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Brussels, 16th October 2002

Free movement of capital: Commission opens infringement proceedings against Spain and Italy concerning public holdings in energy companies

The European Commission is formally requesting Spain and Italy to provide information concerning their legislation that limits the voting rights of investments by state companies in the energy sector. The Commission is concerned that certain provisions of the Spanish and Italian laws in question may unduly restrict free movement of capital as enshrined in EU Treaty rules (Article 56). The requests will take the form of letters of formal notice (the first stage of infringement proceedings provided for in Article 226 of the EC Treaty). In the absence of satisfactory replies to the letters of formal notice within two months, the Commission may decide to issue formal requests to the Member States concerned (in the form of so-called 'reasoned opinions', the second stage of infringement proceedings) to revise the legislation in question.


Spanish Law 55/1999 of 29 December 1999 includes provisions that require the exercise of voting rights by public entities or undertakings of any kind owned or controlled by public entities which directly or indirectly take control or acquire at least 3% of the equity or the voting rights in Spanish energy companies to be subject to the prior authorisation of Spain's Council of Ministers. Furthermore, the authorities are required to have due regard to the principle of reciprocity.


In the case of Italy, the law in question is Decree-Law No 192 of 25 May 2001 converted into Law No 301 of 20 July 2001 concerning measures in the electricity and gas sectors. This law provides that in cases of direct or indirect acquisitions by state companies of more than 2% of the capital of companies operating in the Italian electricity and gas sector, voting rights attached to shares above the limit are automatically suspended until a fully competitive market in these sectors is achieved at the EU level. In this case too, the law refers to the principle of reciprocity.

Commission concerns

The Commission is concerned that the provisions of these Spanish and Italian laws may be incompatible with the Treaty establishing the European Community. In its "Communication on certain legal aspects concerning intra-EU investments" (see IP/97/477) the Commission specified that, according to Community law, restrictions on the free movement of capital and the right of establishment, such as authorisation procedures for investment in privatised companies, should:

  • apply without discrimination

  • be justified on imperative requirements in the general interest

  • be suitable for securing the attainment of the objective that they pursue and

  • must not go beyond what is necessary in order to achieve the defined objective.

This position was confirmed by the Commission in June 2001 (see IP/01/872) and upheld by the European Court of Justice in its rulings of 4 June 2002 in cases C-367/98 Commission v Portugal, C-483/99 Commission v France and C-503/99 Commission v Belgium.

The Commission is concerned that the provision of the Spanish and Italian laws may not be justified on the basis of the above requirements and, therefore, could be incompatible with EU Treaty rules on the free movement of capital.

Recent general information on infringements concerning all Member States may be consulted at:

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