| Author (Person) | King, Tim |
|---|---|
| Series Title | European Voice |
| Series Details | Vol.11, No.28, 20.7.05 |
| Publication Date | 20/07/2005 |
| Content Type | News |
|
By Tim King Date: 20/07/05 The existence of 'golden shares', with which governments maintain control of privatised companies, is still widespread in the EU, according to a European Commission survey. A total of 141 companies are affected by so-called special rights. Those 141 companies include Telef-nica and Repsol of Spain, ENI, ENEL and Telecom Italia of Italy and Volkswagen of Germany. On the face of it, special rights are an obstacle to the free movement of capital in the EU. But Commission officials have concluded that the prevalence of golden shares is waning, particularly because of rulings from the European Court of Justice (ECJ). "A large number of special rights have been or are in the process of being abolished or scaled down," a report to be published by the Commission later this week will say. Other cases are before the ECJ, or are being examined by the Commission with an eye to launching infringement proceedings. The Commission observes that special rights are "still widely present" in the new EU states, because of the timing and scale of privatisations there. But in many cases a deadline has been set or proposed to phase out the special rights. The Commission concludes that special rights have "a diminishing role...as an instrument of government intervention in the management of privatised companies". But the report promises that "where necessary" the Commission will proceed with infringement cases. The analysis carried out by the Commission's internal market department concludes that generally the companies in which the states retain special rights fall into three categories. The providers of services of general economic interest account for about half of the companies. They are often former public utilities, distributing gas, electricity or water, telecoms, postal services. Then there are competitive industries, accounting for 38% of cases. Poland has 40 such companies, including a bank, eight sugar companies, 15 companies in food products, catering, alcohol production and tobacco, as well as timber, textiles, pharmaceuticals and construction. For some companies, Poland has already set deadlines for phasing out the special rights. The third category is a miscellaneous grouping of companies in the defence, nuclear and other industries where special exceptions are possible from EU treaty rules. The UK, for example, retains a golden share in the defence companies BAE Systems, Rolls Royce and Devonport Dockyard. Companies with golden shares can represent a significant part of the total market capitalisation in countries with a small stockmarket. The report cites the examples of Hungary, the Czech Republic and Poland. In countries with larger stockmarkets, the companies make up a smaller share of the total market. But Repsol and Endesa are still the fifth and sixth largest companies quoted on the Madrid stock exchange. Charlie McCreevy, the internal market commissioner, will declare his readiness to discuss residual problems with national authorities, in an effort to dismantle barriers to the flow of capital. While broadly satisfied with the pace of progress, he is expected to reassert his readiness to take firm action if needed. According to a European Commission report, published on 22 July 2005, the existence of special rights with which governments maintain control of privatised companies, was still widespread across the EU, but on the decrease. |
|
| Source Link | http://www.european-voice.com/ |
| Related Links |
|
| Subject Categories | Internal Markets |
| Countries / Regions | Europe |
