The Italian government is preparing the privatization of its electric energy company ("ENEL"). On August 1, 1995, the Italian Antitrust Authority ("the Authority") issued an opinion on the present organization of ENEL, repeating a position which it had already announced in July 1994, that ENEL should be split up into discrete segments to stimulate competition and facilitate market entrance. The Italian Government of Mr. Lamberto Dini disagrees with the Authority's recommendation, and argues that ENEL should be privatized en bloc.
Opponents to the split up of ENEL argue that it would retard privatization. In that regard, the Authority argues in its August 1 notice that the threat of an antitrust action after the privatization may also chill investment interest in the sale to which it gives an estimated value of 30 trillion Lire. The Authority points out that European Union legislation and policy expressly require that competition be stimulated in the electric energy industry, and intimates that such legislation would require Authority action if ENEL is privatized en bloc.
The Authority states that a timely reorgnization of ENEL undertaken before the privatization would create a number of independent energy generation companies, to which a parallel liberalization of the wholesale distribution of electric energy and prices should be added, and that in this way market competition in the sector could be assured. The Authority makes reference to the British experience in the same sector as an example of a privatization which succeeded in stimulating competition.
If the Authority and the Government do not reach an understanding and ENEL is privatized en bloc, the Authority would be free to take action to break up the concentration once the company reaches private hands. However, the Italian Antitrust Law allows the Council of Ministers to permit otherwise impermissible concentrations if it finds such concentrations to benefit the public and they do not completely eliminate competition.
The content of this article is intended to provide general information on the subject matter. It does not substitute the advice of legal counsel.
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