ECJ rulings give mixed message on golden shares

Three judgments by the European Court of Justice (ECJ) on 4 June ruled both for and against the use of golden shares by EU member states.
In separate judgments, the ECJ struck down rules that let the French and Portuguese governments hold golden shares in former state-owned enterprises, but backed rules that allow the Belgium government's golden shares in two major gas companies.
Belgium argued that it needed to keep its golden shares in the companies to maintain minimum gas supply in the event of a serious threat or emergency. The ruling said that the measures used to achieve that objective are compatible with the principles of EU community law.
In the case of Portugal, the court found that the government's legislation amounted to discriminatory treatment of investors from other member states, therefore restricting the free movement of capital.
France, like Belgium, argued that it wanted to keep such shares to guarantee minimum supplies of petroleum in times of crisis. But the court found that the French government's measures went beyond what was necessary to obtain that objective.
“In the Belgium case, golden shares are effectively a system of information – the Belgian government should be informed of all issues in relation to the companies,” says Marc Picat, the Landwell lawyer acting on behalf of the Belgian government. “However, in France it is [a system of] authorisation, which means the French government, with its shares, had the power of veto. They could use their shares to block decisions.”
As well as opening the way for more cross-border M&A transactions, the rulings sound a warning to member states in regard to their golden shares policies.
“[The rulings] might slow down the next French privatisation while the gov-ernment considers the implications of the judgments,” said Stephanie Bates, corporate partner at Mayer Brown Rowe & Maw. “French media ownership, for example, might come under scrutiny.”
“Some governments should be very concerned,” agreed Picat. “They'll need to look very closely at their policies, otherwise the [European] Commission will be on to them.”