European Commission v Portuguese Republic.
Date: 2011-11-10
26. It must be recalled, first of all, that in accordance with settled case-law, the subject-matter of an action under Article 258 TFEU for failure to fulfil obligations is determined by the Commission’s reasoned opinion, with the result that the action must be based on the same grounds and pleas as that opinion (see Case C‑33/04 Commission  v Luxembourg  [2005] ECR I‑10629, paragraph 36; Case C‑236/05 Commission  v United Kingdom  [2006] ECR I‑10819, paragraph 10; and Case C‑171/08 Commission  v Portugal  [2010] ECR I‑0000, paragraph 25).
27. However, that requirement cannot be stretched so far as to mean that in every case the statement of objections expressly set out in the reasoned opinion and the form of order sought in the application must be exactly the same, provided that the subject-matter of the proceedings as defined in the reasoned opinion has not been extended or altered (see Case C‑433/03 Commission  v Germany  [2005] ECR I‑6985, paragraph 28; Case C‑236/05 Commission  v United Kingdom , paragraph 11; Case C‑171/08 Commission  v Portugal , paragraph 26; and Case C-458/08 Commission  v Portugal  [2010] ECR I‑0000, paragraph 44).
31. Therefore, the fact that the Commission set out in detail the complaints that it had already made in more general terms in the reasoned opinion did not alter the subject-matter of the alleged infringement, and thus had no effect on the scope of the proceedings (see, to that effect, Case C‑185/00 Commission  v Finland  [2003] ECR I‑14189, paragraphs 84 to 87; Case C-171/08 Commission  v Portugal , paragraph 29; and Case C‑543/08 Commission  v Portugal  [2010] ECR I‑0000, paragraph 23).
41. As regards the question whether national legislation falls within the scope of one or other of the fundamental freedoms, it is clear from well-established case-law that the purpose of the legislation concerned must be taken into consideration (see, inter alia, Case C‑157/05 Holböck  [2007] ECR I‑4051, paragraph 22; Case C‑326/07 Commission  v Italy , paragraph 33; and Case C-543/08 Commission  v Portugal , paragraph 40).
42. Provisions of national law which apply to the possession by nationals of one Member State of holdings in the capital of a company established in another Member State, allowing them to exert a definite influence on that company’s decisions and to determine its activities, fall within the scope ratione materiae  of Article 43 EC on freedom of establishment (see, inter alia, Case C‑251/98 Baars  [2000] ECR I‑2787, paragraph 22; Case C‑326/07 Commission  v Italy , paragraph 34; and Case C-543/08 Commission  v Portugal , paragraph 41).
43. Direct investments, that is to say, investments of any kind made by natural or legal persons which serve to establish or maintain lasting and direct links between the persons providing the capital and the company to which that capital is made available in order to carry out an economic activity, fall within the scope of Article 56 EC on the free movement of capital. That object presupposes that the shares held by the shareholder enable the latter to participate effectively in the management or control of that company (see, inter alia, Case C‑112/05 Commission  v Germany  [2007] ECR I‑8995, paragraph 18 and the case-law cited; Case C‑326/07 Commission  v Italy , paragraph 35; and Case C-543/08 Commission  v Portugal , paragraph 42).
44. National legislation not intended to apply only to those shareholdings which enable the holder to exert a definite influence on a company’s decisions and to determine its activities but which applies irrespective of the size of the holding which the shareholder has in a company may fall within the scope of both Article 43 EC and Article 56 EC (Case C‑326/07 Commission  v Italy , paragraph 36, and Case C-543/08 Commission  v Portugal , paragraph 43).
46. It should be noted at the outset that, according to consistent case‑law, Article 56(1) EC generally prohibits restrictions on movements of capital between Member States (see, inter alia, Joined Cases C‑282/04 and C‑283/04 Commission  v Netherlands  [2006] ECR I‑9141, paragraph 18 and the case-law cited; Case C‑112/05 Commission  v Germany , paragraph 17; Case C‑171/08 Commission  v Portugal , paragraph 48; and Case C‑543/08 Commission  v Portugal , paragraph 45).
47. In the absence of an EC-Treaty definition of ‘movements of capital’ within the meaning of Article 56(1) EC, the Court has acknowledged the indicative value of the nomenclature of movements of capital set out in Annex I to Council Directive 88/361/EEC of 24 June 1988 for the implementation of Article [67] of the Treaty (article repealed by the Treaty of Amsterdam) (OJ 1988 L 178, p. 5). Thus, the Court has held that movements of capital within the meaning of Article 56(1) EC include, in particular, ‘direct’ investments, that is to say, investments in the form of participation in an undertaking through the holding of shares which confers the possibility of effectively participating in its management and control, and ‘portfolio’ investments, that is to say, investments in the form of the acquisition of shares on the capital market solely with the intention of making a financial investment without any intention to influence the management and control of the undertaking (see Joined Cases C‑282/04 and C‑283/04 Commission  v Netherlands , paragraph 19 and the case-law cited; Case C‑112/05 Commission  v Germany , paragraph 18; Case C‑171/08 Commission  v Portugal , paragraph 49; and Case C‑543/08 Commission  v Portugal , paragraph 46).
