The European Commission has announced that it is taking Portugal to the European Court of Justice over special rights held by the state and other public entities in Portugal Telecom (PT), reports Thomson Financial. The commission alleges that the existence of privileged shares in the telco discourage investment from other member states and contravene EU rules. Privileges include powers to appoint one third of the board and the chairman, veto the election of directors and audit board, as well as influence over the distribution of profits, capital increases, bond issues, and the approval of the acquisition of holdings above 10% of PT’s ordinary shares by shareholders engaged in a competing activity. Portugal argues that the special rights have a ‘private law character’ and are compatible with EU rules. It claims that the rights are applied in a non-discriminatory way and based on imperative needs including security and public order.