CJEU puts a stop to the 'kidnapping' of investors in public undertakings: a broader reading of C-244/11

In its Judgment of 8 November 2012 in case C-244/11 Commission v Greece, the CJEU assessed the compatibility with EU Law of a Greek scheme that required prior authorization for the acquisition of voting rights representing 20% or more of the share capital in certain strategic public limited companies in the utilities sectors which operate national infrastructure networks within a monopoly context. 

Most remarkably, the supervision scheme included a provision for ex post control in regard to the adoption of certain decisions. More specifically, under Article 11 of Law 3631/2008 on the creation of a national fund for social cohesion:
The decisions of those strategic undertakings relating to the [following (?)] subjects shall be subject to authorization by the Minister for Finance for purposes of general interest:
(a) dissolution of the undertaking, its placing in liquidation and the designation of liquidators;
(b) restructuring the abovementioned undertakings: conversion, merger with another company, merger with the creation of a new public limited company, break-up in any form whatsoever or break-up of one or more divisions liable to place in jeopardy the supply of services in the sectors of strategic importance;
(c) transfer, transformation or conversion, disposal, supply as a guarantee, as well as transformation or alteration of the allocation of strategic elements of the assets of the abovementioned undertakings and of the basic networks and infrastructure necessary for the economic and social life of the country as well as its security.
The CJEU assessed the compatibility of such ex post veto scheme controlling the adoption of certain (strategic) decisions of those public limited companies (whose shares are quoted on the stock exchange and may be purchased freely on the market) under the Treaty provisions on the free movement of capital and the freedom of establishment and (not surprisingly) found that it was not compatible with EU Law.

According to the CJEU, 
80 As regards […] the arrangements for ex post control of certain decisions taken by the strategic public limited companies at issue, such as provided for in Article 11(3) of Law 3631/2008, the Hellenic Republic maintains that it must be accepted, as it is similar to the scheme at issue in Case C-503/99 Commission v Belgium, in respect of which the Court held that it was justified by the objective of guaranteeing the security of energy supply in the event of a crisis.
81 The Court has held that it results from paragraphs 49 to 52 of the Judgment in Case C-503/99 Commission v Belgium that the national scheme at issue was characterized by the fact that it specifically listed the strategic assets concerned and the management decisions which could be challenged in any given case. Finally, the intervention by the administrative authorities was strictly limited to cases in which the objectives of the energy policy were jeopardized  Any decision taken in that context had to be supported by a formal statement of reasons and was subject to an effective review by the courts (Judgment in Case C‑463/00 Commission v Spain, paragraph 78). 
82 However, following the example of the schemes examined by the Court in its Judgments in Case C-463/00 Commission v Spain and in Case C‑326/07 Italy v Commission, the scheme at issue in the present case, even it if it is of an ex post nature and is therefore less restrictive than an ex ante scheme, cannot be justified in the light of the criteria stemming from the Judgment in Case C-503/99 Commission v Belgium. 
83 First, as for the decisions listed in Article 11(3)(a) and (b) of Law 3631/2008, the Court has already held that such decisions do not constitute, contrary to the decisions which formed the background to Case C-503/99 Commission v Belgium (paragraph 50), specific management decisions but decisions fundamental to the life of an undertaking (Judgment in Case C-463/00 Commission v Spain, paragraph 79). 
84 Next, the specification in Article 11(3)(b) and (c), according to which it applies to decisions in so far as they are ‘capable of jeopardizing the supply of services in sectors of strategic importance’ or they concern the ‘allocation of strategic elements of the assets of the abovementioned undertakings and of the basic networks and infrastructure necessary for the economic and social life of the country as well as its security’, may hardly be considered to be a specific list of the strategic assets concerned
85 Finally, even if, as the Hellenic Republic claims, Article 11(3) of Law 3631/2008 must be understood as meaning that the right to object which it provides may be exercised only to guarantee the continuity of services supplied and the operation of networks, the fact remains that, with no details of the actual circumstances in which the right to object may be exercised, the investors are not able to know when it may be applicable
86 Accordingly, as the Commission maintains, the circumstances in which the right to object may be exercised are potentially numerous, undetermined and indeterminable and leave the national authorities too much discretion
87 Consequently, it must be stated that […] the Hellenic Republic has failed to fulfill its obligations under Article 43 EC on the freedom of establishment. (CJEU in C-244/11, at paras 80 to 87, emphasis added).
In my view, this new Judgment clearly indicates that the CJEU is ready to prevent any type of ex post intervention by Member States in the adoption of decisions that can be seen as fundamental to the life of an undertaking, and that any intervention schemes based on public interests need to be predefined, specific enough and amenable to effective judicial review.

This should be taken into consideration in the redesign of regulatory schemes in some Member States (such as Spain, where some ex post intervention competences are planned to be transferred back to the sectorial Ministry and out of the current independent regulators' hands), since most generic ex post decisions may fall short of meeting the stringent criteria set by the CJEU in C-244/11 Commission v Greece

This would should also generate trust on the side of investors in 'strategic' companies (generally in the utilities sector) and may contribute to keep their ability to undertake long term investments (in infrastructure, R&D, etc) without fearing undue governmental intervention. In general, preservation of investors' freedom in these sectors seems to be the clear bet made by the CJEU, and this shall prevent a new wave of public intervention (which could easily result from the structural reforms that the economic crisis is triggering).