The phenomenon of widespread intra-Community investment has prompted certain
Member States to adopt specific measures to control that situation. In 1997
the Commission, seeking to ensure compliance with the Treaty provisions concerning
the free movement of capital and freedom of establishment, reiterated, by means
of a communication to the Member States, its view in that regard, especially
in relation to control procedures such as the rules on prior authorisation and
rights of veto which those States proposed to introduce or had laid down.
During the course of 1998 and 1999 the Commission brought Treaty infringement
proceedings against Portugal, France and Belgium, whose legislation imposing
restrictions on participations in the context of privatisation appeared to it
to infringe the right to exercise those essential freedoms, as enshrined in
Community law.
- In the case of Portugal, the provisions at issue are certain laws and regulations
concerning privatisations which limit participation by non-nationals and establish
a procedure for the grant of prior authorisation by the Minister of Finance
once the interest of a person acquiring shares in a privatised company exceeds
a ceiling of 10%. The companies concerned are certain undertakings in the banking,
insurance, energy and transport sectors.
- In the case of France, the Commission complains that the Decree of 1993 vests in the State a "golden share" in Société Nationale Elf-Aquitaine, whereby the Minister for Economic Affairs is required, first, to approve in advance any acquisition of shares or rights which exceeds established limits on the holding of capital and, second, may oppose decisions to transfer shares or use them as security. That company is engaged in supplying France with petroleum products.
- Lastly, the case of Belgium concerns two Royal Decrees dating from 1994 which
vested in the State "golden shares" in Société Nationale
de Transport par Canalisations and in Distrigaz, whereby the Minister for Energy
may oppose any transfer of technical installations and any specific management
decisions taken from time to time concerning the companies' shares which may
jeopardise national supplies of natural gas.
The Court of Justice points out, first, that the EC Treaty prohibits
all restrictions on the movement of capital between Member States and between
Member States and third countries, and that the Council's directive
of 1988 for the implementation of the free movement of capital is designed to
define investments in the form of participations constituting movements of capital
which are compatible with the provisions of the Treaty.
Having regard to that principle, the Court considers whether the "golden
shares" respectively held by each of the three countries meet those requirements,
inasmuch as they involve:
- a prohibition (in Portugal) on the acquisition by
nationals of another Member State of more than a given number of shares;
- a requirement (in France and Portugal) that prior authorisation
or notification is to be given where a limit on the number of shares or voting
rights held is exceeded;
- a right (in France and Belgium) to oppose, ex post
facto, decisions concerning transfers of shares.
First of all, it concludes from its analysis that legislation which is liable
to impede the acquisition of shares in the undertakings concerned and to dissuade
investors in other Member States from investing in the capital of those undertakings
may render the free movement of capital illusory, and thus constitutes a restriction
on movements of capital.
Are those restrictions permissible?
The Court considers, first of all, the Portuguese rule providing for the manifestly
discriminatory treatment of investors from other Member States: its effect is
to restrict the free movement of capital, which the Court obviously finds unlawful.
Next, it considers whether the grounds put forward by way of justification
for the restrictions in question, based - according to the States concerned
- on the need to maintain a controlling interest in undertakings operating in
areas involving matters of general or strategic interest, are acceptable. The
free movement of capital may be restricted only by national rules which fulfil
the twofold criterion of being founded on overriding requirements of the general
interest and being proportionate to the objective pursued - in other words,
where that objective cannot be attained by less restrictive measures and is
determined by objective criteria of which the undertakings concerned are aware
and which enable them, as appropriate, to contest the decisions adopted by the
State.
Although the objective pursued by France (namely, to guarantee supplies of
petroleum products in the event of a crisis) falls within the ambit of a legitimate
general interest, the Court considers that the measures in issue clearly
go beyond what is necessary in order to attain the objective indicated.
Inasmuch as the provisions complained of do not indicate the specific, objective
circumstances in which prior authorisation or a right of opposition ex post
facto will be granted or refused, they are contrary to the principle of
legal certainty. Moreover, the Court is unable to accept such a lack of precision
and such a wide discretionary power, which constitutes a serious impairment
of the fundamental principle of the free movement of capital.
On the other hand, it takes the view that both the justification put forward
for the objective pursued by Belgium (namely, to maintain minimum supplies of
gas in the event of a real and serious threat) and the measures prescribed for
the attainment of that objective are compatible with the fundamental principles
of Community law. No prior approval is required;intervention by the
Belgian public authorities in the context of a transfer of installations and
the pursuit of management policy is subject to strict time-limits, in accordance
with a specific procedure involving a formal statement of reasons which may
be the subject of an effective review by the courts. Lastly, the Commission
has not shown that less restrictive measures could have been taken to attain
the objective pursued.
As to the argument based on the need to safeguard the financial interests
of the Portuguese Republic, the Court points out that it is settled case-law
that such economic grounds, put forward in support of a prior authorisation
procedure, can never serve as justification for restrictions on freedom of movement.
The Court therefore finds that the Portuguese measures in issue constitute an
infringement of the Treaty.
Lastly, the Court states that, since the legislation in issue involves restrictions
on the free movement of capital which are inextricably linked with the obstacles
to freedom of establishment to which they give rise, there is no need for a
separate examination of the measures at issue in the light of the Treaty rules
concerning freedom of establishment.
As regards the case brought against the Kingdom of Belgium, even if it were
assumed that the protective measures in question may constitute a restriction
on freedom of establishment, such a restriction would be justified for the same
reasons as those relating to the restriction on the free movement of capital.
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