The existence of Corporate Groups – several independent incorporated companies connected mostly by a chain of participations to form what is practically one commercial unit – has long been a reality throughout the world. In Europe the Corporate Group has a special importance because if the acquisition or founding of subsidiaries were not legally possible, companies would not, in practice, be able to avail themselves of their right of free establishment under Articles 43 and 48 EC [ex Art. 52 and 58 ECT]. The connection between the right of establishment on the one hand, and the nationality of the companies on the other, leads precisely to the establishment of small and large corporate groups. Furthermore, the acquisition of a majority in another company and the integration of the acquisition into the commercial aims of the group is one of the most important means by which ownership of companies becomes concentrated. Finally, the significance of the effects of taxation and tax laws on the creation and centralisation of company groups should not be underestimated. This is an undisputed fact, and equally a legal reality. Groups which operate on a worldwide scale such as General Motors, Shell, Bayer and Siemens are obvious examples of this reality, a reality already recognised by the EU in 1983 in the Seventh Directive on Company Law dealing with consolidated group annual accounts. In the real world of management and of the capital and financial markets, only the consolidated accounts are of significance; the annual accounts of individual components of the group have become practically meaningless, while those of the parent company have, at least, a significance as a basis for the allocation of profit. Naturally, the EU rules on control of concentrations apply precisely to the formation and expansion of company groups.

The EC Commission's strategy for the modernization of the rules implementing Articles 81 and 82 EC Treaty has unfolded in three acts. The focus of the first act, the White Paper of 28 April, 1999, is on Article 81(3). The Commission proposes to abolish the Regulation 17 rules for the implementation of Article 81(3) and its own exclusive power to grant exemptions. In the future, Article 81 is to be interpreted as a directly applicable exception system to be applied by the Commission, national competition authorities, and national courts. A Council regulation will extend the direct applicability so far limited to Article 81(1) to Article 81(3). Consequently, there is no provision for separate exemption decisions and there are no “detailed rules” for the supervision of exempted agreements as called for by Article 83(2b).

European company law, i.e., all European Community statutes dealing with company law, has in the past been discussed from three different angles.

It has firstly been regarded as falling within the auspices of the fundamental freedoms guaranteed by the EC Treaty, especially the freedom of establishment, by examining whether the national company law system is compatible with the provisions laid down in primary law. An example of this perspective is the passionate discussion on the questions whether and by what means the EC Treaty directly enables companies to transfer their seat within the European Union to another Member State and to what extent the involved Member States' international company law must take this European right of establishment into consideration. In his 1990 Ernst Rabel Memorial Lecture Wulf-Henning Roth related to his audience the pros and cons. Another example of the submission of national private law under the provisions of the EC Treaty is the question raised by Steindorff whether the national law-making authorities may set standards for shareholder and creditor protection that exceed the standards set by the EC harmonization directives. This field of academic examination of European company law aims primarily at the interpretation and effectiveness of the fundamental freedoms guaranteed by the EC Treaty.

The project “Corporate Group Law for Europe” is a joint effort of European specialists in company law, the “Forum Europaeum”. This Forum consists predominantly of legal scholars who, at the same time, enjoy close ties with corporate practice. We should welcome the initiative and appreciate the tremendous amount of careful work that went into producing this document.

The Council of the European Union recently adopted a modified proposal for an EU Directive on takeovers. As a central feature the new proposal contains a provision imposing on the management of a target company a duty of passivity (Neutralitätspflicht) once a public bid for the shares of the target company has been made. This duty of passivity in the face of a hostile offer has been a key feature of the first proposal for an EU Takeover Directive in 1989 and the amended proposals of 1990, 1996, and 1997. It is a central element of the UK City Code on Takeovers and Mergers that from the beginning served as a model for the drafts of the EU Takeover Directive and can still be detected as such in the current proposal. The rule of passivity also found its way into the laws of many Member States that enacted takeover laws in anticipation of the imminent passing of a Takeover Directive. In Germany, a takeover statute is still missing. However, German corporate law scholars widely support the rule of passivity. Moreover, the rule of passivity is already in place in the non-binding German Takeover Code, a non-government voluntary regulation of takeovers to which about 60-70 % of the stock exchange listed companies in Germany have subjected themselves. Finally, the German government this year presented a draft proposal for a German Takeover Act that also contains a duty of passivity. Thus it seems fair to say that until very recently the rule of passivity has been a widely accepted, integral part of European takeover law.

The Forum Europaeum Konzernrecht (hereafter the Forum Europeum) in its Corporate Group Law for Europe puts forward principles and proposals for a harmonised European corporate group law.

Competition is socially desirable because, in general, in a competitive environment, firms' desire to maximize their profits will force them, in the long run, not only to become as efficient as possible but also to lower their prices to the level of their average (economic) costs.

