European Commission challenges Italy over ‘golden power’ on mergers

The European Commission has opened an infringement procedure against Italy regarding the use of the golden power rule toblock the acquisition of Banco Bpm by UniCredit.

The Commission expressed concern about the regulation, which gives the Italian government wide prerogatives to examine, block, or impose conditions on corporate transactions in the banking sector.

According to the Commission, the rule — although intended to safeguard national security — risks allowing unjustified interventions, which undermine the principles of freedom of establishment and free movement of capital within the single market.

The EU added that the Italian legislation overlaps with the exclusive competences of the European Central Bank (ECB) within the Single Supervisory Mechanism.

Italy now has two months to respond and remedy the shortcomings raised by the Commission.

“The Commission raises objections to the so-called golden power rule, reformed in 2022 under the Draghi government. On the basis of the judgement we will respond to the objections raised in the competent fora,” said Italy’s economy minister Giancarlo Giorgetti

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He added: “In a constructive and cooperative spirit we will make a regulatory proposal that will provide clarity and overcome the objections. We are convinced that it will allow for a shared framework of competences.”

In July, UniCredit’s board of directors withdrew its bid for Banco BPM, declaring it impossible to proceed due to the Italian government’s use of golden power to block the merger.

According to UniCredit, the constraints and timelines imposed by the executive prevented the necessary dialogue with shareholders to assess the benefits of the merger, thus scuppering an operation that would have made UniCredit the first national bank by capitalisation.

The lender recently appealed to Italy’s top administrative court against government restrictions imposed during its bidding process for Banco BPM. These include the obligation to exit Russia by 2026 and the maintenance of investments in Anima Holding.

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