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Italian Parliament Passes Anti-Competitive Legislation
By Matthew Creeger
The Digest, The Digest, Associate Editor
On March 23, 2011, the Italian Parliament passed legislation that would make it more difficult for foreign companies to take over “strategic” Italian-owned businesses. These types of businesses include those in energy, food, defense and telecom firms. Stefano Saglia, Italy’s junior industry minister said the legislation would “identify certain sectors the government believes to be strategic on which it reserves the right to intervene when it discovers the investors come from protected markets.” Measures in the legislation allow Italian companies to postpone their annual shareholder meetings to as late as June of this year.
This new legislation has been attributed to French dairy company Lactalis’s recent attempt to become the majority shareholder of its Italian rival Parmalat. Parmalat had planned to hold their annual meeting on April 12, 2011 where it was to appoint new management and dictate new directives. Their annual shareholder meeting can now be delayed for another three months.
The new law will buy Italy extra time for Italian companies to put together an Italian consortium to counter Lactalis’s likely bid for control. Lactalis currently owns 29 percent of Parmalat which is just below the level needed to make a full takeover bid under Italian law. Italian securities laws require a full takeover bid if any investor or consortium acquires more than 30 percent of a listed company.
The Italian consortium would likely include Italy’s biggest bank, Intesa Sanpaulo which currently owns 2.2 percent of Parmalat. Also included would be the Fererro group which is Italy’s biggest food-sector enterprise. Fererro also makes the popular cocoa-hazelnut spread, Nutella. However, both companies are said to be reluctant to openly clash Besnier family which owns Lactalis and who already outsells Parmalat in both France and Italy's cheese market.
Italy’s tax agency has been checking whether the sales of stakes in Parmalat are in line with tax rules. Also, Italian antitrust chief Antonio Catricala has asked Parmalat and Lactalis for more information about possible changes in control of Parmalat.
Giuseppe Vegas, the head of Consob, the securities regulator, stated that the new law "doesn't address the issue of nationality. It gives more time for shareholder assemblies, but each company will still have to deal with their challenges." He added, "Our system is easier to attack than others. Many companies ought to take a look around and make sure their alliance networks are compatible with the way global money flows are moving."
For more information, please see:
The Wall Street Journal “Italy Takes Step to Hold Up Foreign Takeovers,” 31 March 2011.
Reuters, “Italy Erects Barriers to Curtail Foreign Bids,” 23 March 2011.
Euronews,net, “Italy ‘moving on anti-takeover law’” 23 March 2011.