The European Commission has issued a formal warning to the Italian government over its ‘golden powers’ legislation, raising concerns that the rules over some takeover deals in the banking sector could breach EU law.
The EU warning on Italy golden powers comes as Brussels seeks to prevent member states from obstructing consolidation in the banking sector.
Italy’s ‘golden powers’ allow the government to safeguard national interests in sectors such as defence and telecommunications, and the legislation has also been applied to the banking sector, reported Reuters.
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The Commission stated, “The Commission has raised concerns over the so-called ‘Golden Powers’ legislation, which grants the Italian government broad prerogatives to review, block or impose conditions on corporate transactions in the banking sector.”
UniCredit, a leading Italian bank, has cited government intervention as the reason for abandoning a takeover bid for smaller lender Banco BPM.
The Italian government now has two months to respond to the Commission’s concerns and address the identified shortcomings.
On 21 November, Italy’s Economy Minister Giancarlo Giorgetti said Rome would respond to the EU’s objections in the appropriate forums and would draft a legislative proposal to clarify the situation and address the objections.
He stated, “We are convinced that this will enable us to establish a shared framework of competences.”
The media outlet had reported in October that Italy is prepared to make some changes to its golden power rules, but does not intend to radically alter them.
The Italian government’s main objective remains the preservation of the principle, which has been confirmed by some Italian court rulings, that the government can defend its national interest in business matters.
European Commission spokesperson Arianna Podesta clarified that the decision announced on Friday concerns the Golden Power legislation itself and does not refer to any specific case.
In a separate procedure, the news agency reported that the European Union was readying to order Italy to withdraw a government decree that imposed conditions on UniCredit’s bid for Banco BPM.
Among the other requirements, Italy told UniCredit to stop activities in Russia by early next year.
Podesta added, “Article 21 of the merger regulation procedures is separate, and there we have not taken any decision.”
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