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IP/06/1027

Brussels, 19 July 2006

Free movement of capital: Commission closes case against Spain over privatisation law

The European Commission has decided to close infringement procedures against Spain in view of the measures taken to comply with a European Court of Justice ruling of 13 of May 2003. The ruling had found that by maintaining in force certain provisions of the privatisation Law 5/1995, as well as Royal Decrees on Repsol SA, Telefónica de España SA, Telefónica Servicios Móviles SA, Argentaria, Tabacalera SA, and Endesa SA, in so far as they implement a system of prior administrative approval, Spain had failed to fulfil its obligations under EC Treaty rules on the free movement of capital (Article 56). This decision follows the notification by Spain of measures taken on 26 May 2006 to comply with the Court ruling.

In its ruling of 13 May 2003 in Case C-463/00, the Court of Justice found that, by maintaining in force the provisions of Article 2 and Article 3(1) and (2) of Law 5/1995 on the legal arrangements for disposal of public shareholdings in certain undertakings as well as Royal Decrees on Repsol SA, Telefónica de España SA, Telefónica Servicios Móviles SA, Argentaria, Tabacalera SA, and Endesa SA, in so far as they implement a system of prior administrative approval, Spain had failed to fulfil its obligations under EC Treaty rules on the free movement of capital (Article 56). The Court did not accept that, in the case of Tabacalera (tobacco) and Argentaria (commercial banking group operating in the traditional banking sector), the legislation could be justified by general interest reasons linked to strategic requirements[1]. As regards Repsol (petroleum), Endesa (electricity) and Telefónica (telecommunications), the Court acknowledged that obstacles to the free movement of capital could be justified by public-security considerations (e.g. security of supplies). However, it considered that there had been a failure to observe the principle of proportionality. Likewise, the Court pointed out that the fact that the regime was to last for a limited period of time (10 years) did not mean that it ceased to constitute an infringement.

While Spain amended the law (25th Additional Provision of Law No. 62/2003) on 30 December 2003, the Commission considered that these amendments did not fully implement the ruling of the Court. Accordingly, a reasoned opinion under Art 228 of the EC Treaty was sent to Spain on 5 July 2005.

On 26 May, the Spanish Parliament adopted Law No 13/2006 repealing the privatisation law 5/1995, the 25th Additional Provision of Law No 62/2003 as well as all the relevant implementing decrees (Boletín Oficial del Estado núm. 126, of 27 May 2006) thereby eliminating the restrictions on the free movement of capital and establishment created by the 1995 privatisation law.

The latest information on infringement proceedings concerning all Member States is available at: http://ec.europa.eu/community_law/eulaw/index_en.htm


[1] Special rights in Argentaria and Tabacalera were phased out in 1999 and 2000 respectively.


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