The European Commission’s Warning to Italy Over ‘Golden Powers’
The European Commission has recently issued a formal warning to the Italian government regarding its ‘golden powers’ legislation. This legislation includes rules related to certain takeover transactions in the banking sector, which the European Commission believes may infringe upon EU law.
This warning comes amid the Brussels’ efforts to dissuade member states from blocking mergers and consolidation within the banking sector. The Italian ‘golden powers’ enable the government to safeguard national interests in strategic sectors such as defense and telecommunications. The extension of these regulations now includes the banking industry as well.
Concerns Raised by the Commission
The Commission expressed concerns over the ‘Golden Powers’ legislation which provides the Italian government with wide-ranging prerogatives to review, prohibit, or impose conditions on corporate transactions in the banking sector. A well-known Italian bank, UniCredit, has attributed government intervention as the reason behind its decision to abandon a takeover bid for a smaller lender, Banco BPM.
The Italian government currently has two months to respond to the Commission’s concerns and address the identified shortcomings. Italy’s Economy Minister, Giancarlo Giorgetti, pledged on November 21 that Rome would respond to the EU’s objections in the appropriate forums. A legislative proposal would be drafted to clarify the situation and address the objections.
Italy’s Stand on ‘Golden Powers’
Reports from October suggest that Italy is prepared to make some amendments to its golden power rules, but does not plan to make radical changes. The main objective of the Italian government remains the preservation of the principle, which some Italian court rulings have confirmed, that the government can defend its national interest in business affairs.
Arianna Podesta, a spokesperson for the European Commission, clarified that the recent announcement pertains to the Golden Power legislation in general, rather than to any specific case.
Pending Actions from the European Commission
As reported, the EU was preparing to instruct Italy to revoke a government decree that had set conditions on UniCredit’s takeover offer for Banco BPM, in a separate procedure. Italy had instructed UniCredit to cease activities in Russia by early next year, among other requirements.
Podesta commented on this matter, stating, “Article 21 of the merger regulation procedures is separate, and there we have not taken any decision.”
This situation highlights the ongoing contention between national interests and international regulations in the banking sector. The outcome of this dispute could have significant implications for future mergers and acquisitions in the industry.
For more information on this topic, click Here.
