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Brussels, 28 June 2006

Free movement of capital: Italy referred to the Court of Justice over special powers in privatised companies

The European Commission has decided to refer Italy to the European Court of Justice because it considers that certain provisions of Italian law concerning investment in privatised companies constitute unjustified restrictions on the free movement of capital and the right of establishment in violation of EU Treaty rules (Articles 56 and 43).

The Commission's decision concerns the privatisation Law No 474 of 30 July 1994 as amended by law No 350 of 24 December 2003, which replaces the regime of prior authorisation, considered by the European Court of Justice to be in violation of the EC Treaty rules (Case C-58/99), by the less restrictive right of opposition. This law limits the use of the special powers to cases in which the vital interests of the State would be threatened and is implemented by the Prime Ministerial decree of 10 June 2004, which identifies the criteria for their exercise. The special powers in question have already been introduced in privatised companies, such as Telecom Italia, ENI and ENEL.

The Treaty allows exceptions for reasons of public order, public security, public health and defence, and therefore, the goal of protecting certain economic activities can be acceptable in specific cases. However, the Commission considers that the use of the special powers provided for by the Italian legislation is excessive to achieve these objectives. The Commission considers that the criteria for exercising these powers are vague and indeterminate in scope and, therefore, give the authorities wide discretionary powers when judging the risks to the vital interest of the State. Moreover, it also considers that the public interest concerns (i.e. assuring the supply of certain services of general interest) could have been pursued by less restrictive alternative arrangements.

The Italian authorities reply to the Commission reasoned opinion (IP/05/1270) was sent in December 2005. The Commission considers Italy's arguments in defence of the law unsatisfactory in the light of relevant Court of Justice case-law and takes the view that the special powers provided for in the Italian law unduly restrict the freedoms of capital movements and establishment guaranteed by Articles 56 and 43 of the Treaty respectively. It has therefore referred the case to the Court.
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