Brussels, 12 October 2006
Free movement of capital: Commission closes case against Italy regarding law on investment in energy companies
The European Commission has decided to close infringement procedures against Italy in view of the measures taken to comply with a European Court of Justice ruling of 2 June 2005 regarding the law on investment in energy companies. The ruling had found that the automatic suspension of voting rights for shareholdings in excess of 2% in Italian electricity and gas companies, where such holdings are acquired by public companies not quoted on the stock exchange and holding a dominant position in their own domestic markets, breaches EC Treaty rules on the free movement of capital (Article 56). This decision follows the measures taken by Italy on 1 August 2006 to comply with the Court ruling.
In its ruling of 2 June 2005 in Case C-174/04, the Court of Justice found that, by maintaining in force Decree-Law No 192 of 25 May 2001, converted into Law No 301, entitled “Urgent provisions to ensure the liberalisation and privatisation of specific public service sectors” of 20 July 2001, Italy had failed to fulfil its obligations under EC Treaty rules on the free movement of capital (Article 56). The Law in question provides for the automatic suspension of voting rights attached to holdings in excess of 2% of the capital of undertakings operating in the electricity and gas sectors, where those holdings are acquired by public undertakings not quoted on regulated financial markets and enjoying a dominant position in their own domestic markets.
The Court ruled that the suspension of voting rights prevents effective participation by investors in the management and control of Italian undertakings operating in the electricity and gas markets and therefore constitutes a restriction on the free movement of capital. It also added that the fact that the provision only affects public undertakings holding a dominant position in their domestic markets does not detract from that finding.
Italy adopted a new Decree-Law No 81 on 14 May 2005 amending the law in question. However, the Commission considered that the amended law did not fully implement the ruling of the Court. Accordingly, the Commission decided under Art 228 of the EC Treaty to send Italy a letter of formal notice (IP/05/1270) asking for full information on its execution of the Court ruling, followed by a reasoned opinion (IP/06/439), formally requesting it to comply with the Court ruling.
On 1 August 2006 the Italian Parliament adopted Law No 242 repealing both
Decree laws No 192/2001 and No 81/2005 thereby complying fully with the Court