The European Union's supreme court has struck down a law allowing the French government to control Total Fina Elf with a single share, boosting efforts to limit state interference in the economy.
The court ruled that France's veto over management decisions at Europe's biggest oil refiner “constitutes a serious impairment of the fundamental principle of the free movement of capital.” It outlawed similar special voting rights in Portugal, though upheld them in a Belgian case.
The victory for shareholder rights may give a push to mergers and acquisitions and prompt governments to sell off more state holdings. That may make companies more productive at a time when Europe's competitiveness has fallen to the lowest level since the 1960s, when sompared to the US markets.
“It's an encouragement to privatize and is a step in the right direction,” said Jean Marc Lefevre, a mergers and acquisition lawyer at Linklaters & Alliance in Paris. “This will help the French government because it's a good excuse to privatize. The state needs money.”