Expept for the Stock Exchange Act and a few other capital market-oriented laws, the development of a capital market law began in the last decade and is fundamentally based on European law, although it is nevertheless inspired by Austrian peculiarities. This new field of law is not embodied in one uniform act, but consists of different legislative acts. The Takeover Act 1998 represents an important cornerstone. The other relevant sources are the Stock Exchange Act (Börsegesetz) 1989, which contains the obligations of disclosure (immediate disclosure of price-sensitive information, disclosure of major holdings) and regulates the prohibition of abuse of insider information; the Capital Market Act 1991 (Kapitalmarktgesetz – KMG 1991); and, finally, the Austrian Securities Supervision Act (Wertpapieraufsichtsgesetz 1996), which establishes a special supervising authority for the capital market. The Austrian Securities Authority, which is the main supervising authority for the secondary market, has amongst its tasks to prevent the abuse of insider information, to supervise the obligations of disclosure, and to cooperate closely with the stock exchange and other authorities. The Austrian Securities Authority is not responsible for supervising public takeover offers. However, it is obliged to cooperate with the Takeover Commission.

The reform of the enterprise sector in the former socialist countries has been at the core of the economic reform programs, which were launched ten years ago, beginning in Poland and followed by other governments throughout the region. A key element of the enterprise reform package was privatisation. Depending on the country and the specific area of the law in question, this reform measure was preceded, accompanied, or followed by legal reforms. Legal reforms in the region have been comprehensive and affected not only areas immediately relevant for the enterprise sector, but the entire legal system ranging from constitutional, administrative, criminal and civil law to the organization and procedural rules of the court system. This paper focuses on laws that are immediately relevant for the restructuring and financing of enterprises, in particular the rights of shareholders as stipulated in company laws, securities regulations, and the right of creditors as holders of collateral and in bankruptcy. The paper investigates the patterns of legal change in these areas of the law and identifies key determinants of legal change. The method employed is a formalised comparison of legal change based on pre-defined legal indicators. A data base was constructed, which codes the development of shareholder and creditor rights from 1990 through 1998 for 24 transition economies (excluding only Serbia, Tadjikistan and Turkmenistan). The paper joins a growing literature that uses cross-country formalised legal indicators to investigate the interaction between legal and economic change using statistical tools. It introduces the data used and descriptively analyses the patterns of legal change that can be observed. A statistical analysis of the interaction between legal and economic change is addressed in a separate paper.

There are numerous differences in the legal forms of convertible bonds and option bonds in Europe, both between countries and between the time sequences. These differences are a result of the different tax laws and of differing conditions in the markets for equity and outside capital. At this point, an overview is to be given, going back to the analysis of the most important European systems in the special Zeitschrift für Unternehmens- und Gesellschaftsrecht [hereinafter: ZGR] issue Convertible and Option Bonds in Germany and Europe, published jointly by Marcus Lutter and the present author. It will concentrate on the legal issues regarding convertible and option bonds as an instrument of corporate financing. Therefore, a question to be disregarded, for example, is to what extent convertible or option bonds can be used as an instrument to motivate executives and employees, in particular where the issue of naked warrants is regarded as inadmissible. The overview will be limited essentially to an analysis of the contributions in the abovementioned special ZGR issue. For this reason, with only a few exceptions, only the legal systems in Germany, Austria and Switzerland, France, Belgium and the Netherlands, Italy, Spain and Portugal as well as English and Swedish law are included in the study, and only the legal issues discussed in these contributions are taken into account. Thus, if a solution is discussed or emphasised here only for one country, this does not mean that it exists only in that country. Moreover, similarities as well as differences are not mentioned if they appear to be a matter of course; the point instead is to achieve “problem awareness”.

In the field of product and environmental liability, the justification for limited shareholders' liability has been discussed with renewed fervor in the U.S. In 1995 the lower instance courts allowed product liability claims from silicone breast implant patients against Dow Chemical, a company holding 50% of the shares of the defendant. In June 1998 the United States v. Bestfoods Supreme Court decision defined and clarified the conditions for the liability of controlling shareholders for environmental damage caused by their subsidiaries in accordance with § 107 (a) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

This is the time of the making or breaking of Europe. When over one generation from now we will be looking back at this period of the turn of the century we will recognize this as the period during which we finally made it, or we finally blew it. By the time the new EURO notes will slide through the money machines, the Europe that we have known will have changed forever. The reason lies in the stark political choices that are facing the European Union. The outcome of these political choices will be decisive for the shape of the European tax policy in the years to come.2

Although mergers and acquisitions activity in Europe has reached unprecedented levels, almost doubling in the past year alone, hostile takeovers are still the exception, not the rule, especially in Germany. The British telecommunication concern Vodafone's 141 billion Euro takeover bid for its German counterpart, Mannesmann, in December 1999 was the first successful hostile bid for a major German company in post-war history.

The EC Merger Regulation (ECMR) gives exclusive powers for the EC Commission to regulate large, pan-European mergers under the EC competition laws. The ECMR requires the Commission to declare mergers incompatible with the Common Market if they “create or strengthen a dominant position as a result of which effective competition is impeded”.

European competition law has influenced many national competition law systems. One of them is Greek competition law, which is already 23 years old. The development of the Greek competition law system is quite distinctive. This article gives an overview of Greek competition law by stressing the influence of European competition law upon it.