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Brussels, 4 April 2006

Free movement of capital: Commission refers Spain to the Court of Justice for restrictions on investment in energy companies

The European Commission has decided to refer Spain to the European Court of Justice with respect to certain provisions of Spanish legislation that limit the voting rights of investments by state companies in the energy sector. The Commission considers that these provisions constitute unjustified restrictions on the free movement of capital in violation of EC Treaty rules (Articles 56)

The Spanish law in question is the 27th Additional Provision "Public holding in the energy sector" of Law 55/1999 of 29 December 1999 laying down tax, administrative and social measures. This law provides that in cases of direct or indirect acquisition or control by state companies of more than 3% of the equity or the voting rights in Spanish energy companies, voting rights attached to shares above that limit are subject to the prior authorisation of Spain's Council of Ministers. The Commission considered these provisions incompatible with the Treaty and on 9 July 2003 sent Spain a reasoned opinion (c.f. IP/03/964).

Spain amended the law on 30 December 2003 (Article 94 of Law No. 62/2003). However, the Commission considered that the changes made were not sufficent because they gave the authorities wide discretionary powers when deciding on whether or not to allow the exercise of voting rights in Spanish energy companies by public entities The Commission also considered that the system in place goes beyond what is necessary in order to attain the objective of safeguarding the operations and supply of the services provided by such companies. Consequently, on 7 July 2004, the Commission sent Spain a complementary letter of formal notice.

The Commission considered Spain's arguments in defence of the law unsatisfactory in the light of the relevant Court of Justice case law.

Although invited to take the necessary measures to comply with the complimentary reasoned opinion adopted on 7 July 2005 (IP/05/874), the Commission has not as yet received any reply from the Spanish Government.

It is important to note that this procedure has been open since 2001 when the Commission sent a letter of formal notice to the Spanish authorities. This Commission decision is therefore independent of the Real Decreto-Ley 4/2006 of 24 February 2006 and the possible acquisition of Endesa.
The latest information on infringement proceedings concerning all Member States is available at:

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