1. Ehlermann, C. D., “Libéralisation et privatisation” (1994) Rev. Marché Unique Eur. 5–10.Google Scholar

2. See e.g. the national reports submitted at the FIDE Conference on Competition Law Implications of Deregulation and Privatisation (Rome, 1994).

3. See Commission Directive 80/723 on the Transparency of Financial Relations between Member States and Public Undertakings ((1980) O.J. L195/35, as amended by Directive 93/84 (1993) O.J. L254/16).

4. In its 1995 Recommendation on the Broad Guidelines of the Economic Policies of the Member States and of the Community, the Council stated: “additional progress is necessary in reinforcing competition rules, reducing State aids, and reducing the role of the public sector. Privatization, to the extent that Member States judge it compatible with their objectives, could further the progress already made in this direction” (1995) O.J. L191/24. Similarly, in its 1993 White Paper on Growth, Competitiveness and Employment, the Commission encouraged privatisation as a means to increase the Community' s competitiveness towards third countries (COM(94)319 final).

5. The Commission has a limited discretionary power, i.e. power to pass a political judgment, in the context of its review of the compatibility of aid with the common market (cf. infra).

6. The same provision is in Art.83 ECSC and Art.91 Euratom.

7. See Smit, H. and Herzog, P., The Law of the European Economic Community. A Commentary on the EEC Treaty, no. 6–216, 63Google Scholar; Marenco, G., “Public Sector and Community Law” (1983) C.M.L.R. 495Google Scholar; Collard, M., “L' entreprise publique et l'évolution du Marché commun” (1965) Rev. Trim. Dr. Eur. 1.Google Scholar

8. The “liberalist” interpretation of the EU has recently found an additional basis in Art.3a EC, inserted by the Treaty on European Union: “the activities of the Member States and the Community shall include the adoption of an economic policy which is based on the close coordination of Member States' economic policies, on the internal market and on the definition of common objectives, and conducted in accordance with the principle of an open market economy with free competition” (emphasis added).

9. Art.3b provides: “The Community shall act within the limits of the powers conferred upon it by this Treaty and the objectives assigned to it therein. In areas which do not fall within its exclusive competence, the Community shall take action, in accordance with the principle of subsidiarity, only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States and can therefore, by reason of the scale or of the proposed action, be better achieved by the Community. Any action by the Community shall not go beyond what is necessary to achieve the objectives of the Treaty.”

10. In the context of the EU subsidiarity is indeed mostly understood as a question of a “just” balance of powers between the EU and the member States. See e.g. Kapteyn, P. J. G., “Community Law and the Principle of Subsidiarity” (1991) Rev. des Affaires Européennes 35.Google Scholar

11. See Ch. Joerges, “European Economic Law. the Nation State and the Maastricht Treaty”, in Dehousse, R., The European Union Treaty (1993).Google Scholar

12. Cf. Lenaerts, K., and Ypersele, P. Van. “Le principe de subsidiarité et son contexte: étude de l'article 3d du Traité CE” (1994) Cah. Dr. Eur. 3Google Scholar; Toth, A., “Is Subsidiarity Justiciable?” (1994) E.L.Rev. 268: see also Case T–114/92. BEMIM v. Commission, judgment of 24 Jan. 1995.Google Scholar

13. Case 6/64, Costa v. E.N.E.L. [1964] E.C.R. 1149.Google Scholar

14. Case C-202/88, France v. Commission [1991] E.C.R. 1–1223; Case C-18/88, Régie des Télégraphes el Téléphones v. GB-Inno-BM [1991] E.C.R. 1–5941.

15. Recent judgments have somewhat weakened this principle; e.g. in Case C-69/91. Decoster [1993] E.C.R. 1–5335 the ECJ did not object to the fact that the body in charge of approving telecommunications terminal equipment was controlled by the same minister who controlled the public telecommunications operator.

16. A sell-off of a public undertaking to an actual or potential competitor may lead to a concentration of market power, triggering Arts.85 and 86 EC or the provisions of the Merger Regulation. This aspect remains, however, outside the scope of this article.

