United States: Dykema Gossett's US - Italy Practice

Dykema Gossett's U.S. - Italy Practice is one of the most active, in legal and strategic consulting, among American law firms. Participants include: Charles R. Bernardini, former Managing Director of the American Chamber of Commerce in Italy, in Milan; Davide Siniscalchi, formerly with a Rome-based economic and strategic planning group; Sherrill Wolford, Chair, International Taxation Committee, Michigan Bar Association; Jessica DePinto, whose practice concentrates on customs and antidumping issues; and our firm's corporate, intellectual property and immigration attorneys. They are supported in Italy by our affiliate office in Bologna and by a network of qualified, Italian law and accounting firms.

Periodically, we publish a newsletter highlighting opportunities with Italy.

INVESTMENT BOOM IN ITALY'S GOLDEN TRIANGLE

Lombard, the English-language Italian business magazine, reports (November, 1999) that: "Leading private-equity investors based in Italy and abroad are in a hurry to establish a presence in the Milan-Bologna-Verona triangle." The article refers to this northeastern part of Italy as "a sort of Silicon Valley for Italy's mechanical industry." The deals tend to be minority investments in small-to-medium-sized businesses, in which the returns over the last decade have ranked above comparable figures in other countries. Several factors are highlighted as explaining this trend: (1) stock exchange listings in Italy are easier now than in the past; (2) the "triangle" is the richest area in Italy; (3) generational changes in management of the companies are influencing how they do business; and (4) the situation is well-suited for leveraged buyouts, where the transactions can be completed with the help of investors who can exit a few years later through a stock exchange listing.

DYKEMA BOOSTS CUSTOMS EXPERTISE

Dykema Gossett recently enhanced its customs-related services for clients with the addition of Jessica T. DePinto. Jessica practices customs and international trade law and is fluent in Italian. Along with Dykema Gossett partners George Ash and Pierre Talbert, the firm's international group advises clients in the following customs and international trade areas:

• Tariff Classification
• Tariff Valutation
• Customs Compliance and Assessments
• Duty Free Treatment
• Country of Origin Marking Compliance
• Textile Restraints
• Import Restraints
• Import and Export Controls
• Administrative Rulings
• Administrative Protests
• Seizures and Detentions
• Penalties and Liquidated Damages
• Generalized System of Preferences (GSP)
• North American Free Trade Agreement (NAFTA)
• World Trade Organization (WTO)
• Antidumping

The American Chamber of Commerce in Italy published an article in 1999, authored by Charles R. Bernardini and Alessandro Albicini, on the legal and procedural issues involved in representing a client in antidumping cases before the U.S. Court of International Trade.

FRANCHISING IN-AND FROM- ITALY

The U.S. Embassy in Rome issued in November a comprehensive report regarding opportunities for franchising in that country, by U.S. companies. It made reference, also, to some of the Italian companies which are interested in expanding in the U.S. (Dykema Gossett has good contacts with some of them). Following are some highlights of the report:

• There is a move towards concentration in retail distribution - belated compared to much of Europe, because if Italy's traditional laws favoring family-owned stores. Franchising seems to be well-suited to Italy because of these factors;
• Part-time work has recently been liberalized, as well as a lifting of other restrictions for small businesses;
• Services and hotel sectors are two particular growth areas where U.S. names are attractive to local Italian businesses;

Some interesting Italian franchising leaders have not yet embarked widely in the U.S. and, therefore, may offer opportunities. They include:

• Il Fornaio – bakery
• Blue Spirit – jewelry
• Gigad - food distribution
• Iman-VP – cosmetology
• Amico Giò - toys and games
• Figurella – cosmetology
• Mandarina Duck - small leather goods
• Portofino's – cosmetology
• Calzedonia - intimate apparel
• Brummel - children's clothing
• Roman's - ladies clothing
• GP Pedrini - men's clothing
• Max & Co. - quality apparel
• Liola - ladies classical clothing

Dykema Gossett can help identify an Italian partner as a master licensee; assist in the corporate, contractual and tax planning of entering the country; assist, through our Italian network, with obtaining necessary approvals; make the initial overtures to Italian franchisors; advise on Italian and EU regulations, in collaboration with our Italian affiliate; and advise the U.S. based franchisee on import regulations.

