-The European Court of Justice has condemned French and Portuguese provisions on the “golden share”, but has accepted Belgian rules, judicial sources have reported. The power of governments to veto takeovers of former state enterprises is to be severely restricted following this decision.
The judges considered that “the national rules in question constitute, per se, exceptions to the principle of free movement of capital and, consequently, to the principle of freedom of establishment.”
“They can be justified”, according to the Court, “only if the objective pursued falls within the ambit of a general or strategic interest and the measures prescribed are based on precise criteria which are known in advance, are open to review by the courts and cannot be attained by less restrictive measures.”
Commission officials said on Tuesday that the decision could pave the way for controversial proposals on a Europe-wide takeover code, which had been delayed to await the ruling.
A Commission spokesman said the judgement “seems to confirm” the Commission's 1997 Communication on the subject, which has acted as a type of soft law until now. As to whether it would encourage the Commission to take more Member States to Court for holding golden shares, he said “each case is different and must be examined on its merits”.
Mr. Lehne, who was the European Parliament's rapporteur for the Takeovers Directive, welcomed the Courts decision as “a step in the right direction”. “It is unacceptable that some state-owned companies have been privatised and don't want to play by the rules of the market”, he said. Mr. Lehne also called on the Commission to take on board the Court's ruling when drafting the new Takeover Directive. “The logical progression now is that share voting rights, whether restrictive or maximising must be abolished. The statutes of the Wallenberg or Volkswagen groups are no longer tenable”, he said.
The ruling is likely to influence Commission thinking on whether to pursue Italy for trying to prevent its power utility Montedison being taken over by Electricité de France. It may also affect Germany, where the Lower Saxony Region has limited the maximum shareholding any individual can have in car manufacturer Volkswagen to 20%. Annual cross-border, intra-EU capital investment amounts to Euro 670 billion or about 8% of the EU's Gross Domestic Product.
More on Commission web site: Courts Ruling on 4 June
© Graham Bishop
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