Brussels, 20 December 2005
Free movement of capital: the Commission asks Luxembourg to change the provisions of the ASTRA satellites concession contract which give it the right to block certain shareholdings in SES Astra and SES Global
The European Commission has decided to call officially on Luxembourg to comply with Community law as regards the concession contract with the satellite company SES Astra, which allows it to block certain shareholdings in SES Astra and SES Global. It is concerned that these provisions are an unjustified restriction on the movement of capital and the freedom of establishment, thereby breaching the rules of the EC Treaty (Articles 56 and 43). The Commission’s request takes the form of a reasoned opinion under Article 226 of the EC Treaty. If the Luxembourg authorities fail to take satisfactory measures within two months of receiving the reasoned opinion, the Commission may decide to refer the matter to the European Court of Justice.
The concession contract between the Grand Duchy of Luxembourg and SES Astra governs the operation by SES Astra of the orbital positions granted to the Luxembourg State. It imposes restrictions on shareholdings in SES Astra and in the parent holding company SES Global.
The restrictions on SES Astra shares are that at least 79.9% of them must be held at any time by SES Global while the concession lasts. The restrictions on SES Global stipulate that the Luxembourg Government has the right to block the direct or indirect holding of more than 20.1% of the shares by a single shareholder or by several acting jointly. The Government may exercise this right only for specific reasons of public interest.
The Commission considers, in the light of consistent judgments by the Court of Justice of the European Communities, that restrictions on the free movement of capital and the right of establishment, such as authorisation procedures for direct investments can be allowed only for reasons of public policy or public security or overriding reasons of general interest and that they must be such as to guarantee the attainment of these objectives, without going beyond what is necessary to attain them.
While the Commission does not dispute the objectives pursued by Luxembourg, it fails to see the relevance and effectiveness of controlling the shareholding of a company for the pursuit of objectives of public interest, which depend principally on that company’s operational decisions.
It considers that other less restrictive mechanisms would be more appropriate for attaining the objectives of public interest pursued. In the case at hand the proportionality of the measure is particularly questionable as control of the shareholding is imposed not only on the company concerned but also on the controlling international holding company, even though its activities extend far beyond what might affect the public interest aspects concerning the Grand Duchy of Luxembourg.