Judgment — ECLI:EU:C:2009:193
Date: 2009-03-26
Language of the case: Italian
Court formation: Third Chamber
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Right of establishment;Free movement of capital
Concepts: Free movement of capital and freedom of payments;General
Procedure: Action for failure to fulfil obligations - successful
Origin: Italy

summary, the contested Decree is not proportionate in relation to the powers whose exercise it is regulating or in relation to Community law. Consequently, I propose that the Court of Justice declare that, by adopting provisions such as those contained in Article 1(2) of the Decree in relation to Article 4(227)(c) of the Finance Law, the Italian Republic has failed to fulfil its obligations under Article 43 EC. d) Epilogue 89. The action brought by the Commission against the Italian Republic concerns, most particularly, the acquisition by investors from outside the Community of holdings of some significance in companies operating in sectors regarded as strategic or in the public service sector, occasionally giving rise to suspicion on the part of European governments. This is demonstrated in the Italian Government’s defence, which states that the criteria (of the contested Decree) can be identified only in relation to the characteristics of the purchaser of the shares. (55) 90. It has even been claimed that the main purpose of ‘golden shares’ legislation relates to the conditions under which non-European bodies can enjoy the privileges associated with ownership of undertakings in the most sensitive sectors, rejecting solutions such as reciprocity and opting for agreements which introduce golden shares into the statutes, with the blessing of the majority of shareholders. (56) 91. Bearing this in mind, I feel that the approach that I am suggesting is sufficiently respectful of Member States’ concerns regarding extra-Community investment groups. By regarding the national Decree on the exercise of the special powers contained in Article 4(227)(a) and (b) of the Finance Law as disproportionate and therefore contrary to Article 56 EC, the Italian Republic is prevented from enforcing the legislation in issue against either Member State nationals or nationals of non-member countries, because the free movement of capital applies outside the Community, as mentioned previously. 92. However, the governments retain some leeway to hold extra-Community investors with dubious objectives in check by limiting their ability to take the actions referred to in Article 4(227)(c) of the Finance Law; in practice, the fact that the right to veto these decisions which are so fundamental to the existence of the undertaking has been dealt with under Article 43 EC means that its incompatibility with the freedom of establishment does not prevent the Member States from using the veto against major shareholders from outside the Community, for such shareholders cannot rely on the fundamental right of establishment. VI – Costs 93. Article 69(2) of the Rules of Procedure of the Court of Justice stipulates that the unsuccessful party is to be ordered to pay the costs, if the other party has applied for them. Since the Italian Republic has been unsuccessful and the Commission has applied for an order for costs against it, it must be ordered to pay the costs of the action. VII – Conclusion 94. In accordance with the foregoing considerations, I propose that the Court of Justice should: (1) declare that, by adopting provisions such as those contained in Article 1(2) of the Decree of the President of the Council of Ministers of 10 June 2004 defining the criteria for the exercise of the special powers referred to in Article 2 of Decree-Law No 332 of 31 May 1994, converted into law with amendments by Law No 474 of 30 July 1994, and amended by the Finance Law, the Italian Republic has failed to fulfil its obligations under Article 56(1) EC in relation to Article 4(227)(a) and (b) of the Finance Law and under Article 43 EC in relation to subparagraph (c) of the same provision; (2) order the Italian Republic to pay the costs. 1 – Original language: Spanish. 2 – Act II, Scene VII. 3 – Case C‑112/05 [2007] ECR I‑8995 and my Opinion delivered on 13 February 2007. 4 – Van Bekkum, J., Kloosterman, J. and Winter, J., ‘Golden Shares and European Company Law: the Implications of Volkswagen’, European Company Law, Volume 5/1, February 2008, p. 8. 5 – Council directive of 24 June 1988 for the implementation of Article 67 of the Treaty (OJ 1988 L 178, p. 5). 