17. Case 30/59, Steenkolenmijnen v. High Authority [1961] E.C.R. 1 (in the context of the ECSC Treaty); Case C-387/92, Banco Exterior de Espan¯a [1994] E.C.R. 1–877.Google Scholar

18. The obligation of Art.93(3) is directly effective and may be enforced before the national courts: Case C-354/90, Fédération nationale v. France [1991] E.C.R. 1–5523.Google Scholar

19. Case 730/79, Philip Morris v. Commission [1980] E.C.R. 2671. Art.92(2) lists certain exceptional categories of aid that are perse compatible with the common market.Google Scholar

20. Cf. Commission communication concerning public authorities' holdings in company capital (1984) 17(9) E.C.Bull.; Commission communication on the application of Arts.92 and 93 EC and Art.5 of Commission Directive 80/723/EEC to public undertakings in the manufacturing sector (1991) O.J. C273/2.

21. Case 323/82, Intermills v. Commission [1984] E.C.R. 3809.Google Scholar

22. Case 142/87, Belgium v. Commission [1986] E.C.R. 2263.Google Scholar

23. See also Joined Cases 296 and 318/82, The Netherlands and Leeuwarder Papieifabriek v. Commission [1985] E.C.R. 809Google Scholar; Case C-234/84, Belgium v. Commission (Meura) [1986] E.C.R. 2263Google Scholar; Case C-142/87, Belgium v. Commission (Tubemeuse) [1990] E.C.R. 1–959; Case C-305/89Google Scholar, Italy v. Commission (Alfa Romeo) [1991] E.C.R. 1–1603; Case C-303/88Google Scholar, Italy v. Commission (EM Lanerossi) [1991] E.C.R. 1–1433.Google Scholar

24. The following is a non-exhaustive list of State aid decisions with regard to privatisations: Rover(1989) O.J. L25/92and (1993) O.J. L143/7; Alfa Romeo (1989) O.J. L394/9; IOR (1992) O.J. L183/30; Intelhorce (1992) O.J. L176/57; Imepiel (1992) O.J. L172/76; Hilaturasy Tejidos Andaluces S.A. (1992) O.J. L172/54; EKO Stahl (1994) O.J. LI 12/45 and L274/3; KLM (1994) O.J. L379/13; Neue Maxhutte Stahlwerke (1996) O.J. L53/41 and L198/40.

25. Joined Cases C-278/92, C-279/92 and C-280/92, Spain v. Commission [1994] E.C.R. 1–4103; Case C-42/93, Spain v. Commission [1994] E.C.R. 1–4175; see also C-399/95R, Germany v. Commission, order of the President, 3 May 1996.

26. See e.g. Case 817/79. Buyl v. Commission [1982] E.C.R. 245; Lenaerts, K., “Gelijkheid en non-discriminatie in het Europees Gemeenschapsrecht”, in Gelijkheid en non-discriminatie, p.48.Google Scholar

27. Joined Cases 188–190/80, France, Italy and the United Kingdom v. Commission [1982] E.C.R.2545, para.21.Google Scholar

28. Supra n.23, at p.2263 (emphasis added).Google Scholar

29. Supra n.23, at p. 1640, para.20.Google Scholar

30. Supra n.23, at p.1476, para.21.Google Scholar

31. The Commission' s decision concerning the subscription of CDC-Participations to bonds issued by Air France reflects another application of the market investor principle, outside the context of privatisations (1994) O.J. L258/26. In that decision the Commission held that the subscription by a State-controlled undertaking (CDC-Participations) to bonds for FF1.5 billion constituted aid, since a rational private investor would not have injected such an amount into Air France, taking into account its poor financial and operating performance and the fact that its restructuring plan was manifestly insufficient to redress the situation.

32. Iberia (1996) O.J. L104/25.Google Scholar

33. Rover, supra n.24; another example is low-interest shareholders' loans granted by the Treuhandanstalt to EKO Stahl to cover losses of that company, in the context of its proposed sell-off to the Italian Riva Group (EKO Stahl, supra n.24, and Commission notice commenting on that case (1994) O.J. C274/3).

