The European Commission (EC) has threatened to take Greece to court if it does not give up its golden share in telco OTE. The Brussels based regulator said that the golden share is in violation of European Union regulation on free movement of…
The European Commission (EC) has threatened to take Greece to court if it does not give up its golden share in telco OTE. The Brussels based regulator said that the golden share is in violation of European Union regulation on free movement of capital.
Greece has two months to address the problem; otherwise the case may be referred to the European Court of Justice.
The argument between the EC and Greece goes back to a share purchase agreement between the Greek state and Deutsche Telekom (DT), and an accompanying shareholders’ agreement.
In 2008, the agreements were written into national law, including special rights for the Greek state, such as the right of the state to appoint half of the members on OTE governing bodies, even as a minority shareholder. The law also includes veto rights on corporate and business matters, for instance a merger of OTE or the sale of assets. Furthermore, a change of control clause states that Greece could force DT to sell back all OTE shares if control in DT changes, and the person acquiring the control does not meet requirements set out in Greek national law.
“The Commission considers that the national law enables the Greek government to participate in OTE’s governing bodies in a more significant manner than its shareholder status would normally allow,” the European Commission said in a statement. “Therefore, investors, other than the Greek state and DT, might be dissuaded from increasing their investment in OTE.”
The EC has in the past successfully forced countries to give up golden shares. In 2010, for instance, the European Court of Justice ruled that Portugal Telecom has to amend its articles of association and remove special rights held by the Portuguese state. PT complied with the ruling a year later, in 2011.
