Luxembourg, 06/02/2003 (Agence Europe) - Advocate General Ruiz-Jarabo is proposing that the Court of Justice should accept the case of the European Commission versus the United Kingdom but should reject that of the Commission against Spain regarding "golden shares" or the special powers that are conferred upon States in private companies assuring a public service.
The Advocate General considers decisions taken by the British authorities concerning "golden shares" are not subject to any conditions or jurisdictional controls. The British system therefore runs counter to the free movement of capital. On the other hand, any restrictions to the free movement of capital foreseen by the Spanish system are justified and in proportion. Action against Spain should be rejected, Mr Ruiz-Jarabo considers.
Under the Articles of Association of the privatised company, British Airports Authority (BAA) (which owns the international airports in the United Kingdom), specific action (golden share) allows the government to approve or not to approve certain operations by the company (termination, closure of airport). These Articles of Association prevent the acquisition of shares with voting rights in excess of 15% of the share capital.
In Spain, Act 5/1995 governs the conditions for the privatisation of several firms in the public sector. The law makes companies such as Repsol (oil and energy), Telefonica (telecommunications), Argentaria (banking), Tabacalera (tobacco) and Endesa (electricity) subject to a prior approval system that is extended to major corporate decisions (folding up, merger, sale of assets, etc.).
The Advocate General refers to the EU Treaty which provides that the latter in no way prejudges the ownership system in Member States. He then takes up the case law of the Court in recent rulings concerning "golden shares" in France and Portugal, which had been found guilty, and in Belgium, which had been acquitted (see EUROPE of 5 June, 2002).
Case law shows that an intervention system based on prior administrative clearance or on the right of veto is tantamount to infringement of the freedom of movement of capital if it prevents the acquisition of shares of the companies concerned and deters investors from other Member States. On the other hand, the system is admitted: - if it does not create discrimination based on nationality; - if the restrictions comply with imperious general interest reasons; - and if the restrictions are proportionate to the aim they pursue. Only the Belgian system, which gives the State the possibility to intervene in SNTC (canal transport) and in Distrigaz met the criteria set.
The Court had, on the other hand, condemned the golden share system established by a 1993 ruling which gave the French State powers of intervention in Elf Aquitaine (now TotalFinalElf). Portugal was found similarly guilty for maintaining regulation providing for limits and restrictions in the process of re-privatisation of some firms.