Commission of the European Communities v Kingdom of the Netherlands.
Date: 2006-09-28
18. According to consistent case-law, Article 56(1) EC generally prohibits restrictions on movements of capital between Member States (see, to that effect, Case C‑483/99 Commission  v France  [2002] ECR I-4781, paragraphs 35 and 40, and Case C‑98/01 Commission  v United Kingdom  [2003] ECR I-4641, paragraphs 38 and 43).
19. In the absence of a definition in the EC Treaty of ‘movements of capital’ for the purposes of Article 56(1) EC, the Court has recognised the nomenclature annexed to Council Directive 88/361/EEC of 24 June 1988 for the implementation of Article 67 of the Treaty (an article repealed by the Treaty of Amsterdam) (JO 1988 L 178, p. 5) as having indicative value. Movements of capital for the purposes of Article 56(1) EC thus include in particular direct 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 (‘direct’ investments) and 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 (‘portfolio’ investments) (see, to that effect, 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).
20. 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 likely to prevent or limit the acquisition of shares in the undertakings concerned or to deter investors of other Member States from investing in their capital (see to that effect, in particular, 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).
27. Similarly, the special shares at issue may have a deterrent effect on portfolio investments in KPN and TPG. A possible refusal by the Netherlands State to approve an important decision, proposed by the organs of the company concerned as being in the company’s interests, would be capable of depressing the (stock market) value of the shares of that company and thus reduces the attractiveness of an investment in such shares.
30. The possibility cannot be excluded that, in certain particular circumstances, the Netherlands State might exercise its special rights in order to defend general interests, which might be contrary to the economic interests of the company concerned. The special shares at issue thus entail the real risk that decisions recommended by the organs of those companies as being in the economic interests of the latter may be blocked by that State.
32. The free movement of capital may, however, be restricted by national measures justified on the grounds set out in Article 58 EC or by overriding reasons in the general interest (see, to that effect, Case C-319/02 Manninen  [2004] ECR I-7477, paragraph 29), to the extent that there are no Community harmonising measures providing for measures necessary to ensure the protection of those interests (see, to that effect, in the context of the freedom to provide services, Case C‑255/04 Commission  v France  [2006] ECR I-0000, paragraph 43, and case-law cited).
33. In the absence of such Community harmonisation, it is in principle for the Member States to decide on the degree of protection which they wish to afford to such legitimate interests and on the way in which that protection is to be achieved. They may do so, however, only within the limits set by the Treaty and must, in particular, observe the principle of proportionality, which requires that the measures adopted be appropriate to secure the attainment of the objective which they pursue and not go beyond what is necessary in order to attain it (see, to that effect, Case C‑503/99 Commission  v Belgium  [2002] ECR I-4809, paragraph 45).
38. In that regard, the Court acknowledges that the guarantee of a service of general interest, such as universal postal service, may constitute an overriding reason in the general interest capable of justifying an obstacle to the free movement of capital (see, by analogy, Joined Cases C‑388/00 and C‑429/00 Radiosistemi  [2002] ECR I-5845, paragraph 44).
42. The Commission also requests that the Kingdom of the Netherlands be held in breach of its obligations under Article 43 EC, on freedom of establishment, on the ground that the special shares at issue not only hinder direct and portfolio investments in KPN or TPG, but are also likely to hinder the taking of controlling holdings in those two companies, that is to say investments which confer a definite influence over the management and control of those companies (see, to that effect, Case C‑208/00 Überseering  [2002] ECR I-9919, paragraph 77 and case-law cited).
43. As the Advocate General has pointed out in paragraph 41 of his Opinion, in so far as the special shares at issue entail 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 an infringement 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 establishment (see, in particular, Case C-463/00 Commission  v Spain  [2003] ECR I-4581, paragraph 86).