Commission v Spain (E.On, Endesa, Acciona, Enel)

The ECJ handed down its judgement on the “national champions” case C-207/07, Commission v Spain. Unfortunately for people who do not read French and Spanish, there is only a press release. (Since I only do speak three languages and none of them is any of the two, I have to rely on the press release.)

Probably everybody heard about the ongoing struggel of national governments to shelter national champions from foreign takover. This is true for founding MSs (the present case, BSCH/Champalimaud; Holderbank/Secil/Cimpor; E-On/Endesa – Acciona/Enel Endesa; Autostrade/Abertis; Italian Banks, Pepsi/Danone; Suez/GdF; Mittal/Arcelor; Sacyr/Eiffage) and new MSs also (Unicredito/BHV, lex MOL).

This process led the Competition Commissioner to harshly criticise national governments (e.g. here and here) and even argued joining the suggestions that the 2/3 rule should be abolished from the Merger Regulation (see e.g. Scott Andrew: National Champions and the Two-Thirds Rule in EC Merger Control. in CCP Working Paper. 2006/6.)

One of the important judgements in this relation is the judgement of today. The ECJ explained in its press release: “First, the Court considers that Spain’s new system of prior authorisation limits both these fundamental freedoms. The system constitutes a restriction on the free movement of capital inasmuch as it is capable of deterring investors established in other Member States other than Spain from acquiring shareholdings in Spanish undertakings operating in the energy sector and is therefore liable to prevent or limit the acquisition of shareholdings in those undertakings. Furthermore, this new system entails a restriction on the freedom of establishment.” The usual justifications might be available, but in the present case public safety could not be relied on: “the Court states that public safety may be relied on only if there is a genuine and sufficiently serious threat to a fundamental interest of society. In principle, the mere acquisition of shareholdings in undertakings which carry on regulated activities in the energy sector and the acquisition of assets necessary to carry on those activities cannot in themselves be regarded as a genuine and sufficiently serious threat to security of energy supply. On the other hand, the system of prior authorisation which has been established cannot ensure security of energy supply in every case if a genuine and sufficiently serious threat to that supply arises after authorisation of the transaction in question has been granted. The Court therefore concludes that Spain has not shown that the system of prior authorisation which has been established is a measure that is suitable for securing the attainment of the objective sought by the Spanish legislature, that is, security of energy supply.”

The system was moreover not proportionate for several reasons.

It will be interesting to read the judgement itself. It seems like that not only the European Commission dislikes protectionist measures but the ECJ gave also a signal for the Commission to go on. This is especially interesting in the dawn for unbundling measures, where the competences of the Community are called into question by several academics. (e.g. STEFAN STORR, ‘Die Vörschläge der EU-Kommission zur Verschärfung der Unbundling-Vorschriften im Energiesektor‘, (2007) 10 Europäische Zeitschrift für Wirtschaftsrecht; or JÜRGEN F. BAUR, et al., ‘”Ownership Unbundling” von Energienetzen und der europäische Schutz des Eigentums’, (2008) 123 Deutsches Verwaltungsblatt; or JENS EBBINGHAUS, ‘Auf dem Weg zum echten Energiebinnenmarkt: Konsens im Ziel, Dissens über die Methoden – Zur Fachtagung des Instituts für Berg- und Energierecht der Ruhr-Universität Bochum am 21. 2. 2008’, (2008) 11 Europäische Zeitschrift für Wirtschaftsrecht.)


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