Court orders Government to abandon golden share in BAA
Europe's highest court has ordered the Government to abandon its golden share in the airports operator BAA in a move which has important ramifications for a number of privatised UK companies.
The European Court of Justice ruled that the special share in BAA protecting it from takeover breached EU rules on the free movement of capital.
The ruling follows a case brought by the European Commission and could spell the end of golden shares in 24 other UK companies. These also give the Government rights to block foreign takeovers and asset disposals and determine the nationality of directors.
BAA shares gained by less than 2 per cent on the ruling. A spokeswoman said the company would not oppose the scrapping of its golden share but played down speculation that the owner of Heathrow, Gatwick and Stansted airports would now become a bid target. "We are heavily regulated and we have an £8.4bn investment programme which means we are unlikely to be at the top of anyone's hit list," she added.
A spokesman for the Department for Transport said it was now studying the court's decision but would comply with the law. "Ministers are considering the implications of the judgement which are quite wide," the spokesman added.
The special share in BAA prevents any single shareholder from owning more than 15 per cent of the company and has been in force since the body was privatised in 1987.
The only time it has ever been tested was in 1991 when Michael Ashcroft's ADT built up a 15 per cent stake and asked the Government for permission to go higher. Permission was refused.
Other companies where the Government still retains a special share include BAE Systems, Rolls-Royce, National Grid Transco and the electricity companies ScottishPower and Scottish & Southern Energy. The company building the Channel Tunnel Rail Link, London & Continental Railways, and the two naval dockyards at Rosyth and Devonport are also protected by special shares.
Analysts said even if BAA's special share was dismantled, any potential bidder would still need the Government's blessing because of the national importance of BAA to the UK economy. Only this week, the company put forward proposals to build three new runways in the South-east of England to cope with an expected tripling in passenger numbers to 300 million over the next 30 years.
Dominic Eldridge of Commerzbank said: "At the end of the day, politics is so important for the whole airport development side that it wouldn't be possible for anyone to come in without at least an agreement or relationship with the Government themselves."
Over the years, the Government has relinquished its golden shares in several companies such as BT and relaxed them in others such as BAE and Rolls, where the ceiling on non-UK shareholdings has been abolished and the only restriction is now a 15 per cent limit on individual foreign shareholdings.
Even if the golden shares in BAE and Rolls were scrapped, competition lawyers said the Government would still be able to cite national defence interests for blocking a takeover by an "undesirable" foreign bidder.
The court's ruling on BAA also outlawed special shares in three Spanish companies – the telecoms group Telefonica, the oil company Repsol YPF and the electricity distributor Endesa. The judgement confirms a landmark ruling in June last year which abolished the French government's control over the oil group Elf Aquitaine.
The Commission argued before the court that the use of golden shares was one reason why EU growth had lagged that of the US for the last decade. But the Government argued that in the case of BAA, the special share did not affect free movement of capital as access to the market was not affected.
- 1 Finland schools: Subjects scrapped and replaced with 'topics' as country reforms its education system
- 2 The West has it totally wrong on Lee Kuan Yew
- 3 #FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
- 4 Scientists have discovered a simple way to cook rice that dramatically cuts the calories
- 5 Zayn Malik quits One Direction: Hundreds of workers request compassionate leave following band member's exit
Germanwings captain Patrick Sondenheimer tried to break into locked cockpit door 'with an axe' as plane was descending
Amanda Knox murder conviction: Italian court overturns verdict for US student and Raffaele Sollecito in the killing of Meredith Kercher
Saudi Arabia says it won't rule out building nuclear weapons
The battle for the Middle East's future begins in Yemen as Saudi Arabia jumps into the abyss
#FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
Nigel Farage brands LGBT activists 'filth' and 'scum' and accuses them of scaring away his children after they invade his local pub
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Russia threatens Denmark with nuclear weapons if it tries to join Nato defence shield
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Germanwings plane crash live: Co-pilot Andreas Lubitz wanted to 'do something people would remember him for'
iJobs Money & Business
Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...
Negotiable: Recruitment Genius: You will be the first point of contact for all...
£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...
£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...