Dutch mount key test case over privatisation ‘golden share’ rules

Date: 24/06/1999

By Renée Cordes

THE company which manages Amsterdam's Schiphol Airport is challenging Italian rules designed to prevent foreign state-owned firms from buying more than a minor stake in Rome airport.

The challenge is being seen as a key test of EU member states' ability to stop foreign governments from snapping up too many shares in their most treasured industries.

Schiphol Group, which is majority-owned by the Dutch government authorities, has complained to the European Commission about the Italian restrictions.

Although Italy is selling a 49&percent; stake in the airport, with the rest to be retained by national, regional and local authorities, it is preventing other state-owned companies from buying more than 2&percent;. Schiphol argues that this rule unfairly discriminates against it and other firms in the same position.

The case is the latest challenge to so-called 'golden share' restrictions which are aimed at limiting the participation of foreign governments in share sales. It comes as Germany and the UK are preparing to file complaints accusing France's state-owned electricity company of using its dominant position in France and Spain to finance expansion abroad.

“In principle, from a legal point of view, there is nothing that prevents a state-owned company from being involved in commercial activities,” said Werner van Lembergen, a lawyer at White & Case. “The idea of direct participation of the state in national industries is passé.”

Companies which are majority government-owned but consider themselves to be commercial enterprises are urging the Commission to fine-tune its definition of state-owned companies.

Schiphol argues that it should be allowed to bid for the entire 49&percent;, with officials insisting that the company - which is 75.6&percent; owned by the Dutch government - functions as a private enterprise because it manages its own affairs.

“We think that it is wrong to put in such a clause,” said Marion de Bie, a spokeswoman for Schiphol. “If they exclude us or other state-owned companies from making a bid, that would mean that only completely privately owned companies could buy shares.”

The firm, which has stakes in airports in New York and Brisbane, is now seeking to broaden its activities within Europe. Officials emphasised that such moves were long-term strategic investments and that the company's main goal was to carry out airport management abroad. De Bie added that the partnership between KLM airlines and Alitalia makes the Rome airport a perfect fit.

Traditionally, EU policy-makers have agreed that member state governments should be able to impose limitations on who can buy into their precious industries.

The advent of a single currency and the single market is, however, starting to change their thinking. This is because, for many member states, the best and indeed only way to raise cash to pay off government debt is to go to the capital markets and invite private investors to make offers. The lines between public and private firms have also become increasingly blurred, especially when a company is being transformed from a 100&percent; state-owned company into a private enterprise, as in the case of Germany's national telecommunications firm Deutsche Telekom or the company which manages Brussels' Zaventem airport.