6 – Point I.2 of Annex I. 7 – Point III.A.1 of Annex I. 8 – Law No 350 of 24 December 2003 (GURI No 299 of 27 December 2003). 9 – GURI No 126 of 1 June 1994. 10 – GURI No 177 of 30 July 1994. 11 – GURI No 139 of 16 June 2004. 12 – Case C‑58/99 [2000] ECR I‑3811. 13 – Specifically, at points 4 and 14 of the defence, a contrario sensu, and points 2, 4 and 43 of the rejoinder, in fine. 14 – Point 3 et seq. of that pleading. 15 – Point 5 of the reply. 16 – See, for example, Case 76/86 Commission v Germany [1989] ECR 1021, paragraph 8; Case C‑96/95 Commission v Germany [1997] ECR I‑1653, paragraph 22; Case C‑206/96 Commission v Luxembourg [1998] ECR I‑3401, paragraph 13; and Case C‑350/02 Commission v Netherlands [2004] ECR I‑6213, paragraphs 19 and 20. 17 – Letter from the Commission to the Permanent Representation of the Republic of Italy dated 6 February 2003. 18 – Letter of the Commission to the Representation dated 18 October 2005. 19 – Penultimate paragraph on page 7 of the letter of formal notice and last paragraph on page 6 of the reasoned opinion. 20 – Case C‑279/94 Commission v Italy [1997] ECR I‑4743, paragraph 25. 21 – Case C‑367/98 Commission v Portugal [2002] ECR I‑4731, Case C‑483/99 Commission v France [2002] ECR I‑4781 and Case C‑503/99 Commission v Belgium [2002] ECR I‑4809, the Opinion in which was delivered on 3 July 2001. 22 – Case C‑463/00 Commission v Spain [2003] ECR I‑4581 and Case C‑98/01 Commission v United Kingdom [2003] ECR I‑4641, the Opinion in which was delivered on 6 February 2003. 23 – See also my Opinion in Case C-112/05 Commission v Germany, point 47 et seq. 24 – See, for example, Case C‑463/00 Commission v Spain, paragraph 66, and Joined Cases C‑463/04 and C‑464/04 Federconsumatori and Others [2007] ECR I‑10419, paragraph 41. 25 – Case C‑463/00 Commission v Spain, paragraph 67; Commission v France, paragraph 44; and Commission v Belgium, paragraph 44. 26 – Opinion in Commission v Portugal, Commission v France and Commission v Belgium, point 67, and in Case C‑463/00 Commission v Spain and Commission v United Kingdom, point 37. 27 – Schwarze, J., European Administrative Law, Sweet & Maxwell, 1st revised edition, London, 2006, p. 679. 28 – Opinion in Case C‑463/00 Commission v Spain and Commission v United Kingdom, point 37. 29 – Opinion in Case C‑463/00 Commission v Spain and Commission v United Kingdom, point 36; see also my Opinion in Case C-112/05 Commission v Germany, points 58 and 59. 30 – Velasco San Pedro, L.A. and Sánchez Felipe, J.M., ‘La libertad de establecimiento de las sociedades en la UE. El Estado de la cuestión después de la SE’, Revista de derecho de sociedades, No 19, 2002-2, p. 31. 31 – Commission v Portugal and Commission v France, paragraph 56. See also Commission v Netherlands, paragraph 43. 32 – Opinion in Case C‑463/00 Commission v Spain and Commission v United Kingdom, point 36. 33 – See, for example, the recent judgment of 17 July 2008 in Case C‑207/07 Commission v Spain, paragraph 31. 34 – The Commission asserts, and this has not been disputed by the Italian Government, that a clause concerning special powers has been inserted into the statutes of ENI SpA (energy and petrochemicals), Telecom Italia (telecommunications), Enel SpA (electricity) and Finameccanica SpA (defence). 35 – Directive of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in electricity and repealing Directive 96/92/EC – Statements made with regard to decommissioning and waste management activities (OJ 2003 L 176, p. 37). 36 – Directive of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in natural gas and repealing Directive 98/30/EC (OJ 2003 L 176, p. 57). 37 – Directive of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (Framework Directive) (OJ 2002 L 108, p. 33), which the Commission refers to in conjunction with Directive 2002/22/EC of the European Parliament and of the Council of 7 March 2002 on universal service and users' rights relating to electronic communications networks and services (Universal Service Directive) (OJ 2002 L 108, p. 51). 38 – Subparagraphs (a) to (e) of Article 2(1) of the contested Decree. 39 – Tridimas, T., The General Principles of EU Law, 2nd edition, Oxford University Press, Oxford, 2006, p. 193; Galetta, D.‑U., Principio di proporzionalità e sindacato giurisdizionale nel diritto amministrativo, Giuffrè, Milan, 1998, p. 103 et seq. 40 – In both cases, the Minister for Economic Affairs and Finance has the authority to reduce this percentage by decree. 41 – Cited in footnote 5. 