affairs of Engie, the European Commission on Wednesday said Luxembourg selectively deviated from provisions of national law to help lower the tax bill for France’s former natural-gas monopoly, then known as GDF Suez.

The probe is one of a string of cases by the EU, which has sought to crack down on member nations giving a select few companies a tax advantage over others. The tax breaks at issue in the case were implemented by Engie in 2008 and in 2010, and allowed the company to pay an effective corporate tax rate of 0.3 percent on certain profits in Luxembourg for about a decade. This is illegal, said the EU’s antitrust chief.

The so-called tax rulings “endorsed two complex financing structures put in place by Engie that treat the same transaction in an inconsistent way, both as debt and as equity,” EU Competition Commissioner Margrethe Vestager said in a statement. “This artificially reduced the company’s tax burden.”

The Brussels-based EU executive authority’s state-aid officials embarked on a quest in 2013 to find questionable deals among the thousands of otherwise legal tax pacts governments have arranged for companies for years. The clampdown saw Ireland ordered to recoup a record 13 billion euros in back taxes, plus interest from Apple. The first court hearings in a series of pending appeals are set to kick of this Thursday, pitting Luxembourg and a Fiat Chrysler Automobiles NV unit against the EU over a 2015 payback order for 30 million euros.

The EU probe, which started in 2016, concluded that Luxembourg’s tax treatment of Engie’s financing structures did not reflect economic reality and gave the company a selective economic advantage by allowing it “to pay less tax than other companies subject to the same national tax rules.”

“In fact, the rulings enabled Engie to avoid paying any tax on 99 percent of the profits generated by Engie LNG Supply and Engie Treasury Management,” the two Engie companies based in Luxembourg, according to the regulator.

The intensified scrutiny pushed Luxembourg -- a key target together with the Netherlands and Ireland for the EU probes -- to regulate the way so-called tax rulings are given to companies. The change, effective since January last year, will make it harder for the financing arms of multinational corporations to get special tax deals.

Luxembourg was among the first nations to be singled out in 2014 on its tax practices, when a group of investigative reporters published thousands of pages from secret arrangements between the tiny nation and companies including Walt Disney Co., Microsoft Corp.’s Skype and PepsiCo Inc. The so-called LuxLeaks publications have been used by the European Commission in its deliberations.

Luxembourg is still facing an EU state aid probe over tax arrangements with McDonald’s Corp.

--With assistance from Francois de Beaupuy.

To contact the reporter on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Peter Chapman, James Herron

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