The European Court of Justice has ruled that the Portuguese government’s golden share in Portugal Telecom is illegal, on the grounds that it violates EU rules on the free flow of capital.
However, the ruling stopped short of specifying whether it could…
The European Court of Justice has ruled that the Portuguese government’s golden share in Portugal Telecom is illegal, on the grounds that it violates EU rules on the free flow of capital.
However, the ruling stopped short of specifying whether it could be applied to past instances, such as last week’s use of the golden share to prevent Spanish incumbent Telefonica’s E7.15bn buyout of Brazilian mobile JV Vivo from Portugal Telecom.
The court declared that “by maintaining in Portugal Telecom special rights, allocated in connection with golden shares, Portugal has failed to fulfil its obligations pursuant to the free movement of capital.” Furthermore, “the exercise of the special rights in PT conferred on Portugal by the golden shares constitutes a restriction on the free movement of capital,” it added.
Specifically, the size of the stake – some 500 Class A shares – held by the Portuguese government “confers on Portugal an influence on the management of PT which is not justified”.
Telefonica responded that its offer had been “impeccable”, but that it remained committed to “continue looking for possible solutions to take this
operation to a good ending, as long as there is equal availability from Portugal.
