One week after the Portuguese government exercised its “golden share” rights to block Telefonica’s US$9 billion bid for Portugal Telecom’s (PT’s) indirect stake in Brazilian wireless carrier Vivo, the European Court of Justice (ECJ) has ruled Portugal’s golden share to be illegal. Handed down yesterday, the decision potentially vindicates Telefonica in its two-month quest to acquire full control of the Brasilcel venture in which PT and Telefonica are 50-50 partners and which owns 60% of Vivo, the largest mobile telephony firm in Brazil’s fast-growing wireless market. Although Portuguese Prime Minister Jose Socrates asserted last week that the government acted with the intention of protecting the national interest, the ECJ determined that the state’s holding of golden shares in PT “constitutes an unjustified restriction” in the “free movement of capital.” While voicing disappointment with the decision, a spokesman for the prime minister said Portugal “will search for solutions that allow full respect for [European Union] law but that also safeguard the national interest.” In anticipation of the ECJ ruling, company officials also hinted on the eve of the court’s order that efforts were underway to reach a compromise as PT affirmed it was willing “to maintain a dialogue with Telefonica aimed at analyzing options that optimize the advantages for all parties.”