Luxemburg, 06/12/2007 (Agence Europe) - According to rulings delivered by the European Court of Justice on Thursday 6 December 2007, Italy has infringed Community law as a result of two points in its legislation. Firstly, Italian provisions which grant special powers to the state or public bodies with holdings in a company are contrary to Article 56 of the EC Treaty. Secondly, Italy failed to recover state aid set up in 2003 to encourage job creation, after the Commission had required it to do so.
Article 2449 of the Italian civil code says that if the state or public bodies hold shares in a company limited by shares, the articles of association may confer on them the power to appoint one or more directors or auditors or members of the supervisory board. The Court says that this could discourage investment by other shareholders, who would be denied influence on the management of the company proportionate to their shareholdings.
The company Azienda Elettrica Milanese SpA (AEM) was set up by the City of Milan in 1996. After it was listed on the Stock Exchange in 1998, the City retained 49% of shares (ceding, therefore 51%), then in 2004, it reduced its holding to 33.4%. However, AEM's articles of association were amended to allow the City to continue to be represented on the Board of Directors, and to allow it to have a say in the selection of the other board members. The amendment of the articles is allowed under the Italian civil code. Following a complaint lodged by a group of the other shareholders, the Tribunale amministrativo regionale per la Lombardia referred the matter to the Court of Justice to determine whether, although this case was different from the “golden shares” scenario, such an application of the civil code complied with Article 56 of the EC Treaty, which bans any restrictions on the movement of capital. In its judgment, the Court ruled that such an application of the Italian civil code contravened the Article in the Treaty (joint cases c-463/04 and C-464/04). The Court has already found against Germany in a similar case (“Volkswagengesetzt”, see EUROPE 9529).
In a separate ruling, the Court found against Italy for failing to take effective measures to recover state aid set up in 2003 to encourage job creation. In 2004, the Commission concluded that this aid was illegal. It ordered aid to companies in financial difficulty (the aid was intended to be used to avoid job losses) to be recovered. The Court supported the Commission's decision and deemed that Italy was not able to demonstrate that it was not possible to recover the aid in question, given that it had not even tried to do so (case C-280/05). (C.D.)