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The State as Shareholder and the Private Investor Principle


Type: Article

ref: 42003363-382

N0:4 of 2003

Pages: 363-382

The Ec Treaty recognises the fact that public authoriites can act as owners, just as any shareholder would with its own company. The financial intervention of the State or a public authority in a public undertaking will not necessarily be considered as State aid, i.e., as a measure that actually or potentially restricts competition. The Commission bases its assesment on the principle of the private investor acting in a free market.Therefore, in practice, it must be determined, in each case, by considering the situation at the time the transaction was decided 1) whether the recipient undertaking could have obtained the funds in question from the financial markets, and, 2) whether the private investor could have carried out the transaction in question under the same conditions, 3) without falling to consider, more globally, the interaction between the various economic players. The article details the modalities of the public intervention under market conditions and more specifically the presence of a private investment aside the public one.