34. Neue Maxhütte Stahlwerke, supra n.24.

35. Joined Cases C-278–280/92, supra n.25, at para.22.

36. Imepiel, supra n.24, at pp.76 and 82.Google Scholar

37. Commission press release of 10 May 1995; the Commission itself was probably not convinced that Article 92(1) did apply, as it indicated it “double checked informally” whether the contributions would be compatible with the Common Market (pursuant to Article 92(3)).

38. For indirect aid to exist it is not necessary for the “intermediary” enterprise to belong to the public sector. It is sufficient that the enterprise in question acts upon a mandate or under the supervision of a State and that the aid results in the State receiving less revenue: Case 57/86, Greece v. Commission [1988] E.C.R. 2855Google Scholar: opinion of Advocate-General Darmon in Joined Cases C-72/91 and C-73/91. Sloman Neptun [1993] E.C.R. 1–889.Google Scholar

39. State aid may be involved, however, if an apparently general measure benefits or favours, in practice, a particular sector or industry: Hancher, L., Ottervanger, T. and Slot, P. J., EC Slate Aids (1993). pp.25–33; XXV Report on Competition Policy (1995), No.156.Google Scholar

40. Admittedly, such general measures may result in different competitive conditions in different member States. Such problems should be solved, however, on the basis of Arts. 101 and 102 EC, i.e. on the basis of recommendations of the Commission and, in principle, unanimous action by the Council; see the Commission' s Second Survey of State Aids in the European Community (1990), p.4.Google Scholar

41. Gasunie (1985) O.J. L97/49Google Scholar; Case 169/84, Cofaz v. Commission [1986] E.C.R. 408Google Scholar; Joined Cases 67, 68, 70/84, Kwekerij Cebroeders van de Kooy v. Commission [1988] E.C.R. 219Google Scholar; Case 169/84. Cofaz v. Commission [1990] E.C.R. 3083; Gasunie (1992) O.J. C344/4Google Scholar; Case C-56/93, Belgium v. Commission, judgment of 29 Feb. 1996 (not yet pub.).Google Scholar

42. See Case C-56/93, idem, para. 10; originally, the preferential tariffs applied by Gasunie were considered State aid since only industrial consumers who use gas as a raw material for production of ammonia profited from the tariff and since there appeared to be no economic justification for such differential treatment. After a revision of the tariff system, it was decided that Tariff F was justified on commercial grounds.

43. E.g. a system of State guarantees on loans offered by public banks may involve aid, since it grants these banks an unfair advantage over its competitors. In such case the State' s funding constitutes a form of direct aid, since it directly benefits the enterprise that receives the funding.

44. See e.g. Cenemasa (1993) O.J. L309/21. Compare Lufthansa, supra n.37.Google Scholar

45. KLM, supra n.24.

46. (1993) O.J. C253/1.

47. Ibid.

48. It is interesting to note that national administrative laws also may favour or require that public sell-offs take the form of a public bidding procedure. Such a national law requirement is inspired, then, by a desire to protect the State against bad financial management or a requirement to treat all potential buyers equally.

49. Joined Cases 188–190/80, supra n 27.

50. Case C-325/91. France v. Commission, judgment of 16 June 1993.Google Scholar

51. While the Commission has no power to declare an aid measure incompatible with the common market on the sole ground that it has been granted unlawfully, it may take “measures … to counteract any infringement of Article 93(3)” (see Case C-301/87, Boussac [1990] E.C.R. 1–307). A breach of Art.93(3) may also be sanctioned by the national courts. In a recent communication, moreover, the Commission announces that it considers itself competent to adopt a provisional decision ordering a member State to recover any money which has been disbursed in violation of the notification requirement (1995) O.J. C156/5.Google Scholar

52. See XXIst Competition Report. No.402.

53. Joined Cases C-278/92, C-279/92 and C-280/92, Spain v. Commission, supra n.25.

54. See the Commission' s guidelines on State aid for rescuing and restructuring firms in difficulty (1994) O.J. C386/12.

