August 7, 2006
EC Sues Italy, Hungary and Germany over Golden Shares
News from GovernanceMetrics International’s “In Focus”: The European Commission has been busy trying to quash “golden share” veto takeover powers currently used by several EU member countries to protect key companies. The commission is seeking to open up markets and reduce government control of business. The EC has filed suit against Italy for maintaining golden shares at privatized companies that were formerly state-owned monopolies such as oil company Eni, power utility Enel and telephone utility Telecom Italia. Hungary is also the subject of likely suits, as it has yet to repeal the golden shares it holds over 31 companies in various industries, a repeal it promised to enact before joining the EU in 2004.
EU regulators are also eyeing Germany for its restrictions on the sale of Bankgesellschaft Berlin, the former state-owned German bank which was bailed out by the EU. Germany is restricting the use of the bank’s valuable “Sparkasse” trade name by any potential buyer, but the EC insists that the brand is a key asset of the company and must be offered as part of a sale. Bankgesellschaft Berlin is scheduled to be sold to a non-government buyer during 2007. Throughout Europe, the EC has been arguing that government protections must be limited to only specific areas, such as defense and security.