European Commission v Hellenic Republic.
Date: 2012-11-08
15. As regards, firstly, the Hellenic Republic’s argument regarding Article 295 EC, which states that ‘[the] Treaty shall in no way prejudice the rules in Member States governing the system of property ownership’, it should be recalled that the Court has already held that that article does not have the effect of exempting the Member States’ systems of property ownership from the fundamental rules of the Treaty (Case C‑503/04 Commission v Germany  [2007] ECR I‑6153, paragraph 37).
16. In particular, the Court has held that, although Article 295 EC does not call into question the Member States’ right to establish a system for the acquisition of immovable property, such a system remains subject to the fundamental rules of EU law, including those of non-discrimination, freedom of establishment and free movement of capital (Case C‑452/01 Ospelt and Schlössle Weissenberg  [2003] ECR I‑9743, paragraph 24 and the case‑law cited).
17. It follows, as regards Article 11 of Law 3631/2008, which, as the Hellenic Republic stated, is part of the national legislation on the privatisation of certain strategic public limited companies controlled by that Member State, that, although Article 295 EC does not call into question the power of a Member State to establish such a privatisation scheme, that scheme must observe the fundamental rules of the Treaty, which include, in particular, the fundamental freedoms referred to in the present case.
21. As regards, in the first place, the prior authorisation scheme at issue, it must be borne in mind that, according to settled case‑law, the national of a Member State with a holding in the capital of a company established in another Member State, allowing him to exert a definite influence on that company’s decisions and to determine its activities, is exercising his right of establishment (see, inter alia, Case C‑212/09 Commission v Portugal  [2011] ECR I‑10889, paragraph 42 and the case‑law cited).
22. The Court has also held that 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 (see, inter alia, Commission  v Portugal , paragraph 44).
29. The Court has already held that such a restriction exists if a prior authorisation scheme has the effect of preventing or restricting the exercise of voting rights attached to shares held since these constitute one of the principal means for the shareholder to participate actively in the management of an undertaking or in its control (see, to that effect, as regards the rules on the free movement of capital, judgment of 14 February 2008 in Case C‑274/06 Commission  v Spain , paragraphs 21 to 24).
30. In the second place, as regards the arrangements for ex post  control, the Court has already held that such a scheme must be assessed only under Article 43 EC since it relates to decisions within the scope of the management of the company and therefore concerns only those shareholders capable of exerting a definite influence on it. Moreover, even if the effects of such a scheme are restrictive of the free movement of capital, those effects would be the unavoidable consequence of any restriction on freedom of establishment and would not warra nt independent examination in the light of Article 56 EC (Case C‑326/07 Commission  v Italy  [2009] ECR I‑2291, paragraph 39).
33. According to the Commission, although the first objective may be invoked to justify a restriction on the freedom of establishment, it follows from the case‑law that requirements of public policy and public security must be interpreted strictly and 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). However, it submits, the Hellenic Republic does not explain why a holding of 20% of the capital of those undertakings could adversely affect a fundamental interest of society.
35. As for the second objective, the Commission points out that, in order for a prior authorisation scheme, such as that at issue, which derogates from a fundamental freedom, to be justified, it must be based on objective non‑discriminatory criteria known in advance to the undertakings concerned, in such a way as to circumscribe the exercise of the authorities’ discretion so that it is not used arbitrarily. Furthermore, all persons affected by a restrictive measure based on such a derogation must have a legal remedy available to them (see, inter alia, Case C‑205/99 Analir and Others  [2001] ECR I‑1271, paragraph 38, and Case C‑463/00 Commission  v Spain  [2003] ECR I‑4581, paragraph 69).
37. Finally, as regards the third objective which the national measure at issue pursues, this is, according to the Commission, economic in nature and cannot, in accordance with settled case‑law, serve as justification for obstacles to fundamental freedoms (see, inter alia, Case C‑367/98 Commission  v Portugal  [2002] ECR I‑4731, paragraph 52).
39. Accordingly, the measures at issue are intended to preserve the general interest, in particular public policy, public security and public health, grounds which, in accordance with the Treaty and settled case‑law, may justify restrictions on fundamental freedoms, as the Court has, inter alia, held in the context of the security of supply in the petroleum, telecommunications and energy sectors (see, inter alia, Case C‑326/07 Commission  v Italy , paragraph 69 and the case‑law cited).
45. As regards, first, the prior authorisation scheme at issue, the Commission points out that the Court has held, in respect of a prior authorisation scheme for the acquisition of holdings or assets, that the scheme at issue did not make it possible to ensure in all cases that the security of energy supply would be guaranteed if a real and sufficiently serious threat to that supply were to arise after the authorisation for the operation concerned had been delivered (judgment of 17 July 2008 in Case C‑207/07 Commission  v Spain , paragraph 52) and also that the sole supervision of the public entity at the time when it takes control of an undertaking does not make it possible to ensure that, once the voting rights linked to the shares held by that entity are recognised, it will use them in an appropriate way to guarantee the security of energy supply (judgment in Case C‑274/06 Commission v Spain, paragraph 45).
