Brussels, 4 April 2006
Free movement of capital: Commission calls on Italy to apply Court of Justice ruling on the law on investment in energy companies
The European Commission has decided to ask Italy formally to modify its legislation in order to comply with the Court of Justice ruling of 2 June 2005 on the law on investment in energy companies. The Court 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 the EC Treaty rules on the free movement of capital (Article 56). The Commission's request is in the form of a "reasoned opinion", the second stage of the infringement procedure laid down in Article 228 of the EC Treaty related to compliance with Court of Justice rulings. In the absence of a satisfactory reply from Italy within two months of receiving the reasoned opinion, the Commission may decide to refer the matter to the European Court of Justice.
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 attaching 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. Furthermore, it did not accept that general strengthening of the competitive structure of the market in question constitutes valid justification for restricting the free movement of capital.
Italy adopted a new Decree-Law No 81 on 14 May 2005 which amended the law in question. However, the Commission does not consider that the changes introduced fully implement the ruling of the Court and consequently on 13 October 2005 reminded Italy of its obligation to comply (IP/05/1270). The Commission has not as yet received a reply from the Italian government.