Spain, Portugal face golden shares scrutiny

Spain and Portugal are next in line for regulatory scrutiny, following infringement action brought by the European Commission against Hungary and Italy yesterday (28 June) on special voting rights, or 'golden shares', in companies located in key economic sectors.

The Commission is set to review solutions proposed by Portugal and Spain at the end of July. "Golden shares have no place in the internal market. Wherever there is a violation of the principle, we will go for it," said Oliver Drewes, internal market spokesperson.

Portugal, which holds a golden share in national telecoms company Portugal Telecom, was earlier this month given a six-week extension to present its case to the Commission. At the time, the Commission expressed confidence that the matter was being dealt with adequately by the Portuguese authorities.

Spain's infringement comes in the form of a stealth measure introduced to replace its golden share in energy company Endesa.

The Commission warned the government in February not to use its special powers to block German energy group E.ON's 29.1 billion euro bid for Endesa. Although Prime Minister José Luis Zapatero was seen to resist protectionist urges, his government passed a new measure stipulating that mergers and acquisitions in the energy sector would require clearance from market regulator CNE (Comisi-n Nacional de Energ’a). The regulator's decision on the E.ON bid is expected in July.

Spain's golden share law, which also applied to national telecoms company Telef-nica, was revoked in April. The Commission took legal action against the government's introduction of the CNE measure a month later. "This energy committee has wide discretionary powers," said Drewes. "Without proper justification, they could block any deal."

Spain and Portugal are next in line for regulatory scrutiny, following infringement action brought by the European Commission against Hungary and Italy yesterday (28 June) on special voting rights, or 'golden shares', in companies located in key economic sectors.