48. Moreover, the legislative framework adopted at EU level in certain sectors such as those of energy and telecommunications leaves the Member States broad discretion to adopt, in compliance with the Treaty and, in particular, the principle of proportionality, provisions on public service obligations imposed on undertakings which are less restrictive of the fundamental freedoms (see, to that effect, judgment in Case C‑207/07 Commission v Spain , paragraphs 43 to 45).
53. The Hellenic Republic claims that, in the cases relied upon by the Commission, either the investors concerned were given no indication of the specific objective circumstances in which prior authorisation would be granted or withheld (judgment in Case C‑463/00 Commission  v Spain , paragraph 74), or no criteria existed which were as specific as those provided for by Law 3631/2008 (judgment in Case C‑274/06 Commission  v Spain , paragraph 52).
62. As regards the criteria concerning the exercise of the right to object and judicial review of an opposition decision, the Hellenic Republic points out that the public security clause and its various elements, despite their flexible nature, may be controlled, and are in fact controlled, by the courts, both at the national and EU level, as clauses derogating from the fundamental freedoms of movement enshrined in the Treaties (see, to that effect, inter alia, Case 30/77 Bouchereau  [1977] ECR 1999, paragraphs 33 to 35, and Case 72/83 Campus Oil and Others  [1984] ECR 2727, paragraph 34).
65. In that respect, it must be borne in mind that, in the case of undertakings carrying out activities and supplying public services in the petroleum, telecommunications and energy sectors, the Court has held that the objective of guaranteeing the security of supply of such products or the supply of such services in the event of a crisis, on the territory of the Member State at issue, may constitute a public security reason and, therefore, possibly justify an obstacle to the free movement of capital (judgment in Case C‑463/00 Commission v Spain , paragraph 71).
66. Moreover, the Court has already held that the pursuit of general interests which concern public policy, public security and public health may possibly justify certain restrictions on the fundamental freedoms (Case C‑326/07 Commission v Italy , paragraph 45 and the case‑law cited).
67. However, as regards an objective linked to the security of supply of energy, the Court has pointed out that this can be relied on only if there is a genuine and sufficiently serious threat to a fundamental interest of society (judgment in Case C‑207/07 Commission v Spain , paragraph 47).
69. The Court has held that the mere acquisition of a holding of more than 10% of the capital of a company operating in the energy sector or any other acquisition conferring significant influence on such a company cannot, as a general rule, be regarded as a real and serious enough threat to security of supply (Case C‑326/07 Commission v Italy , paragraph 48 and the case‑law cited).
71. Moreover, at the time of issuing the authorisation, it is not certain that all the cases of real and serious threats to the security of energy supply may be identified and taken into account (judgment in Case C‑207/07 Commission v Spain , paragraph 53).
74. In an analogous context to that of the present case, the Court has held that, if the national legislation at issue defines those criteria non-exhaustively, it follows that that leaves the authorities broad discretion which is difficult for the courts to control (judgment in Case C‑274/06 Commission v Spain , paragraph 52).
75. The uncertainty surrounding the circumstances in which those powers may be exercised gives them a discretionary nature, having regard to the latitude enjoyed by the national authorities in making use of them. Such latitude is disproportionate in relation to the objectives pursued (Case C‑326/07 Commission v Italy , paragraph 52).
76. In the present case, the criteria applicable to the exercise of the power by the authorities whether or not to approve an application to acquire shares in the public limited companies at issue, while listed in Article 11(2) of Law 3631/2008, are expressly ‘for indicative purposes’.
77. Neither the general reference in Article 11(2) of Law 3631/2008 to ‘general interest criteria for ensuring the continuity of the services provided and the operation of the networks’ nor the nine evaluation criteria which are listed merely by way of example, which in essence concern the choice of a strategic partner offering the best guarantees to sustainably ensure the continuity of service and networks, make it possible to determine the specific objective circumstances in which the power to oppose the acquisition of holdings is capable of being exercised.
81. The Court has held that it results from paragraphs 49 to 52 of the judgment in Case C‑503/99 Commission  v Belgium that the national scheme at issue was characterised by the fact that it specifically listed the strategic assets concerned and the management decisions which could be challenged in any given case. Finally, the intervention by the administrative authorities was strictly limited to cases in which the objectives of the energy policy were jeopardised. Any decision taken in that context had to be supported by a formal statement of reasons and was subject to an effective review by the courts (judgment in Case C‑463/00 Commission  v Spain , paragraph 78).
83. First, as for the decisions listed in Article 11(3)(a) and (b) of Law 3631/2008, the Court has already held that such decisions do not constitute, contrary to the decisions which formed the background to Case C‑503/99 Commission  v Belgium  (paragraph 50), specific management decisions but decisions fundamental to the life of an undertaking (judgment in Case C‑463/00 Commission v Spain , paragraph 79).
86. Accordingly, as the Commission maintains, the circumstances in which the right to object may be exercised are potentially numerous, undetermined and indeterminable and leave the national authorities too much discretion.