Brussels set to issue formal warning to Italy over ‘golden power’ rules
European Commission believes Rome’s regulations enabling it to scrutinise foreign takeovers may breach EU law
Brussels is set to issue a formal warning to Rome over concerns that Italy’s far-reaching “golden power” rules may breach EU law, two European officials have said.
The European Commission has been critical of Italy’s use of the golden power rules, which were originally introduced in order to vet foreign takeovers of strategic Italian assets and give Rome the right to impose requirements on transactions considered to involve national security.
On Friday, Brussels was poised to issue a “letter of notice” to Italy, which marks the formal start of an infringement procedure under which Rome will be accused of potentially breaching EU law, the European officials said.
Through such a letter, Brussels requests information from Italy, after which Rome must send a detailed reply. The European Commission declined to comment.
The golden power rules, which give Rome the right to potentially block foreign acquisitions of Italian assets, were originally introduced in 2012 and only applied to companies in critical sectors such as defence, energy, transport and communications.
But Italy subsequently increased the sectors coming within the scope of the rules to include banking, health and water.
Italian Prime Minister Giorgia Meloni’s government used the golden power rules for the first time in May to impose conditions on a proposed domestic deal: UniCredit’s takeover bid for smaller rival Banco BPM.
Analysts said the rules, initially devised as a defensive measure against a sharp influx of Chinese investment into Italy, had turned into a government tool for managing significant national assets.
The Italian government’s intervention in UniCredit’s bid for Banco BPM came amid the European Commission’s push to encourage EU banking industry consolidation to boost the bloc’s ailing economy.
Brussels is increasingly frustrated with hostile reactions from EU member states to consolidation as it views a network of fewer, bigger banks as essential to creating globally competitive financial services companies that can take on US rivals.
In July, the commission sent a private letter to the Italian government that said Brussels had reached a preliminary conclusion that Rome breached EU merger law through its use of the golden power rules in UniCredit’s bid for Banco BPM.
UniCredit ultimately withdrew its offer for Banco BPM following the government’s imposition of several conditions on the proposed deal.
The formal warning by the commission comes amid ongoing discussions with Rome in an effort by Brussels to try to persuade Italy to change its golden power rules.
European officials have described those conversations as constructive and said the discussions are set to continue.