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Brussels, 27 November 2008

Free movement of capital: Commission contests Greek law on investment in strategic companies

The European Commission has sent Greece a formal request to eliminate the restrictions on investment in strategic companies introduced by Law 3631/2008. The infringement procedure was initiated by a letter of formal notice in May 2008. Having analysed the Greek government's reply, the Commission considers that the restrictions represent unjustified obstacles to EC Treaty rules on free movement of capital and freedom of establishment. The Commission's request takes the form of a 'reasoned opinion', the second stage of infringement procedures under Article 226 of the EC Treaty. If there is no satisfactory reply within two months, the Commission may decide to refer the case to the European Court of Justice.

The law in question establishes (i) an ex-ante authorisation system, according to which the acquisition of voting rights by shareholders other than the State is limited to 20%, unless prior approval has been granted by the Inter-ministerial Privatization Committee; and (ii) an ex-post approval system, according to which certain important corporate decisions as well as certain decisions concerning specific management matters need, for their validity, the approval of the Minister of Economy and Finance.

The Commission considers that both authorisation systems are not suitable and proportionate measures. The criteria for granting the authorities' prior approval are imprecise, and no criteria exist for the ex-post approval by the Minister of Economy and Finance. This situation gives the administrative authorities a wide margin of discretion, which in the Commission's view restricts the rights of potential investors deriving from Article 56 of the EC Treaty on the free movement of capital.

In addition, the Commission considers that the law does not provide a clear definition of the scope of the measure, thus creating legal uncertainty as to which companies and sectors are currently subject to these mechanisms or might be covered by them in the future.

Consequently, it is considered that the schemes are not based on objective criteria known in advance to the undertakings concerned and subject to judicial review. Therefore, in the Commission's opinion, both the ex-ante authorisation regime and the ex-post approval system go beyond what is necessary to ensure the objective pursued by the Greek government, i.e. ensuring that there is a continuous and uninterrupted supply of services and that the networks function well.

The latest information on infringement proceedings concerning all Member States can be found at:

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