Italians seek measures to safeguard privatisations

Date: 22/07/1999

By Tim Jones

ITALY is seeking changes to EU law to prevent the backdoor renationalisation of vulnerable privatised companies by state-owned foreign predators.

The proposed 'reciprocity rule' suggested by Treasury Minister Giuliano Amato would force firms such as Electricité de France, Deutsche Telekom or Schiphol Group to open up their share capital to other EU firms or abandon their acquisition plans.

"There must be a legal rule on reciprocity because we are ready to privatise but we do not want to leave the door wide open to companies from other countries," Amato told an Italian parliamentary panel.

Rome is in dispute with the European Commission over its refusal to allow nationalised companies including Schiphol Group, the 75% government-owned operators of Amsterdam airport, to buy more than a 2% stake in Aeroporti di Roma. On the other hand, privatised British operator BAA has been allowed to buy 49% of Naples airport.

Commission internal market regulators have given Rome until next week to respond to allegations that these restrictions violate rules guaranteeing free movement of capital within the EU.

When Deutsche Telekom was negotiating the take-over of Telecom Italia in April, Prime Minister Massimo D'Alema said he could not accept the newly privatised firm "becoming a company in which the prime owner is the German state".

Italian officials point out that when 26% of Deutsche Telekom was sold, the German government put 'mechanisms' in place to prevent majority foreign ownership during privatisation.

The Italian 'reciprocity' proposal, which is set to be tabled during the impending Intergovernmental Conference called to rewrite the Union's founding treaties, could well attract support from governments frustrated by lop-sided opening of the EU's utilities markets.

Although a quarter of the EU's €170-billion electricity market was opened up to cross-border competition in February, France is lagging in implementing its liberalisation law.

Dutch Economic Affairs Minister Anne-Marie Jorritsma has filed a complaint with the Commission regarding France's minimal compliance with energy liberalisation rules, while British Energy Minister John Battle has stated: "It is not acceptable for companies to compete in the markets of other member states while being protected from competition in their own."

The UK, which has recently become the first country in the world to offer all electricity and gas customers a choice of supplier, wants to resume negotiations with EdF over the contract under which it supplies 6% of the market in England and Wales through a cross-Channel 'interconnector'.

"The trouble is this rule change would require unanimous backing and there is little chance that the French or even the Dutch would like it", said a British official.