The European Commission on Thursday acted to ensure that Greece complies with its obligations to implement EU rules on free movement of capital and the right of establishment.

The non-compliance with EU law results from the application of a State measure, adopted in the context of Deutsche Telekom's (DT) participation in the Hellenic Telecommunication Organisation (OTE) and granting special rights (“golden share”) to the Greek State.

The Commission's request to Greece takes the form of a reasoned opinion. If the national authorities do not reply satisfactorily within two months, the Commission may refer the matter to the Court of Justice of the European Union.

Greece and Deutsche Telekom (DT) entered into a share purchase agreement (SPA) for 3.03% of the Hellenic Telecommunication Organisation's (OTE) shares and a Shareholders' Agreement (SA). Upon completion of the SPA, Greece and DT each held 25% plus one of OTE shares. On 11 July 2008 the aforementioned agreements were ratified by national law.

The Commission contests the provisions of the above-mentioned law that:

· introduces special rights for the State such as: the possibility for the State, even as a minority shareholder, to appoint half of the members on OTE governing bodies,

· includes a wide range of veto rights on corporate and business matters such as a company's dissolution or merger, transfer or conversion of a strategic company's assets, changes in a company's nationality or capital,

· requires prior approval by the Greek authorities for the transfer of OTE shares by DT and a change of control clause.

The Commission considers that the national law enables the Greek Government to participate in OTE’s governing bodies in a more significant manner than its shareholder status would normally allow. Therefore, investors, other than the Greek State and DT, might be dissuaded from increasing their investment in OTE.

Consequently, these provisions are considered to be incompatible with the Treaty freedoms on capital movement and establishment.