42 – Case C‑222/97 Trummer and Mayer [1999] ECR I‑1661, paragraph 21; Commission v France, paragraphs 36 and 37; and Commission v United Kingdom, paragraphs 39 and 40. 43 – Commission v France, paragraph 41; Case C‑174/04 Commission v Italy [2005] ECR I‑4933, paragraphs 30 and 31; and Case C‑265/04 Bouanich [2006] ECR I‑923, paragraphs 34 and 35. 44 – My starting point is the commonly accepted idea that proportionality comprises two tests: that the provision in question must be appropriate to the objective pursued and that the provision must be necessary, which in Community law is usually referred to as ‘the least restrictive measure test’; in this regard, see Sarmiento Ramírez-Escudero, D., El control de proporcionalidad de la actividad administrativa, Tirant lo Blanch, Valencia, 2004, p. 641 et seq. 45 – It is surprising to have to make this comment when, in Italian law, the principle of proportionality is generally associated with rationality, according to Fromont, M., Droit administratif des États européens, Presses Universitaires de France (Thémis droit), Paris, 2006, p. 294. 46 – Article 3(2), relating to recital 27 in the preamble to the gas Directive and Article 3, in conjunction with recital 26 in the preamble to the electricity Directive; in addition, Directive 2002/22 concerns universal service and the obligations which that entails, which constitutes only one sector of the public services. See also Pießkalla, M., Golden Aktien aus EG‑rechtlicher Sicht – Eine Untersuchung staatlicher und privater Sonderrechte in Wirtschaftsgesellschaften unter besonderer Berücksichtigung der Kapitalverkehrsfreiheit, Dr. Kovac, Hamburg, 2006, p. 202. 47 – Point 2 of the Protocol on the application of the principles of subsidiarity and proportionality, annexed to the EC Treaty by virtue of the Treaty of Amsterdam. 48 – Case 36/75 Rutili [1975] ECR 1219, paragraphs 26 and 27. 49 – Case C‑54/99 Église de scientologie and Scientology International [2000] ECR I‑1335, paragraphs 19 and 23. 50 – Commission v France, paragraphs 50 and 52, and Case C‑463/00 Commission v Spain, paragraph 74. 51 – Case C‑196/04 Cadbury Schweppes and Cadbury Schweppes Overseas [2006] ECR I‑7995, paragraphs 31 to 33; Case C‑452/04 Fidium Finanz [2006] ECR I‑9521, paragraphs 34 and 44 to 49; Case C‑374/04 Test Claimants in Class IV of the ACT Group Litigation [2006] ECR I‑11673, paragraphs 37 and 38; and Case C-207/07 Commission v Spain, paragraph 35. 52 – Case C‑251/98 Baars [2000] ECR I‑2787, paragraph 22; Case C‑436/00 X and Y [2002] ECR I‑10829, paragraph 37; and Cadbury Schweppes and Cadbury Schweppes Overseas, paragraph 31. 53 – Article 59(1) of Council Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for a European company (SE) (OJ 2001 L 294, p. 1); Article 39(1) of the third amendment to the proposal for a fifth Council directive based on Article 54 of the EEC Treaty concerning the structure of public limited companies and the power and obligations of their organs (COM(1991) 372 final); by way of example of Member State legislation, see also Articles 153 and 239 of French Law No 66‑537 of 24 July 1966 on companies; Paragraphs 179 (II), 182 (I), 193 (I) and 262 (I), No 2, inter alia, of the German Law on limited companies (Aktiengesetz) of 6 September 1965 (BGBl. I, p. 1089); Articles 2364 and 2368 to 2369 bis of the Italian Civil Code and Article 144(1) and Article 260(1)(1) of the consolidated version of the Spanish Law on limited companies, approved by Legislative Royal Decree 1564/1989 of 22 December 1989. 54 – Basically, the following legislation, which I cite by number and reference to the Official Journal, omitting the full name so as not to overburden this footnote: Directive 68/151/EEC (OJ, English Special Edition 1968 (I), p. 41); Directive 77/91/EEC (OJ 1977 L 26, p. 1); Directive 78/855/EEC (OJ 1978 L 295, p. 36); Directive 78/660/EEC (OJ 1978 L 222, p. 11); Directive 82/891/EEC (OJ 1982 L 378, p. 47); Directive 83/349/EEC (OJ 1983 L 193, p. 1); Directive 84/253/EEC (OJ 1984 L 126, p. 20); Directive 89/666/EEC (OJ 1989 L 395 p. 36); Directive 89/667/EEC (OJ 1989 L 395, p. 40); Directive 2004/25/EC (OJ 2004 L 142, p. 12); Directive 2005/56/EC (OJ 2005 L 310, p. 1); Directive 2007/36/EC (OJ 2007 L 184, p. 17); and Directive 2007/63/EC (OJ 2007 L 300, p. 47). 55 – Point 26 et seq. of the defence to the action for failure to fulfil obligations. 56 – Goldschmidt, P.N., ‘Editorial – Golden Shares’, Cahiers de droit européen, 2007, No 3/4, p. 297. In favour of reciprocity, however, see Weiss, M., ‘Staatlicher Schutz vor Investitionen nach dem Urteil zum VW‑Gesetz’, EWS, 2008, No 1/2, p. 20.