CJE/02/49 4 June 2002
The Court of Justice today delivers three judgments concerning "Golden Shares" in the context of the privatisation of undertakings. The french and portuguese provisions are declared unlawful; the belgian rules are held to be valid
The national rules in question constitute, per se, exceptions to the principle of free movement of capital and, consequently, to the principle of freedom of establishment, and can be justified, according to the Court, only if the objective pursued falls within the ambit of a general or strategic interest and the measures prescribed are based on precise criteria which are known in advance, are open to review by the courts and cannot be attained by less restrictive measures.
The phenomenon of widespread intra-Community investment has prompted certain Member States to adopt specific measures to control that situation. In 1997 the Commission, seeking to ensure compliance with the Treaty provisions concerning the free movement of capital and freedom of establishment, reiterated, by means of a communication to the Member States, its view in that regard, especially in relation to control procedures such as the rules on prior authorisation and rights of veto which those States proposed to introduce or had laid down.
During the course of 1998 and 1999 the Commission brought Treaty infringement proceedings against Portugal, France and Belgium, whose legislation imposing restrictions on participations in the context of privatisation appeared to it to infringe the right to exercise those essential freedoms, as enshrined in Community law.
In the case of Portugal, the provisions at issue are certain laws and regulations concerning privatisations which limit participation by non-nationals and establish a procedure for the grant of prior authorisation by the Minister of Finance once the interest of a person acquiring shares in a privatised company exceeds a ceiling of 10%. The companies concerned are certain undertakings in the banking, insurance, energy and transport sectors.
In the case of France, the Commission complains that the Decree of 1993 vests in the State a "golden share" in Société Nationale Elf-Aquitaine, whereby the Minister for Economic Affairs is required, first, to approve in advance any acquisition of shares or rights which exceeds established limits on the holding of capital and, second, may oppose decisions to transfer shares or use them as security. That company is engaged in supplying France with petroleum products.
Lastly, the case of Belgium concerns two Royal Decrees dating from 1994 which vested in the State "golden shares" in Société Nationale de Transport par Canalisations and in Distrigaz, whereby the Minister for Energy may oppose any transfer of technical installations and any specific management decisions taken from time to time concerning the companies' shares which may jeopardise national supplies of natural gas.
The Court of Justice points out, first, that the EC Treaty prohibits all restrictions on the movement of capital between Member States and between Member States and third countries, and that the Council's directive of 1988 for the implementation of the free movement of capital is designed to define investments in the form of participations constituting movements of capital which are compatible with the provisions of the Treaty.
Having regard to that principle, the Court considers whether the "golden shares" respectively held by each of the three countries meet those requirements, inasmuch as they involve:
a prohibition (in Portugal) on the acquisition by nationals of another Member State of more than a given number of shares;
a requirement (in France and Portugal) that prior authorisation or notification is to be given where a limit on the number of shares or voting rights held is exceeded;
a right (in France and Belgium) to oppose, ex post facto, decisions concerning transfers of shares.
First of all, it concludes from its analysis that legislation which is liable to impede the acquisition of shares in the undertakings concerned and to dissuade investors in other Member States from investing in the capital of those undertakings may render the free movement of capital illusory, and thus constitutes a restriction on movements of capital.
Are those restrictions permissible?
The Court considers, first of all, the Portuguese rule providing for the manifestly discriminatory treatment of investors from other Member States: its effect is to restrict the free movement of capital, which the Court obviously finds unlawful.
Next, it considers whether the grounds put forward by way of justification for the restrictions in question, based - according to the States concerned - on the need to maintain a controlling interest in undertakings operating in areas involving matters of general or strategic interest, are acceptable. The free movement of capital may be restricted only by national rules which fulfil the twofold criterion of being founded on overriding requirements of the general interest and being proportionate to the objective pursued - in other words, where that objective cannot be attained by less restrictive measures and is determined by objective criteria of which the undertakings concerned are aware and which enable them, as appropriate, to contest the decisions adopted by the State.
Although the objective pursued by France (namely, to guarantee supplies of petroleum products in the event of a crisis) falls within the ambit of a legitimate general interest, the Court considers that the measures in issue clearly go beyond what is necessary in order to attain the objective indicated. Inasmuch as the provisions complained of do not indicate the specific, objective circumstances in which prior authorisation or a right of opposition ex post facto will be granted or refused, they are contrary to the principle of legal certainty. Moreover, the Court is unable to accept such a lack of precision and such a wide discretionary power, which constitutes a serious impairment of the fundamental principle of the free movement of capital.
On the other hand, it takes the view that both the justification put forward for the objective pursued by Belgium (namely, to maintain minimum supplies of gas in the event of a real and serious threat) and the measures prescribed for the attainment of that objective are compatible with the fundamental principles of Community law. No prior approval is required;intervention by the Belgian public authorities in the context of a transfer of installations and the pursuit of management policy is subject to strict time-limits, in accordance with a specific procedure involving a formal statement of reasons which may be the subject of an effective review by the courts. Lastly, the Commission has not shown that less restrictive measures could have been taken to attain the objective pursued.
As to the argument based on the need to safeguard the financial interests of the Portuguese Republic, the Court points out that it is settled case-law that such economic grounds, put forward in support of a prior authorisation procedure, can never serve as justification for restrictions on freedom of movement. The Court therefore finds that the Portuguese measures in issue constitute an infringement of the Treaty.
Lastly, the Court states that, since the legislation in issue involves restrictions on the free movement of capital which are inextricably linked with the obstacles to freedom of establishment to which they give rise, there is no need for a separate examination of the measures at issue in the light of the Treaty rules concerning freedom of establishment.
As regards the case brought against the Kingdom of Belgium, even if it were assumed that the protective measures in question may constitute a restriction on freedom of establishment, such a restriction would be justified for the same reasons as those relating to the restriction on the free movement of capital.