WRITTEN QUESTION P-1615/01

by W.G. van Velzen (PPE-DE) to the Commission

(28 May 2001)

Subject: Governments should have the right to stop state-owned foreign companies from taking over their privatised companies

Does this statement of the point of view of a Commissioner also accurately reflect the point of view of the Commission with regard to the renationalisation of privatised firms by foreign raiders?

Does the Commission take the view that the takeover of a previously privatised public utility by a public utility from another EU country and which is still in part controlled by the government of the EU Member State involved (whether by means of a golden share or share ownership or another form of part-ownership) must be prohibited? If so, on which legal provision of the Treaty of Amsterdam does the Commission base its opinion?

If the Commission does not share this view, what possibilities does it have to reprimand a Member State which has unjustly refused a transfrontier alliance or merger on the basis of those arguments? Is the Commission prepared to take definite action against a Member State which has acted in that way?

Answer given by Mr Bolkestein on behalf of the Commission

(5 November 2001)

1. The appropriate Community law framework for dealing with acquisitions of holdings, notably in privatised companies, by companies from other Member States was outlined by the Commission in its 1997 Communication on certain legal aspects concerning intra-EU investment(1).

2. The specific issue of the acquisition of shareholdings in privatised companies by companies from other Member States which are wholly or partly owned by the State was raised against the background of the ongoing process of liberalisation and, in particular, the asymmetrical opening up of Community energy markets.

On 20 June 2001 the Commission held a discussion on the subject which confirmed the principles spelt out in the 1997 communication and clarified a number of aspects.

3. The principle that direct investments should benefit from the free movement of capital and freedom of establishment was reiterated.

Since these are two fundamental freedoms laid down in the EC Treaty, the only admissible derogations are those explicitly and exhaustively defined in the Treaty and those resulting from Court of Justice case law, i.e. derogations on the grounds of overriding reasons of general interest, provided that the measures taken comply with the principles of non-discrimination and proportionality. In this context, the Commission confirmed the position it had taken when examining a specific case in which, in the very first stage of a privatisation, when the State still retained control of the company, a temporary limitation on shareholdings by public enterprises, in accordance with clearly defined economic policy objectives and under conditions that were precise, objective, non-discriminatory and determined in advance, was found to be in conformity with the Treaty.

The Commission concluded that it would continue to be guided by the 1997 Communication when examining the obstacles (and particularly special rights) introduced by Member States that hindered the free movement of capital and freedom of establishment, subject to forthcoming judgments by the Court of Justice in cases pending in this field. In its institutional role, the Commission will continue to exercise the powers conferred on it by the Treaty as the guardian of Community law.

4. During the same discussion, however, after noting that the free movement of capital and freedom of establishment are directly applicable fundamental freedoms enshrined in the Treaty, the Commission observed that in most Member States the opening up of energy markets had progressed more quickly than stipulated in the directives, possibly giving rise to some distortions in competition between firms.

The Commission took the view that this situation called for the rules on competition and on state aid (including for the nuclear energy sector) to be applied strictly, for the second liberalisation package to be adopted more quickly by the Council and Parliament and, if there were a delay in adopting this package, for Article 86 particularly paragraph 3 to be applied and directives or decisions addressed to the Member States with a view to removing any distortions in competition, while maintaining obligations to provide services of general economic interest, and for a swift solution to be found to the problems associated with charging in intra-Community trade and with the development of infrastructures that hindered the effective opening of markets.

However, such distortions warrant neither the application of a principle of reciprocity nor the use of retaliatory measures between Member States, these being concepts that are alien to the Treaty and, in particular, to the principles of the single market. Indeed, it was pointed out that liberalisation does not give rise to any privatisation obligation. Although liberalisation is going ahead on the initiative of the Commission, particularly through harmonisation, the Member States remain free to decide whether or not to privatise their firms. Once the decision has been made, the rules of the Treaty still apply.

(1) OJ C 220, 19.7.1997.