Less competition, more politics? Golden power: handle with care

Madonna di Campiglio. Perhaps it is because the Dolomites are protected not only by Italy but also by UNESCO; perhaps it is because this is where Africa and Eurasia collided (we are talking about tectonic plates a hundred million years ago); or perhaps because of the marvellous scenery bathed in the September sun, but it does not seem all that out of place to discuss ‘Golden Power’ against the backdrop of the Brenta peaks, as was done at the conference organised by the Observatory founded and directed by Michele Carpagnano. The topic may seem like one for insiders, yet it became central the moment the doctrine of economic security was adopted in Europe too (the US had already introduced it in 1979, even though the long cycle of globalisation had left it on the back burner). In many respects, Italy has anticipated the changing times. And year after year, virtually all the main economic sectors have become strategic, with the risk that this governmental power might become the instrument of a new form of national protectionism. It is not a question of filling the gaps or ‘failures’ of the market, because the series of crises we are experiencing do not stem from ‘turbulent liberalism’, but from the choices made by governments.

Over the past six to seven years, the most industrialised countries have seen a surge in various types of controls on foreign investment (not all of them have ‘Golden Power’); the rise in Italy, however, is truly striking, as shown by the OECD charts, commented on by Carmine Di Noia, Director of Financial and Business Affairs. Notable cases include the veto on Unicredit’s bid for BPM (two Italian banks), the governance of Pirelli, and the takeover of TIM. In its original 2012 framework, the ‘Golden Power’ covered only defence and national security, communications, transport and energy. Even before the Covid-19 pandemic, the regulation had extended its scope to biotechnology, the agri-food sector and finance. The pandemic introduced a framework also applicable to transactions within the European Union; defined as temporary, it has become permanent. It is a Rossinian crescendo: notification requests have multiplied to the current figure of 1,080. This does not mean that this extraordinary power has always been exercised; fortunately, it has only been invoked in 6 per cent of cases. Yet the measure has been likened to opening Pandora’s box. Moreover, the imposition of conditions is subject to a process involving ongoing scrutiny by the public authorities – scrutiny that is all the more pervasive when one considers that the Presidency of the Council can call upon the inspection and investigative powers of the Guardia di Finanza.

What has been the impact on the system? In June, the Bank of Italy published a study on corporate mergers and acquisitions. “In sectors where the notification requirement was not accompanied by the actual exercise of government powers, M&A activity was not hindered,” it states. In sectors where these powers were actually exercised, however, a significant but temporary decline was observed: between 2020 and 2024, there are estimated to be around 350 fewer transactions, a figure far exceeding the number of transactions formally blocked (13) or authorised subject to conditions (120). The negative impact proved statistically significant in the two-year period 2021–22, immediately following the extension of the legislation. The gradual clarification of operational boundaries and implementation practices has contributed to a return to normality. In the sectors concerned – which are among the most productive and technologically advanced – the ‘Golden Power’ has therefore temporarily hindered the rationalisation of the production system, a process which has, however, continued in the rest of the economy”.

We need to bring order to the situation and adopt a clear and responsible course of action that minimises the impact on businesses and growth. This is also because, in the meantime, a regulation has arrived from Brussels that strengthens the role of the European authorities in the approval process for transactions, particularly in the financial sector – undoubtedly the most sensitive and controversial area. The broadening of the scope makes it essential to regulate the exercise of these special powers and, at the very least, to coordinate them at EU level, explained Damien Levie, the European Commission’s Adviser on Economic Security, in his opening remarks. 2027 will be a pivotal year, and a particularly difficult one as elections are due to be held in Italy, France, Spain, Poland and Greece.

‘Golden Power’ faces its make-or-break moment, Carpagnano emphasises. ‘Handle with care’ could be the central theme of a discussion involving Renato Loiero, adviser to Giorgia Meloni; Carlo Deodato, Secretary-General of Palazzo Chigi; Roberto Chieppa and Roberto Garofoli of the Council of State; Serena Stella, Deputy Secretary-General of the Antitrust Authority; Carlo Comporti, Consob Commissioner; Daniele Calisti of the European Commission (DG Competition); Giuseppe Catalano (Segretario del Consiglio di Amministrazione di Assicurazioni Generali), Giuseppe Antonuccio, head of the Golden Power unit at the Ministry of Enterprise, Giuseppe Lillo, a state lawyer, Raffaele Giarda, Alessandra Battaglia, legal director, and Biagio Mazzotta, chairman of Fincantieri. We have mentioned only a few of the large group of experts. The ‘Madonna di Campiglio method’ is not as strict as the more famous Chatham House Rule, but it is nonetheless an open and confidential discussion; no direct quotes, but topics, issues and even the occasional name and surname.

Representatives of market regulatory authorities are concerned about a conflict of interest with Golden Power, which tends to assume a dominant position precisely because of its close ties to the government. Jerker Hellström, of the Swedish Inspectorate for Strategic Products, explained that his government adopts a more liberal approach by entrusting agencies with the task of analysing and determining what may breach national rules. Nevertheless, it is undeniable that politics has gained the upper hand over the economy everywhere. The risks are clear: stifling competition, hindering the free movement of capital (an even more serious matter within the EU, which aims to build a genuine single market), blocking innovation, and erecting barriers to free trade. The very nature of business is changing: to put it bluntly, there are fewer economists and more generals on boards of directors; this applies not only to state-owned companies but also to purely private ones. The challenge is to drain the dirty water without throwing out the baby—a baby that must, however, be raised, educated, and nurtured within the framework of a social market economy that defends strategic interests without erecting walls. This, in essence, is the crux of the debate, bearing in mind that it is an equation for which there are currently no clear solutions – even less so if the ‘invisible hand’ is replaced by the ‘will to power’.