48. Concerning those two forms of investment, the Court has stated that national measures must be regarded as ‘restrictions’ within the meaning of Article 56(1) EC if they are liable to prevent or limit the acquisition of shares in the undertakings concerned or to deter investors from other Member States from investing in their capital (see Case C‑543/08 Commission  v Portugal , paragraph 47 and the case-law cited).
53. Moreover, it must also be stated that the creation of the right of the State to appoint the chairman of GALP’s Board of Directors is not the result of a normal application of company law. While the CSC expressly precludes the right to appoint certain directors being attached to certain categories of shares, Decree-Law No 261-A/99 and GALP’s articles of association provide, on the contrary, that approval of the choice of chairman of the Board of Directors is a right inherent in the shares specific to the State. This therefore constitutes a specific right, which derogates from general company law and is laid down by a national legislative measure for the sole benefit of the public authorities (see, to that effect, Case C‑112/05 Commission  v Germany , paragraphs 59 to 61).
57. Consequently, that right of veto, in so far as it confers on the Portuguese State an influence over the management and control of GALP which is not justified by the size of its shareholding in that company, is liable to discourage traders from other Member States from making direct investments in GALP’s share capital since it would not be possible for them to be involved in the management and control of that company in proportion to the value of their shareholdings (see, inter alia, Case C‑112/05 Commission  v Germany , paragraphs 50 to 52; Case C‑171/08 Commission  v Portugal , paragraph 60; and Case C‑543/08 Commission  v Portugal , paragraph 56).
58. Similarly, the right of veto at issue may have a deterrent effect on portfolio investments in GALP’s share capital in so far as a possible refusal by the Portuguese State to approve an important decision, proposed by the organs of that company as being in the company’s interests, is in fact liable to depress the value of the shares of that company and thus reduce the attractiveness of an investment in such shares (see, to that effect, Joined Cases C‑282/04 and C‑283/04 Commission  v Netherlands , paragraph 27; Case C‑171/08 Commission  v Portugal , paragraph 61; and Case C‑543/08 Commission  v Portugal , paragraph 57).
59. As regards the right to appoint the chairman of the Board of Directors, this amounts to a restriction on the free movement of capital since such a specific right constitutes a derogation from general company law and is laid down by a national legislative measure for the sole benefit of the public authorities (see Case C‑112/05 Commission  v Germany , paragraph 61, and Case C‑543/08 Commission  v Portugal , paragraph 62). While it is true that that facility can be conferred by legislation as a right of a qualified minority, it is clear that it must, in such a case, be accessible to all shareholders and must not be reserved exclusively to the State.
64. According to that judgment, the application to products from other Member States of national provisions restricting or prohibiting certain selling arrangements, within the Member State of importation, is not such as to hinder trade between Member States so long as, first, those provisions apply to all relevant traders operating within the national territory and, secondly, they affect in the same manner, in law and in fact, the marketing of domestic products and of those from other Member States. The reason is that the application of such provisions is not such as to prevent access by the latter products to the market of the Member State of importation or to impede such access more than it impedes access by domestic products (Case C‑384/93 Alpine Investments  [1995] ECR I‑1141, paragraph 37).
65. In the present case, while it is true that the national provisions at issue apply without distinction to both residents and non-residents, it must none the less be held that they affect the position of a person acquiring a shareholding as such and are thus liable to deter investors from other Member States from making such investments and, consequently, affect access to the market (see Case C‑463/00 Commission  v Spain [2003] ECR I‑4581, paragraph 61 and the case-law cited; Case C‑171/08 Commission  v Portugal , paragraph 67; and Case C‑543/08 Commission  v Portugal , paragraph 68).
67. It is clear, as has been stated in paragraphs 58 and 61 of the present judgment, that the national provisions at issue, to the extent to which they create instruments liable to limit the ability of investors to participate in the share capital of GALP with a view to establishing or maintaining lasting and direct economic links with it which would make possible effective participation in the management or control of that company, reduce the interest in acquiring a stake in that capital (see, to that effect, Case C‑112/05 Commission  v Germany , paragraph 54, and Case C‑543/08 Commission  v Portugal , paragraph 70).
68. That finding is not affected by the fact that GALP’s shareholders include direct investors. That circumstance is not such as to cast doubt, in the present case, on the fact that, because of the provisions of national law at issue, direct investors from other Member States, whether actual or potential, may have been deterred from acquiring a stake in the capital of that company in order to participate in it with a view to establishing or maintaining lasting and direct economic links with it which would make possible effective participation in the management or control of that company, even though they were entitled to benefit from the principle of the free movement of capital and from the protection which that principle affords them (see, to that effect, Case C‑112/05 Commission  v Germany , paragraph 55, and Case C‑543/08 Commission  v Portugal , paragraph 71).
