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Brussels, 15 May 2003

Free movement of capital: Commission calls on Portugal to apply a ruling of the Court of Justice; proceedings against France are closed

The European Commission has decided to remind Portugal of its obligation to comply with a Court of Justice ruling of 4 June 2002, which found the procedure for authorising foreign investment in privatised companies to be incompatible with the provisions of the EC Treaty on the free movement of capital (Article 56). The Portuguese authorities have not notified the Commission to date of measures taken to implement the Court's judgment. On the other hand, the infringement proceedings against France regarding its special shareholding (golden share) in Société Nationale Elf-Aquitaine have been formally closed by the Commission, in view of the measures taken by France to comply with a ruling of the Court, also of 4 June 2002, finding the special shareholding to be incompatible with the same provisions of the Treaty on the free movement of capital.

Portugal privatisation of undertakings

In its ruling of 4 June 2002 in Case C-367/98, the Court of Justice found that the Portuguese Republic had failed to comply with its obligations under Article 73b of the EC Treaty (now Article 56 EC) by maintaining in force Law No 11/90, the decree-laws on the privatisation of undertakings subsequently adopted pursuant to that Law and also Decree-Laws Nos 380/93 of 15 November 1993 and 65/94 of 28 February 1994.

This legislation restricts the movement of capital by prohibiting the acquisition by investors from other Member States of more than a given number of shares in certain national undertakings and by requiring prior authorisation by the State for the acquisition of a holding in certain national undertakings in excess of a specified level.

To date, the Portuguese Republic has not notified the Commission that it has taken the measures necessary to implement the ruling of the Court. The Commission has therefore decided to initiate new infringement proceedings under Article 228 of the EC Treaty in order to ensure that the Portuguese legislation is brought into line with Community law.

France Elf-Aquitaine

On 4 June 2002, the Court of Justice also delivered a judgment in Case C-483/99 finding that the "golden share" held by France in Société Nationale Elf-Aquitaine was incompatible with the provisions of Article 56 of the Treaty enshrining the free movement of capital. Decree No 93-1298 of 13 December 1993 establishing this special shareholding was subsequently repealed by the French authorities on 3 October 2002, by way of Decree No 2002-1231.

The French State's "golden share" in Elf-Aquitaine was found by the Court to constitute an unjustified obstacle to the free movement of capital in that the following rights were attached to it:

  • the power of the Minister for Economic Affairs to give prior approval for any direct or indirect shareholding by a natural or legal person, acting alone or in conjunction with others, which exceeded the ceiling of one tenth, one fifth or one third of the capital of, or voting rights in, the company,

  • the right to oppose any decision to transfer or use as security the majority of the capital of four subsidiaries of Elf-Aquitaine, namely Elf-Aquitaine Production, Elf-Antar France, Elf-Gabon SA and Elf-Congo SA,

without any specific criteria, made known in advance to investors, laying down the rules for the French authorities to exercise such discretionary power.

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