The question of the extent of the freedom of establishment arose in connection with the intended acquisition by a Hungarian company of all the shares of another Hungarian company, the main activity of which was manufacturing concrete building elements. The relevant Hungarian Ministry opposed the transaction on the grounds that the company’s business is of strategic importance under national law and the acquiring company is owned and controlled by a foreign company.
In this context, CJEU has been asked to give a preliminary judgment (which becomes binding on all EU courts) on this national regulation and its possible infringement of the EU law. In replying, the Court recalls, as a general matter, that a restriction on a fundamental freedom may be permitted only if the national measure is in response to an imperative reason relating to the public interest, is capable of securing the attainment of the objective pursued and does not exceed what is necessary to attain that objective.
The European Court also considers that purely economic reasons relating to the promotion of the national economy or its proper functioning cannot serve as justification for an obstacle to one of the fundamental freedoms guaranteed by the treaties and that, although the member states are free to determine, in accordance with their national needs, the requirements of public policy and public security, those reasons must be interpreted strictly so that their scope cannot be determined unilaterally by each member state without the control of the institutions of the Union. Thus, public policy and public security may only be invoked in the event of a genuine and sufficiently serious threat affecting a fundamental interest of the company.
In particular, the Court had previously held that, in the case of enterprises carrying on activities and providing public services in the petroleum, telecommunications and energy sectors, the objective of ensuring security of supply of such products or the provision of such services, in the event of a crisis on the territory of the Member State concerned, may constitute a ground of public security and, thus, possibly justify a restriction on a fundamental freedom.
In the present case, however, the Court concludes that the national measure infringes the European Union law and the provisions of the treaties because the objective invoked by the Hungarian State, in so far as it seeks to ensure security of supply for the construction sector, in particular at local level, in respect of certain basic raw materials, namely gravel, sand and clay, resulting from mining activities, does not fall within a “fundamental interest of the company”, like the objective of security of supply for the oil, telecommunications and energy sectors.