# C_2007140EN.01001501.xml

| 23.6.2007 | EN | Official Journal of the European Union | C 140/15 |
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Action brought on 19 April 2007 — Commission of the European Communities v Kingdom of Spain

(Case C-207/07)

(2007/C 140/24)

Language of the case: Spanish

Parties

Applicant: Commission of the European Communities (represented by: H. Støvlbæk and R. Vidal Puig, acting as Agents)

Defendant: Kingdom of Spain

Form of order sought

| — | declare that, by adopting the first indent of the second paragraph of the single article of Royal Decree-Law 4/2006 of 24 February 2006, amending the fourteenth function of the National Energy Commission provided for in Supplementary Provision No 11, part 3, point 1 of Law 34/1998 of 7 October 1998 on the hydrocarbon sector, in order to make the acquisition of certain shareholdings in undertakings which carry on certain regulated activities in the energy sector and the acquisition of the assets necessary to carry on such activities subject to the prior approval of the National Energy Commission, the Kingdom of Spain has failed to fulfil its obligations under Article 56 EC and 43 EC; |
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| — | order Kingdom of Spain to pay the costs. |
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Pleas in law and main arguments

| 1. | The Spanish legislation which is the subject of these proceedings makes the following transactions subject to the prior approval of the National Energy Commission (‘the NEC’):
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the acquisition of a shareholding in an undertaking which carries on itself or through other undertakings belonging to the same group certain activities in the energy sector, where that shareholding exceeds 10 %, or any other percentage giving a significant influence over that undertaking; —
the acquisition of the assets necessary to carry on such activities. | — | the acquisition of a shareholding in an undertaking which carries on itself or through other undertakings belonging to the same group certain activities in the energy sector, where that shareholding exceeds 10 %, or any other percentage giving a significant influence over that undertaking; | — | the acquisition of the assets necessary to carry on such activities. |
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| — | the acquisition of a shareholding in an undertaking which carries on itself or through other undertakings belonging to the same group certain activities in the energy sector, where that shareholding exceeds 10 %, or any other percentage giving a significant influence over that undertaking; | | | | |
| — | the acquisition of the assets necessary to carry on such activities. | | | | |

| 2. | The Commission takes the view that the provision in question is incompatible with Article 56 of the EC Treaty for the following reasons:
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the acquisition of shares in undertakings which carry on activities in the energy sector or the assets necessary to carry on such activities are ‘movements of capital’ within the meaning of Article 56 EC; —
the requirement of prior approval by the NEC constitutes a ‘restriction’ on the free movement of capital prohibited in principle by Article 56 EC; and —
that restriction is not justified under the EC Treaty. | — | the acquisition of shares in undertakings which carry on activities in the energy sector or the assets necessary to carry on such activities are ‘movements of capital’ within the meaning of Article 56 EC; | — | the requirement of prior approval by the NEC constitutes a ‘restriction’ on the free movement of capital prohibited in principle by Article 56 EC; and | — | that restriction is not justified under the EC Treaty. |
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| — | the acquisition of shares in undertakings which carry on activities in the energy sector or the assets necessary to carry on such activities are ‘movements of capital’ within the meaning of Article 56 EC; | | | | | | |
| — | the requirement of prior approval by the NEC constitutes a ‘restriction’ on the free movement of capital prohibited in principle by Article 56 EC; and | | | | | | |
| — | that restriction is not justified under the EC Treaty. | | | | | | |

| 3. | In particular, the Commission takes the view that the legislation at issue is not justified by the objective of safeguarding the energy supply for the following reasons:
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the contested measure is not an appropriate means of safeguarding the energy supply, there being other more suitable means of doing so; —
in any event, the contested measure is disproportionate, since prior approval is not limited to either certain specific aspects of the management of the undertaking in which a shareholding has been acquired or the management of the assets; —
the power of the NEC to withhold the approval or to make it subject to conditions is not governed by criteria which are objective and sufficiently precise, so as to be amenable to effective review by the courts. | — | the contested measure is not an appropriate means of safeguarding the energy supply, there being other more suitable means of doing so; | — | in any event, the contested measure is disproportionate, since prior approval is not limited to either certain specific aspects of the management of the undertaking in which a shareholding has been acquired or the management of the assets; | — | the power of the NEC to withhold the approval or to make it subject to conditions is not governed by criteria which are objective and sufficiently precise, so as to be amenable to effective review by the courts. |
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| — | the contested measure is not an appropriate means of safeguarding the energy supply, there being other more suitable means of doing so; | | | | | | |
| — | in any event, the contested measure is disproportionate, since prior approval is not limited to either certain specific aspects of the management of the undertaking in which a shareholding has been acquired or the management of the assets; | | | | | | |
| — | the power of the NEC to withhold the approval or to make it subject to conditions is not governed by criteria which are objective and sufficiently precise, so as to be amenable to effective review by the courts. | | | | | | |

The Commission considers that the legislation at issue also constitutes a restriction on the right to establishment contrary to Article 43 EC which, for the reasons already mentioned in relation to Article 56 EC, are not justified by the objective of safeguarding energy resources.

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