81. According to well-established case-law, national measures which restrict the free movement of capital may be justified on the grounds set out in Article 58 EC or by overriding reasons in the public interest, provided that they are appropriate to secure the attainment of the objective which they pursue and do not go beyond what is necessary in order to attain it (see Case C‑112/05 Commission  v Germany , paragraphs 72 and 73 and the case-law cited; Case C‑171/08 Commission  v Portugal , paragraph 69; and Case C‑543/08 Commission  v Portugal , paragraph 83).
82. As regards the derogations permitted under Article 58 EC, it cannot be denied that the objective invoked by the Portuguese Republic of safeguarding a secure energy supply in that Member State in case of crisis, war or terrorism may constitute a ground of public security (see judgment of 14 February 2008 in Case C‑274/06 Commission  v Spain , paragraph 38; Case C‑171/08 Commission  v Portugal , paragraph 72; and Case C‑543/08 Commission  v Portugal , paragraph 84) and may possibly justify an obstacle to the free movement of capital. The importance attached by Member States and the European Union to the protection of a secure energy supply can, moreover, be seen, for example, with regard to oil, in Directive 2006/67 and, with regard to the natural gas sector, in Directive 2003/55.
83. However, it is common ground that requirements of public security must, in particular as a derogation from the fundamental principle of the free movement of capital, be interpreted strictly, with the result that their scope cannot be determined unilaterally by each Member State without any control by the institutions of the European Union. Thus, public security may be relied on only if there is a genuine and sufficiently serious threat to a fundamental interest of society (see, inter alia, Case C‑54/99 Église de scientologie  [2000] ECR I‑1335, paragraph 17; Case C‑171/08 Commission  v Portugal , paragraph 73; and Case C‑543/08 Commission  v Portugal , paragraph 85).
87. Even if it is accepted that, pursuant to provisions of European Union secondary legislation, a Member State has an obligation to guarantee the supply of energy within its territory, as is claimed by the Portuguese Republic, compliance with such an obligation cannot be relied on to justify any measure which is contrary in principle to a fundamental freedom (see Case C‑543/08 Commission  v Portugal , paragraph 89).
89. Although Article 15(3) of the LQP states that the creation in the share capital of GALP of golden shares which confer special rights on the Portuguese State is subject to the condition – which, it may be added, is formulated in a rather general and imprecise manner – that grounds of national interest must so require, the fact nevertheless remains that neither that law nor GALP’s articles of association lay down any criteria for determining the specific circumstances in which those special rights may be exercised (see Case C‑326/07 Commission  v Italy , paragraph 51, and Case C‑543/08 Commission v Portugal , paragraph 91). The same finding applies to Article 15(1) of the LQP, in that, under that provision, the State’s appointment of a director is subject to the condition, also formulated in a rather general and imprecise manner, of safeguarding the public interest.
90. Thus, such uncertainty constitutes serious interference with the free movement of capital in that it confers on the national authorities, as regards the use of such rights, a latitude so discretionary in nature that it cannot be regarded as proportionate to the objectives pursued (see, to that effect, Case C‑326/07 Commission  v Italy , paragraph 52, and Case C‑543/08 Commission  v Portugal , point 92).
91. Lastly, as regards the justification based on Article 86(2) EC, it must be stated that that provision, in conjunction with Article 86(1) EC, may be relied on to justify the grant by a Member State to an undertaking entrusted with the operation of services of general economic interest of special or exclusive rights which are contrary to the provisions of the Treaty, to the extent to which performance of the particular task assigned to that undertaking can be assured only through the grant of such rights and provided that the development of trade is not affected to such an extent as would be contrary to the interests of the European Union (Case C‑340/99 TNT Traco  [2001] ECR I‑4109, paragraph 52; Case C‑220/06 Asociación Profesional de Empresas de Reparto y Manipulado de Correspondencia  [2007] ECR I‑12175, paragraph 78; and Case C‑567/07 Woningstichting Sint Servatius  [2009] ECR I‑9021, paragraph 44).
94. In any event, since a Member State must set out in detail the reasons why, in the event of elimination of the contested measures, the performance, under economically acceptable conditions, of the tasks of general economic interest which it has entrusted to an undertaking would, in its view, be jeopardised (Case C‑463/00 Commission  v Spain , paragraph 82), the Portuguese Republic has given no explanation whatsoever as to why that is the case here.
98. With regard to the Commission’s application for a declaration that the Portuguese Republic has failed to fulfil its obligations under Article 43 EC, suffice it to note that, in accordance with settled case‑law, since the national measures at issue involve restrictions on freedom of establishment, such restrictions are a direct consequence of the obstacles to the free movement of capital considered above, to which they are inextricably linked. Consequently, since a breach of Article 56(1) EC has been established, there is no need for a separate examination of the measures at issue in the light of the Treaty rules concerning freedom of esta blishment (see, inter alia, Case C‑463/00 Commission  v Spain , paragraph 86; Joined Cases C‑282/04 and C‑283/04 Commission  v Netherlands , paragraph 43; Case C‑171/08 Commission  v Portugal , paragraph 80; and Case C‑543/08 Commission  v Portugal , paragraph 99).
Costs