55. Cf. the Commission' s White Paper, supra n.4.

56. In its guidelines, supra n.54. the Commission indicates that “like rescue aid. aid for restructuring should normally only need to be granted once”: See also Ehlermann, C.-D., “State Aid Control: Failure or Success?” (1995) Fordham Corp. L. Inst. 9.Google Scholar

57. Bull (1994) O.J. L386/1Google Scholar; Air France (1994) O.J. L254/73Google Scholar; Enichem Agricultura (1996) O.J. L28/18; see also Crédit Lyonnais (press release of 26 July 1995).Google Scholar

58. E.g. in Air France, idem, p.3, the government' s commitment is stated as follows: “the process of privatizing Air France shall begin once the company' s economic and financial recovery has been achieved, in accordance with the Plan, having regard also to the situation on the financial markets”.

59. Moreover, certain public undertakings almost become symbolic of the State (cf. the expression “crown jewels”) and are, for political/sentimental reasons, difficult to part with completely.

60. The acquisition of a company in another member State constitutes an “establishment” in that member State within the meaning of Art.52; therefore member States must give all EU nationals equal opportunities to participate in the capital of companies on their territories (Case 270/83, Commission v. France [1986] E.C.R. 273).Google Scholar

61. Case 81/87, Daily Mail [1988] E.C.R. 5483.Google Scholar

62. As to the direct effect of Art.221 EC see Case 81/87, ibid and Written Question No.570/85 (1986) O.J. C48.

63. The requirement of a real and continuous link has been established by the Council of Ministers in its “General Programme” for the abolition of restrictions on the freedom of establishment adopted on 16 Dec. 1961. This text, however, has no force of law. The requirement of ultimate control has been introduced, in various forms, in a set of EC secondary legislation in, among others, the banking, public procurement and airline sectors. However, the requirement is arguably contrary to the EC Treaty.

64. With regard to Arts.30 and 59 EC the ECJ has held that individuals may not invoke the protection of the free movement rules with the sole purpose of circumventing national legislation which would otherwise apply: see Case 33/74, Van Binsbergen [1974] E.C.R. 1299Google Scholar; Case 229/38, Leclerc [1985] E.C.R. 35, point 27. These precedents arguably also apply, mutatis mutandis, in the context of Art.52.Google Scholar

65. Cf. Case 249/81, Commission v. Ireland [1982] E.C.R. 4005 (“Buy Irish”).Google Scholar

66. Case C-188/89. Foster v. British Cos [1990] E.C.R. 1–3313Google Scholar. In Foster the ECJ decided that British Gas, at the time the question arose, i.e. before its privatisation, was bound by the not yet implemented provisions of the Equal Treatment Directive (76–207–EEC). However, the ECJ' s broad ruling in that case suggests that the Treaty obligations may also apply to privatised undertakings which, functionally, still belong to the public sector: see also Walrave v. Union Cycliste [1974] E.C.R. 1405.Google Scholar

67. Case 2/74, Reyners v. Belgium [1974] E.C.R. 631.Google Scholar

68. See Smit and Herzog, op. cit. supra n.7, at paras.2–603 et seq.

69. See e.g. Joined Cases 115 and 116/81, Adoui and Cornuaille [1981Google Scholar ] E.C.R. 1665; in addition, measures that seek justification under Art.56 must also constitute the least restrictive means to attain the goal for which justification is sought: see Case C-106/91, Ramrath [1992] E.C.R. 1–3351.Google Scholar

70. Case C-19”92. Kraus [1993] E.C.R. 1–1663Google Scholar; Case C-55”94. Gebhard. judgment of 30 Nov. 1995 (not yet pub.).Google Scholar

71. Case 107/83. Ordre des Avocats du Barreau de Paris v. Klopp [1984] E.C.R. 2971Google Scholar. Following Klopp, the ECJ has struck down a series of similar “single-practice” restrictions (see e.g. Case C-351/90, Commission v. Luxembourg [1992] E.C.R. 1–3945).Google Scholar

72. See e.g. Case 71/76, Thieffry [1977] E.C.R. 765Google Scholar; Case C-340/89, Vlassopolou [1991] E.C.R. 1–2357Google Scholar; Case C-55/94, Cebhard, supra n.70.Google Scholar

