Commission of the European Communities v Portuguese Republic.

• Jurisdiction: European Union
• Celex Number: 61998CJ0367
• ECLI: ECLI:EU:C:2002:326
• Date: 04 June 2002
• Docket Number: C-367/98
• Procedure Type: Recurso por incumplimiento – fundado
• Court: Court of Justice (European Union)

Avis juridique important

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61998J0367

Judgment of the Court of 4 June 2002. - Commission of the European Communities v Portuguese Republic. - Failure by a Member State to fulfil its obligations - Articles 52 of the EC Treaty (now, after amendment, Article 43 EC) and 73b of the EC Treaty (now Article 56 EC) - System of administrative authorisation relating to privatised undertakings. - Case C-367/98.

European Court reports 2002 Page I-04731

Summary
Parties
Grounds
Decision on costs
Operative part

Keywords

1. Free movement of capital - Restrictions - Obstacles resulting from a system of administrative authorisation relating to privatised undertakings - Justification - Systems of property ownership - None

(EC Treaty, Art. 222 (now Art. 295 EC))

2. Free movement of capital - Restrictions - National rules prohibiting the acquisition by investors from other Member States of more than a given number of shares and providing for a system of prior authorisation for the acquisition of a holding in certain national undertakings in excess of a specified level - Not permissible - Justification on economic grounds - None

(EC Treaty, Arts 73b and 73d(1) (now Arts 56 EC and 58(1) EC))

Summary

$$1. Depending on the circumstances, certain concerns may justify the retention by Member States of a degree of influence within undertakings that were initially public and subsequently privatised, where those undertakings are active in fields involving the provision of services in the public interest or strategic services. However, those concerns cannot entitle Member States to plead their own systems of property ownership, referred to in Article 222 of the Treaty (now Article 295 EC), by way of justification for obstacles, resulting from a system of administrative authorisation relating to privatised undertakings, to the exercise of the freedoms provided for by the Treaty. That article does not have the effect of exempting the Member States' systems of property ownership from the fundamental rules of the Treaty.

( see paras 47-48 )

2. A Member State which adopts and maintains in force national rules (a) prohibiting the acquisition by investors from other Member States of more than a given number of shares in certain national undertakings and (b) requiring the grant by the State of prior authorisation for the acquisition of a holding in certain national undertakings in excess of a specified level fails to comply with its obligations under Article 73b of the Treaty (now Article 56 EC).

Such rules constitute a restriction on the movement of capital within the meaning of that article which cannot be justified. In that regard, restrictions on the fundamental freedom concerned cannot be justified either by the economic policy objectives reflected in such national rules or by the objectives of choosing a strategic partner, strengthening the competitive structure of the market concerned or modernising and increasing the efficiency of means of production, inasmuch as all those grounds fall outside the ambit of the reasons set out in Article 73d(1) of the Treaty (now Article 58(1) EC).

( see paras 46, 52, operative part 1 )

Parties

In Case C-367/98,

Commission of the European Communities, represented initially by A. Caeiro, and subsequently by F. Benyon and F. de Sousa Fialho, acting as Agents, with an address for service in Luxembourg,

applicant,

v

Portuguese Republic, represented initially by L. Fernandes and L. Bigotte Chorão, and subsequently by L. Fernandes and J. Vasconcelos, acting as Agents, with an address for service in Luxembourg,

defendant,

APPLICATION for a declaration that, by adopting and maintaining in force Law No 11/90 of 5 April 1990, being the framework law on privatisations (Diário da República I, Series A, No 80, of 5 April 1990, p. 1664), in particular Article 13(3) thereof, the decree-laws on the privatisation of undertakings subsequently adopted in application of that Law and also Decree-Laws Nos 380/93 of 15 November 1993 (Diário da República I, Series A, No 267, of 15 November 1993, p. 6362) and 65/94 of 28 February 1994 (Diário da República I, Series A, No 49, of 28 February 1994, p. 993), the Portuguese Republic has failed to comply with its obligations under the EC Treaty, in particular Articles 52 (now, after amendment, Article 43 EC), 56 (now, after amendment, Article 46 EC), 58 (now Article 48 EC), 73b (now Article 56 EC) et seq. and 221 (now, after amendment, Article 294 EC) thereof, and Articles 221 and 231 of the Act concerning the conditions of accession of the Kingdom of Spain and the Portuguese Republic and the adjustments to the Treaties (OJ 1985 L 302, p. 23),

THE COURT,

composed of: G.C. Rodríguez Iglesias, President, P. Jann (Rapporteur), N. Colneric and S. von Bahr (Presidents of Chambers), C. Gulmann, D.A.O. Edward, A. La Pergola, J.-P. Puissochet, R. Schintgen, V. Skouris and J.N. Cunha Rodrigues, Judges,

Advocate General: D. Ruiz-Jarabo Colomer,

Registrar: H.A. Rühl, Principal Administrator,

having regard to the Report for the Hearing,

after hearing oral argument from the parties at the hearing on 2 May 2001, at which the Commission was represented by F. de Sousa Fialho and by M. Patakia, acting as Agent, and the Portuguese Republic by L. Fernandes and by C. Botelho Moniz, acting as Agent,

after hearing the Opinion of the Advocate General at the sitting on 3 July 2001,

gives the following

Judgment

Grounds

1 By application received at the Court Registry on 14 October 1998, the Commission of the European Communities brought an action under Article 169 of the EC Treaty (now Article 226 EC) for a declaration that, by adopting and maintaining in force Law No 11/90 of 5 April 1990, being the framework law on privatisations (Diário da República I, Series A, No 80, of 5 April 1990, p. 1664, hereinafter Law No 11/90), in particular Article 13(3) thereof, the decree-laws on the privatisation of undertakings subsequently adopted in application of that Law and also Decree-Laws Nos 380/93 of 15 November 1993 (Diário da República I, Series A, No 267, of 15 November 1993, p. 6362, hereinafter Decree-Law No 380/93) and 65/94 of 28 February 1994 (Diário da República I, Series A, No 49, of 28 February 1994, p. 993, hereinafter Decree-Law No 65/94), the Portuguese Republic has failed to comply with its obligations under the EC Treaty, in particular Articles 52 (now, after amendment, Article 43 EC), 56 (now, after amendment, Article 46 EC), 58 (now Article 48 EC), 73b (now Article 56 EC) et seq. and 221 (now, after amendment, Article 294 EC) thereof, and Articles 221 and 231 of the Act concerning the conditions of accession of the Kingdom of Spain and the Portuguese Republic and the adjustments to the Treaties (OJ 1985 L 302, p. 23, hereinafter the Act of Accession).

Legal framework

Community law

2 Article 73b(1) of the Treaty is in the following terms:

Within the framework of the provisions set out in this Chapter, all restrictions on the movement of capital between Member States and between Member States and third countries shall be prohibited.

3 Article 73d(1)(b) of the EC Treaty (now Article 58(1)(b) EC) provides:

The provisions of Article 73b shall be without prejudice to the right of Member States:

...

(b) to take all requisite measures to prevent infringements of national law and regulations, in particular in the field of taxation and the prudential supervision of financial institutions, or to lay down procedures for the declaration of capital movements for purposes of administrative or statistical information, or to take measures which are justified on grounds of public policy or public security.

4 Annex I to Council Directive 88/361/EEC of 24 June 1988 for the implementation of Article 67 of the Treaty (OJ 1988 L 178, p. 5) contains...