Europe: Spain - free movement of capital and freedom of establishment

On July 17 the European Court of Justice gave its opinion in Commission v Spain (Case C-207/07). The case concerned the requirement, for those acquiring shareholdings in certain energy sector companies, to seek the prior authorisation of the National Energy Commission (the Spanish regulatory body with responsibility for the operation of energy systems).  The European Commission took the view that this requirement breached Community law and instigated infringement proceedings against the Spanish Government. The ECJ has agreed. Its opinion is not yet available in English but a press release in English has been published in which it is stated:

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. However, a system which entails such restrictions may be justified by reasons laid down in the EC Treaty or by overriding reasons in the public interest, such as public safety. To that end, the system has to satisfy certain conditions: that it is suitable for securing the attainment of the objective pursued and is proportionate to that objective".

It is also noted:

... 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. In any event, the Court considers that the Spanish system of prior authorisation is not proportionate to the objective of ensuring security of energy supply. First, the system does not limit the NEC’s power to refuse to allow the acquisition of shareholdings or assets referred to above or to make subject them to certain conditions on the sole ground of securing the objective of security of energy supply ... Secondly, the Court finds that Spain has not demonstrated that the objective pursued may not be attained by less restrictive measures, in particular by a system of ex post declarations".

For further information see:
ECJ press release (English) | ECJ opinion (Spanish) | Comment in International Herald Tribune | Europa - free movement of capital information | Europa - freedom to provide services / freedom of establishment information |