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Brussels, 29 July 1998

Free movement of capital: infringement proceeding against Italy

The European Commission has decided to send a reasoned opinion (the second stage of infringement proceedings under Article 169 of the Treaty of the European Union) to Italy. The Commission considers that certain elements of Italian provisions on investment in privatised companies constitute unjustified restrictions on the free movement of capital, the right of establishment in contravention of EU Treaty rules (Articles 73b, 52). In the absence of a satisfactory reply from Italy within two months of receiving the reasoned opinion, the Commission could decide to refer the matter to the European Court of Justice.

Article 2 of Italy's Law n° 474 o f 30.7.1994 concerning the privatisation of state-owned enterprises grants special powers to the Treasury Minister as regards companies operating in the defence and public utilities sectors (i.e. transport, telecommunications, energy and other public utilities). These "special powers"can include:

- prior authorisation ("gradimento") is required for the acquisition by any investor of a significant stake (5% of voting rights) as well as for agreements between shareholders representing at least 5% of voting rights;

- the right to veto decisions concerning the dissolution, transfer, merger, change of business and modification of the company's statutes which implies the suppression or modification of these special powers;

- the right to appoint at least one or several members in the company's Board of Directors and one auditor.

These "special powers" must be exercised "taking into account the national objectives concerning economic and industrial policies". These have been introduced in the privatisation of ENI S.p.A., Telecom Italia S.p.A. and STET S.p.A. (in the energy and telecommunication sectors).

In its "Communication on certain legal aspects concerning intra-EU investments" (see IP/97/477; OJ C220 - 19.7.1997) the Commission made clear that, according to Community law, restrictions on the free movement of capital and the right of establishment must be applied in a non-discriminatory manner; that they must be justified by imperative requirements in the general interest; they must be suitable for securing the attainment of the objective that they pursue; and finally they must not go beyond what is necessary in order to attain the defined objective.

The Commission considers that the introduction of "special powers" was not justified in the cases mentioned above, because the relative concerns (i.e. assuring a minimum level of oil supplies necessary for public security in the case of ENI) could have been better pursued by other arrangements without having to limit acquisition rights and so being less restrictive for the freedoms involved. Moreover, there is no guarantee of non-discriminatory implementation for non-residents.

Mr Carlo Azeglio Ciampi, Minister for the Treasury, replied on 13 May 1998 to the Commission's formal notice, but the arguments contained in this reply do not add new elements to those already presented in previous correspondence. In particular, the prior authorisation of the acquisition has not been clearly justified as being in the general interest by reference to objective criteria compatible with the EU legislation, which have been published and are consistently applied over time. This requirement is intended to limit the discretion of national authorities to the minimum.

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