SETTING UP AN ITALIAN SUBSIDIARY

We recently assisted, with tax and corporate planning, a U.S. supplier of warranty services to GM in setting up an Italian subsidiary. The Italian location was selected because of the expertise of an Italian company able to support the operation, under the direction of the U.S. supplier. Through this mechanism, the U.S. supplier was able to expand its business into Europe and maintain its relationship with GM.

The VAT (value added tax) and related customs issues proved to be the most complex aspects of the corporate planning. The warranty service involved shipping parts between countries within Europe and then returning them to the country of origin, as well as sourcing parts from the U.S.

Our firm works regularly with European attorneys and accountants who are experienced in dealing with U.S. clients, in English, on these complicated transactions.

ITALIAN AUTOMOTIVE SUPPLIER ACQUISITION

Aleksandra Miziolek of our Detroit office assisted a major Michigan automotive supplier in its acquisition of an Italian company with facilities in Italy, Germany, Czech Republic and Switzerland. The deal value was approximately $100 million. DG managed and coordinated the restructuring of the client's European operations (including UK, France and Luxembourg) and the closing of the sale simultaneously with the execution of a major US credit facility.

ROME LOBBYIST JOINS DYKEMA GOSSETT

The firm added a new range of services for its U.S. and European clients recently, with the addition of Davide Siniscalchi, formerly with an economic and strategic consulting group based in Rome. He concentrates in strategic planning for companies in the aerospace, defense, chemicals and environmental sectors.

Davide will be based out of our Chicago and Washington offices, where he will assist European and U.S. clients in dealing with governmental contacts and in establishing strategic partnerships both here and abroad.

Davide represents, for example, the aviation subsidiary of a major Italian company, in its strategic positioning in North America.

SPORTS INVESTMENT IN ITALY

Dykema Gossett represented in 1999 the first U.S. purchaser of a professional ("A1 Division") basketball franchise in Italy, and in the subsequent sale of a portion of the same franchise to Kobe Bryant, of the Los Angeles Lakers.

Our client purchased Olimpia Milano, a franchise which over 63 years is the winningest in Italy.

The purchase - and subsequent part sale to Mr. Bryant - was widely covered in the U.S. and Italian business press. The transaction represented not only the first such investment by a U.S. company, but the first by an active NBA player. Its significance is linked to a worldwide trend of linking sports and business marketing, and to the potential growth worldwide for basketball.

Along with our affiliate Italian counsel, Alessandro Albicini of Bologna, we assisted in the corporate and tax aspects of planning, structuring and coordinating the different legal systems, under the umbrella of the U.S.-Italy tax treaty.

It is expected that other Italian franchises will come available to international investors as the league moves toward European consolidation and toward a possible Euro league.

ENTERTAINMENT LAW

Our firm continued its work in 1999 as lead international counsel for the "Andrea Bocelli Tour of the Americas," which came to a successful conclusion. This involved contractual and tax work for the Italian tenor, whose management is based in Bologna.

As a result of this assignment, Sherrill Wolford and Charles Bernardini were invited as speakers at the July seminar in Porretta Terme, Italy on legal aspects of the U.S. and Italian music business. Dykema Gossett serves as pro bono, U.S., counsel for the Porretta Terme Sweet Soul Music Festival, the oldest, continuous, festival in Europe for soul music.

SITE SELECTION IN ITALY

In recent years, major U.S. companies such as Allstate, Motorola, Lucent, Mailboxes USA and Manpower have set up operations in Italy. The Italian American Chamber of Commerce of Chicago will present a panel of such companies in the Spring of 2000, to hear their start -up experiences and advice and how they came to decide where to set up operations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.