BAA ‘golden share’ deemed illegal

The European Court of Justice today ruled that the Government’s ‘golden share’ in airport operator BAA is illegal.

The golden share in the company, which owns most of the UK’s major airports including Heathrow and Gatwick, gives ministers the final say in major decisions such as selling or closing down an airport.

It also prevents any other investor from having more than a 15% stake in the company.

And under EU law such majority control of private firms is only permissible if it is in the public interest and if the action is proportionate to the need.

Golden shares held by the Spanish government in a range of businesses including tobacco, oil and telecommunications firms have also been condemned.

The ECJ stated that “both the Spanish and United Kingdom rules entail restrictions on the movement of capital between member states”.

Many analysts have backed the decision claiming that golden shares make a mockery of a free and single market.

The ruling could leave BAA vulnerable to a hostile takeover bid, although analysts have suggested that this is unlikely.

The ECJ has a host of similar cases pending from other EU countries including Germany and the Netherlands, where it has been alleged that such measures are unfairly protecting established national companies from takeovers.