EU Issues Formal Warning to Italy Over “Golden Power” Rules
The European Commission is set to formally challenge Italy’s use of broad golden power regulations, raising concerns they violate EU law and potentially obstruct market competition. The escalating dispute centers on Rome’s authority to intervene in foreign acquisitions of Italian companies, a practice Brussels argues has expanded beyond its original intent.
The Commission has been increasingly critical of Italy’s application of these rules, initially designed to safeguard strategic assets from foreign takeover. On Friday, the Commission prepared to issue a “letter of notice” to Italy, initiating a formal infringement procedure. This marks the first step in a legal process where Rome will be accused of potentially breaching EU regulations and will be required to provide a detailed response.
The golden power rules, first introduced in 2012, originally focused on sectors deemed critical to national security – namely defense, energy, transport, and communications. However, Italy subsequently broadened the scope to encompass banking, healthcare, and water infrastructure. This expansion has drawn the ire of the Commission, which views it as an overreach of national authority.
The Meloni government’s first application of the expanded rules came in May, when conditions were imposed on UniCredit’s proposed acquisition of smaller competitor Banco BPM. “Analysts said the rules, initially devised as a defensive measure against a sharp influx of Chinese investment into Italy, had turned into a government tool for managing significant national assets,” highlighting a shift in purpose.
The Commission’s concerns are amplified by its broader push for consolidation within the EU banking sector, aiming to create larger, more competitive financial institutions capable of challenging US rivals. Brussels views resistance to consolidation from member states as detrimental to the bloc’s economic health. “Brussels is increasingly frustrated with hostile reactions from EU member states to consolidation,” a senior official stated.
In July, the Commission communicated its preliminary findings to the Italian government, asserting that the use of golden power in the UniCredit-Banco BPM deal likely violated EU merger law. Following the government’s intervention and the imposition of several conditions, UniCredit ultimately withdrew its offer for Banco BPM.
The formal warning comes as the Commission continues discussions with Rome, seeking to persuade Italy to modify its golden power regulations. European officials have characterized these conversations as “constructive,” indicating a willingness to find a resolution. However, the initiation of the infringement procedure underscores the seriousness of the Commission’s concerns and its commitment to upholding EU law.
