Palacio backs 'golden shares' in transport

Governments should be allowed to maintain control of privatised transport companies through “golden shares”, Europe’s transport and energy commissioner has suggested.

The intervention by Loyola de Palacio comes despite a case being pursued by the Commission against the UK government for its controls in BAA, the British airports authority.

In three landmark cases last week, the court upheld governments’ rights to hold golden shares in energy companies, but said that government controls had to be the minimum possible and had to allow management the right of appeal.

“I think these principles are not limited to energy but to certain other sectors,” Ms de Palacio said. “For me it was really a matter of concern that too rigid an interpretation could hamper the aim of creating integrated European markets. . . in the areas of my responsibility – not only energy, but also transport.”

Apart from the special area of defence, where no one questions the importance of maintaining government controls, the UK’s golden shares are essentially in energy and transport – in companies such as British Energy, National Grid, London & Continental Railways and Stena Line.

Ms de Palacio had opposed the Commission’s decision to launch the case against BAA in 2000, but is now bound by Brussels’ rules on collective responsibility.

“I don’t like the Commission losing on any case as a principle,” she said. “That said, I think that nobody’s perfect.”

Ms de Palacio said the court would facilitate “the end of certain monopolies”.

Some Commission officials argue that golden shares would make it easier for governments to reassure the public about the effects of privatisations such as Electricite de France, which maintains a grip over most of the French market. But Commission colleagues such as Frits Bolkestein, responsible for the single market, are much more opposed to golden shares in principle.

The Commission also has a case pending against Spain for a wide range of golden shares, including energy groups Endesa and Repsol, as well as non-utilities such as the tobacco manufacturer Tabacalera. It has also considered actions against the Netherlands for golden shares in KPN, the telecommunications company, and TPG, the logistics group.

Even Germany, which abolished such provisions in 1998, is affected by the dispute, since the issue has been a crucial element in Berlin’s decisive opposition to an EU-wide takeover code last summer. The Commission intends to come out with new takeover proposals before the summer break.

Other British golden shares include Royal Navy dockyards and BAE Systems and Rolls Royce, two of the UK’s largest defence contractors.

Copyright © 2002: Financial Times Group