FRANCE'S business image was dealt a fresh blow yesterday as France Telecom complained of interference after the state blocked Yahoo from buying a majority stake in Dailymotion.

Industrial Renewal Minister Arnaud Montebourg - often at the center of complaints that France's Socialist government is anti-business - admitted on Wednesday to having derailed the US Internet firm's plans, saying the deal was not in French interests.

But France Telecom CEO Stephane Richard said the firm's management - and not the government - should be deciding the strategy for Dailymotion, a Paris-based video-sharing website.

"Dailymotion is a subsidiary of Orange and not the state. It is the company, its management and its board that manages this issue," Richard told Les Echos business newspaper, using France Telecom's brand name Orange.

"I had refused that Yahoo have the option of buying all of Dailymotion and we were on the verge of finding an arrangement," he said.

Yahoo! Inc had been in talks to buy a 75 percent stake in Dailymotion, the 12th-largest video-sharing website and an industry leader in Europe, with an estimated value of US$300 million.

But the government, which holds 27 percent of France Telecom, had insisted on a 50-50 split.

The deal was part of efforts by Yahoo to expand its global reach.