Shareholders between the Market and the State: The VW Law and Other Interventions in the Market Economy

Abstract

This article takes the VW case as a starting point for a systematic examination of the golden shares jurisprudence of the Court of Justice. The golden shares decisions have received much attention, but a coherent test to establish whether a national measures constitutes a restriction of the free movement of capital has not yet emerged. The Court uses the notion of “derogation from ordinary company law”, whereas commentators propose to focus on the effects of potentially restrictive measures. The article seeks to rationalise the golden shares decisions and question the delimiting criteria developed by the Court. In order to do so, it distinguishes between different types of state intervention in the market economy and derives four arguments from the case law that help explain the Court’s interpretation of the Treaty. The article shows that the argument with the highest explanatory power is a genuinely political one that concerns the internal governance structure of companies, an area not regulated by European company law. The Court’s approach has implications for the different models of corporate governance and of the market economy prevalent in the Member States. The article submits that the free movement of capital is the wrong tool to level these differences. Accordingly, it recommends to exercise constraint when reviewing golden shares.

Keywords: Free movement of capital, golden shares, VW case, European company law

JEL Classification: K22