73. See Reich, N.. “The November Revolution of the European Court of Justice: Keck. Meng and Audi Revisited” (1994)Google Scholar C.M.L.R. 459,480. See also opinion of Advocate-General Tesauro in Case C-292/92, Hünermund [1993] E.C.R. 1–6787.Google Scholar

74. Bernard, N., “Discrimination and Free Movement in EC Law” (1996) 451.C.L.Q. 82, 108.Google Scholar

75. Cases C-267 and C-268/91 [1993] E.C.R. 1–6097.Google Scholar

76. The Keck distinction between “selling arrangements” and “rules affecting the products themselves” corresponds to the degree to which such measures normally impede access to local markets, and results in a distinction in burden of proof. Rules affecting the products themselves are presumed to fall within Art.30, since the mere fact that such rules are different in the importing and exporting member States normally restricts trade. The restrictive effect of a difference in rules pertaining to selling arrangements is much less clear (Advocate-General's opinion in Joined Cases C-401/92 and C-402/92, Tankstation 't Heukske [1994] E.C.R. 1–2199).Google Scholar

77. Certain authors argue that Art.30 applies to all measures that restrict trade, whether or not discriminatory (see e.g. Mattera, M., “De I'arrêt ‘Dassonville’ à l'arrêt ‘Keck’: l'obscure clarté d'une jurisprudence riche en principes novateurs et contradictions” (1994)Google Scholar Rev. Marché Unique Eur. 117). Advocate-General Jacobs, in his opinion in the Leclerc-Siplec case, proposed to replace the Keck test by a de minimis test. The ECJ did not, however, follow the Advocate-General's opinion (Case 412/93. Leclerc-Siplec v. TF1 Publicité and M6 Publicité, judgment of 9 Feb. 1995).Google Scholar

78. Cf. Case 384/93, Alpine Investment BV, judgment of 10 May 1995 (not yet pub.Google Scholar: Devroe, W. and Wouters, J.. “Liberté d'établissement et libre prestation de services (ler Janvier 1995–31 décembre 1995)” (1996) J.T.Dr.Eur. 56.Google Scholar

79. The regulatory framework of the British privatisations is discussed in more detail in Flynn, J., “British Report to the XVI FIDE Congress on Competition Law Implications of Deregulation and Privatization” (1994) pp.175–177.Google Scholar

80. Loi No.86–912 du 6 aoul 1986 relative aux modalités d'application des privatisations. Journal Officiel, 7 Aug. 1986, p.9695Google Scholar: discussed e.g. in Turrini, R., “Privatisations et droit communautaire”, in Revue des Affaires Internationales (1993). p.823.Google Scholar

81. Law No.11/90 of 5 Apr. 1990.

82. (1993) O.J.C253/3 (17 Sept.).

83. Case C-281/89. Factortame [1991] E.C.R. 1–3906.Google Scholar

84. The nationality requirement for directors may, where directors are employed by the privatised company, also constitute a violation of Art.48 EC. Pursuant to Art.48(4), however, the free movement of workers does not apply to employment in public service. Since the concept of “public service” has been interpreted by the ECJ as covering only the exercise of public authority, an exception based on Art.48(4) does not easily apply (see e.g. Case 149/79. Commission v. Belgium [1980] E.C.R. 3881).Google Scholar

85. Turrini, op. cit. supra n.80. at p.822.Google Scholar

86. Such a limitation has often been introduced with a view to securing a controlling position of “stable” shareholders in cases where part of the shares of the formerly publicly owned company are introduced on the stock exchange.

87. Arrêté royal du 20 juillet 1994 relatif à l'acquisition d'actions cotées en bourse de Distrigas, Moniteur Beige, 30 July 1994. p.19689.Google Scholar

88. See Art.9 of Loi 86–912, supra n.80.

89. Cf. Art. 10(2) of the French 1993 privatisation law and specific “golden share” regulations for companies formerly owned by the Belgian State.

90. Abate, A., “Droit communautaire. privatisations et déréglementations” (1994) Rev. Marché Unique Eur. 28.Google Scholar