Bloomberg News

Italy Faces EU Suit Over Finmeccanica, Enel Investor Curbs

November 24, 2011

(Updates with Barnier comment on Monti meeting in fifth paragraph.)

Nov. 24 (Bloomberg) -- The European Union said it will sue Italy over rules restricting investment in companies, including Finmeccanica SpA, Enel SpA and Telecom Italia SpA, that allow the government to interfere in management decisions.

The new Italian government, led by Prime Minister Mario Monti, has one month to take action before the European Commission triggers a court case over the matter, the regulator said in an e-mailed statement from Brussels today.

“Italian legislation provides that the state may be granted special powers to safeguard its vital interests should they be under threat,” the commission said. “Such powers make direct and portfolio investment less attractive and may discourage potential investors in other member states from buying shares in the companies concerned.”

The commission, the 27-nation EU’s executive arm, already sued Italy in 2006 for repeatedly failing to strip the government of its veto power over decisions at companies, including defense company Finmeccanica, Telecom Italia and energy company Enel, that it said were controlled directly or indirectly by the state. The measures violated EU rules on the free movement of capital, including by allowing the Italian state to block mergers, the commission said.

Michel Barnier, the EU’s internal market commissioner, said he’ll discuss the matter with Monti tomorrow. Barnier made the comments to reporters in Rome today after a hearing at the country’s Senate.

The EU called in February for Italy to modify its law.

“Latest contacts with the Italian authorities suggest that compliance can be envisaged in the very short term,” the commission said today.

An Italian government spokesman declined to comment on today’s decision by the commission.

--With assistance from: Jeffrey Donovan and Chiara Vasarri in Rome. Editors: Peter Chapman, Robert Valpuesta

To contact the reporter on this story: Jim Brunsden in Brussels at jbrunsden@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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