368 10 Exit of Shareholders
goods ... in so far as it affects trade between Member States”. Any plans to grant
or alter aid must be notified to the Commission in advance under Article 87(3).
Privatisations can trigger the application of state-aid provisions in different
ways. State aid may be involved, for instance, where the undertaking to be priva-
tised receives capital contributions or grants before its sell-off (direct aid), or if
certain conditions are imposed on the buyer of the privatised company that nega-
tively influence the sale price (indirect aid). An example of the latter would be
when the buyer of the company is required to ensure certain services at abnor-
mally low tariffs.^174
To establish whether a privatisation operation involves direct aid, the Commis-
sion uses the so-called “private market economy investor” or “prudent investor
operating in a market economy” test. The ECJ has endorsed this principle.^175
There is aid if the conduct of a public sector entity as investor is not comparable to
that of a private sector investor.
For example, the United Kingdom agreed to provide new capital of £800 mil-
lion to the Rover Group upon its sale to British Aerospace in order to discharge
the Group’s debts for that amount. The sale price amounted to only £150 million.
The Commission reasoned that, under market conditions, a private shareholder
would not provide funds that exceeded the sale price to enable the company to
discharge debts.^176
Discrimination, restrictions on capital movements, golden shares. In the past,
several Member States have attempted to favour their nationals over individuals or
companies of other Member States. Such discrimination is illegal, because the EC
Treaty prohibits discrimination on the basis of nationality.^177
The prohibition of discrimination is complemented by Treaty provisions on
freedom of establishment^178 and provisions on the free movement of capital.^179
Member States often try to maintain domestic control over undertakings they
privatise. Many public enterprises are considered part of the core economy of a
Member State because they provide essential utilities, are regarded as national
champions, or are symbolic of the State. To this end, Member States can be
tempted to accompany their privatisation programmes with various restrictions,
including “golden shares”.^180 However, golden-share type arrangements are nor-
mally prohibited by the EC Treaty or are acceptable only in rare circumstances.
Case: “Sparkassen”. Problems relating to the application of Treaty provisions
to privatisations can be illustrated by the Sparkassen case. Sparkasse – savings
(^174) See Verhoeven A, op cit, p 866.
(^175) Case 323/82 Intermills v Commission [1984] ECR 3809. For more recent cases, see
Case C-197/99 P Belgium v Commission [2003] ECR I-8461; Case C-482/99 France v
Commission [2002] ECR I-4397. See Verhoeven A, op cit, p 867.
(^176) Verhoeven A, op cit, p 871.
(^177) Article 12 of the EC Treaty. See also Article 48 of the EC Treaty on companies and
firms treated in the same way as as natural persons who are nationals of Member States.
(^178) Article 43 of the EC Treaty.
(^179) Article 56 of the EC Treaty.
(^180) Verhoeven A, op cit, pp 878 and 884–886.