«(Failure of a Member State to fulfil obligations – Articles 43 EC and 56 EC – System of administrative approval relating to privatised undertakings)»

1.. Free movement of capital – Restrictions – Obstacles resulting from privileges retained by the Member States in the management of privatised undertakings – Justification – System of property ownership – No justification (Arts 56 and 295 EC)

2.. Free movement of capital – Restrictions – National rules laying down a system of prior administrative approval in respect of certain decisions by commercial undertakings – Not permissible – Justification based on grounds of public security – No justification (Arts 56 EC and 58(1)(b) EC)

JUDGMENT OF THE COURT 13 May 2003 (1)

((Failure by a Member State to fulfil its obligations – Articles 43 EC and 56 EC – System of administrative approval relating to privatised undertakings))

In Case C-463/00,

applicant,

v

defendant, supported by

intervener,

APPLICATION for a declaration that the provisions of Article 2 and Article 3(1) and (2), together with Article 1, of Ley 5/1995 de régimen jurídico de enajenación de participaciones públicas en determinadas empresas (Law 5/1995 of 23 March 1995 on the legal arrangements for disposal of public shareholdings in certain undertakings (BOE No 72 of 25 March 1995, p. 9366) and the implementing royal decrees enacted under Article 4 of Law 5/1995 (Royal Decree No 3/1996 of 15 January 1996 concerning Repsol SA (BOE No 14 of 16 January 1996, p. 1133), Royal Decree No 8/1997 of 10 January 1997 concerning Telefónica de España SA and Telefónica Servicios Móviles SA (BOE No 10 of 11 January 1997, p. 907), Royal Decree No 40/1998 of 16 January 1998 concerning Corporación Bancaria de España SA (Argentaria) (BOE No 15 of 17 January 1998, p. 1851), Royal Decree No 552/1998 of 2 April 1998 concerning Tabacalera SA (BOE No 80 of 3 April 1998, p. 11370), and Royal Decree No 929/1998 of 14 May 1998 concerning Endesa SA (BOE No 129 of 30 May 1998, p. 17939)), in so far as they implement a system of prior administrative approval

are incompatible with Article 43 EC and Article 56 EC,

THE COURT,,

composed of: G.C. Rodríguez Iglesias, President, J.-P. Puissochet, M. Wathelet and R. Schintgen (Presidents of Chambers), C. Gulmann, D.A.O. Edward, A. La Pergola, P. Jann (Rapporteur), V. Skouris, F. Macken, N. Colneric, S. von Bahr and A. Rosas, Judges,

Advocate General: D. Ruiz-Jarabo Colomer,

having regard to the Report for the Hearing, after hearing oral argument from the parties at the hearing on 5 November 2002, at which the Commission was represented by M. Patakia and G. Valero Jordana, the Kingdom of Spain by N. Díaz Abad and the United Kingdom of Great Britain and Northern Ireland by J.E. Collins, acting as Agent, and by D. Wyatt and J. Crow,

after hearing the Opinion of the Advocate General at the sitting on 6 February 2003,

gives the following

are incompatible with Article 43 EC and Article 56 EC.

Community law

...

...

...

National law

Article 2. Conditions for applicationThe system of prior administrative approval set out in Article 3 et seq. of this Law shall apply where the public holding of the State member of the undertakings referred to in the preceding article falls within either of the following cases:

Article 3. Prior administrative approval

...Article 4. System of administrative approval

Pleas in law and arguments of the parties

Findings of the Court

Pleas in law and arguments of the parties

Findings of the Court

Article 56 EC

where the State's shareholding in the undertaking has been reduced by at least 10% and has fallen below 50% or where the holding has been reduced to less than 15% of the share capital.

Article 43 EC

On those grounds,

THE COURT

hereby:

Rodríguez Iglesias

Puissochet

Wathelet

Schintgen

Gulmann

Edward

La Pergola

Jann

Skouris

Macken

Colneric

von Bahr

Rosas

Delivered in open court in Luxembourg on 13 May 2003.

R. Grass

G.C. Rodríguez Iglesias

Registrar

President