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Free movement of capital: Commission decides to open infringement proceedings against Italy concerning privatised companies

European Commission - IP/03/177   05/02/2003

Other available languages: FR DE IT

IP/03/177

Brussels, 5th February 2003

Free movement of capital: Commission decides to open infringement proceedings against Italy concerning privatised companies

The European Commission has decided to send a formal request to Italy to provide information concerning the legislation that lays down the criteria for the exercise of special powers in privatised companies. Although this legislation was amended shortly before a ruling of the Court of Justice on 23rd May 2000, which condemned an Italian privatisation law of 1994, the Commission is concerned that the conditions in which these special powers can be used are still so broadly defined that they could act as a disincentive on investment from other EU Member States, in violation of EC Treaty rules on the free movement of capital (Article 56) and the right of establishment (Article 43). The Commission has also decided to send a separate formal request for information concerning measures that, following that same Court ruling, Italy should take to withdraw a specific restriction according to which professionals have to be registered in the official Italian registers for at least 5 years in order to carry out certain advisory tasks concerning privatisation. Such restrictions were found by the Court to be in violation of EC Treaty rules on the right of establishment and the freedom to provide services (Articles 43 and 49). These requests take the form of letters of formal notice. In the absence of satisfactory replies within two months, the Commission may decide to issue formal requests to the Italian Government in the form of so-called 'reasoned opinions'.

On 23 May 2000, the European Court of Justice ruled (Case C-58/99) that some aspects of Italy's privatisation law N° 474 of 30 July 1994 were in violation of EC Treaty rules on free movement of capital (Article 56). It also ruled that restrictions laid down by the Law as regards professionals that could be involved in the privatisation process were in violation of EC Treaty rules on freedom of establishment and freedom to provide services (Articles 43 and 49 respectively).

Before the Court ruling, Italy had already adopted new measures that amended the Law in issue, namely certain provisions of Financial Law No 488 of 23 December 1999 and the implementing Prime Minister's Decree issued on 11 February 2000. However, these were not taken into consideration by the Court because they were adopted after the deadline laid down in the Commission's earlier formal request to Italy to amend its legislation (the so-called 'reasoned opinion').

Special rights

The first request for information that the Commission has now decided to send will concern the criteria for the exercise of the special powers provided in the February 2000 decree implementing the privatisation law. The request will take the form of a letter of formal notice under EC Treaty infringement procedures (Article 226), since the law at issue was significantly amended in relation to the version of the law that was already subject to the May 2000 Court ruling.

The Commission would like to verify whether the special powers given to the government by the decree to control the ownership and management structure of the privatised companies concerned are justified, and in particular whether the possibility for the government to exercise these special powers could constitute an unjustified restriction on the free movement of capital and the right of establishment in violation of EU Treaty rules (Article 56 and 43 respectively).

In particular, the Decree in question, issued on 11 February 2000, lists in Article 2.2 five guidelines for the exercise of special powers. Thus, authorisation is denied for the acquisition of shareholdings which:

    do not permit identification of the ownership of shares that are significant for the direct or indirect control of the company as well as of the buyer's industrial objectives and programmes

    jeopardise liberalisation and market opening processes, are inconsistent with the option of privatising the company or create conflict of interest

    involve objective risks of the company being infiltrated by criminal organisations or becoming involved in illegal activities

    are detrimental to the maintenance of special powers

    involve substantial risk of serious damage to the vital interests of the State, also with reference to 1) the independence and security of supplies of essential raw materials and goods; 2) the continuity of essential public services and the security of the relevant installations and networks; and, 3) the development of high-technology sectors.

The Commission notes that though both the Financial Law of 1999 and the Decree of 2000 amend significantly the Privatisation Law of 1994 which was the issue of the Court case (see IP/98/1134), the criteria provided in the 2000 Decree still seem to be disproportionate to meeting overriding general interest requirements that would justify control of the ownership structure of the capital of the enterprise and its management.

Since those special powers are today present not only in the by-laws of ENI S.p.A. and Telecom Italia S.p.A., which the ECJ had already condemned in its ruling of 23 May 2000, but also in the bylaws of FINMECCANICA S.p.A. and in ENEL S.p.A, the Commission requests the Italian Government to explain in which way these restrictions can be considered to be proportionate and justified by the possibly legitimate general interest requirements (namely, defence and security of energy supplies) that those companies pursue.

Restrictions on professionals

In its second request, the Commission will seek information concerning Italy's compliance with the Court's May 2000 ruling as regards a specific provision concerning the freedom to provide services and freedom of establishment. Indeed, the Court found Art 1.5 of the Law 474 of 30 July 1994, according to which national authorities can entrust certain advisory tasks (studies, consulting, assessment, etc.) related to privatisation only to "… professionals being listed in the official registers for at least 5 years ", to be incompatible with Articles 49 (freedom to provide services) and Article 52 (right of establishment) of the EC Treaty, insofar as this provision limits the choice among operators to those listed for at least 5 years in the registers set up by Italian legislation, thereby excluding all professionals legally registered in other Member States or recently established in Italy.

Since the Commission has not as yet received any communication from the Italian Government regarding measures taken to comply with the Court ruling on this specific point, the request for information will take the form of a letter of formal notice sent in accordance with Article 228 of the EC Treaty (infringement procedures related to compliance with rulings by the Court of Justice).

The latest information on infringement procedures concerning all Member States can be found at the following website:

http://ec.europa.eu/secretariat_general/sgb/droit_com/index_en.htm


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