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Petroleum industry

European Commission Takes Action Against EU Countries Over "Golden Share" Laws

Strategic Insights

— 2 min read

The European Commission has initiated legal proceedings against six EU countries, including France, Italy, Spain, Portugal, Belgium, and the UK, for maintaining laws that restrict foreign ownership of key companies. The "golden share" law in France, which allows the government to prevent anyone from controlling more than 15% of Elf Aquitaine, has been deemed incompatible with EU rules on the free movement of capital. The tussle between Elf Aquitaine and TotalFina, its Franco-Belgian rival, has reached a critical point, with the French government's "golden share" law potentially deterring foreign companies from making counter-bids. The move could have significant implications for the European oil industry and may encourage foreign companies to enter the takeover battle.

Key Takeaways:

  • The European Commission has opened legal proceedings against six EU countries for maintaining "golden share" laws that restrict foreign ownership of key companies.
  • The French "golden share" law, which gives the government special powers to prevent anyone from controlling more than 15% of Elf Aquitaine, contravenes EU rules on the free movement of capital and the right of establishment.
  • The tussle between Elf Aquitaine and TotalFina has reached a critical point, with the French government's "golden share" law potentially deterring foreign companies from making counter-bids.
  • The move could have significant implications for the European oil industry and may encourage foreign companies to enter the takeover battle.
  • Elf shares fell 1.86% to €158.50, while TotalFina was off 0.59% at €118.90.
  • The French finance ministry has stated that it considers the special share it has in Elf to be in line with EU law, but the Commission has decided to open an infringement procedure.
  • The "golden share" law in France gives the government the right to prevent anyone from acquiring more than 10% of Elf Aquitaine's capital or voting rights, and also allows the state to appoint representatives to the company's board.

Statistics:

  • 6 EU countries have been taken to court by the European Commission for maintaining "golden share" laws that restrict foreign ownership of key companies.
  • 15% is the maximum amount of Elf Aquitaine that can be controlled by any one entity under the French "golden share" law.
  • The special share held by the French state in Elf Aquitaine contravenes EU rules on the free movement of capital and the right of establishment.
  • 1.86% is the amount by which Elf shares fell to €158.50.
  • 0.59% is the amount by which TotalFina shares fell to €118.90.

Sources:

  • Financial Times Limited, 1999.

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