EU is determined to make the ‘golden share’ a thing of the past

The recent decision by the European Court of Justice severely limiting the application of the so-called «golden share» held by the State in privatized former state-controlled firms is expected to lead to action by the European Commission toward removing obstacles to competition. The «golden share» allows the State, a minority stockholder, to have a veto on most company decisions, especially those concerning capital increases, strategic alliances and investments. It has long been used by several EU countries but only recently touted as a concept in Greece by Economy and Finance Minister Nikos Christodoulakis. He recently announced that the State planned to retain just a 35-percent share in public utilities, but that this minority holding would constitute a «golden share.» Christodoulakis chose the solution of the golden share in answer to concerns about economic activities of strategic importance, especially those of telecommunications and energy, falling entirely into the hands of private operators, domestic or foreign. The trouble is, he has introduced the concept at a time it is about to become obsolete. The EU is moving toward the position that a private company’s major business decisions should not be held hostage to the interests of the State, or more precisely, the minister overseeing a particular business sector. In that respect, the Commission expects members to comply with the guidelines set by the court and will not accept any legislation restoring the State’s veto powers in any roundabout way. The exception, EU sources say, will be the energy sector, and this only in exceptional circumstances, such as an energy crisis. Even then, the intervening minister must present a well-reasoned argument for using the veto power of the golden share. The government is ready to introduce the golden share into a new law on privatization. Under the circumstances, it must choose between eventually losing any say in the affairs of a company such as telecoms giant OTE and backing off from further privatizations and losing badly needed revenue in the process. The likelihood is it will choose the second, after prevaricating for a long time, as the Simitis government habitually does. The European court decisions are bound to lead to a new wave of liberalization in European markets. «The rationale of the decisions is that the State cannot impose its political will on investors, either domestic or foreign,» says Commission technocrat Giorgos Zavvos. The court decisions will strengthen European competitiveness and effectiveness, he adds. «In a globalized environment, it seems strange for the State to invoke reasons of public interest or security to justify intervening in activities such as banking, insurance, telecoms and transport,» Zavvos says. «The opening debate is going to be awfully difficult,» he added.

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