WRITTEN QUESTION E-0368/00

by Benedetto Della Vedova (TDI) to the Commission

(14 February 2000)

Subject: Transfer of part of the electricity generation capacity of ENEL S.p.A., the former Italian state monopoly in this sector

As part of the process of privatising and liberalising the electrical energy production sector, the Italian Government recently decided in its capacity as controlling shareholder, and in accordance with the relevant legal provisions, to remove 21 plants with a total capacity of 15 thousand megawatts from the former state monopoly ENEL S.p.A (equal to about a quarter of its production capacity) and hand them over to three separate and newly established companies: Eurogen S.p.A., Elettrogen S.p.A. and Interpower S.p.A.

On 25 January 2000 the Italian Cabinet passed a decree laying down the procedures for the transfer involving the three private companies, stipulating that it should be done through private negotiation, under the control of ENEL S.p.A. and under the supervision of the Treasury Minister and the Minister for Industry, as well as with the assistance of the advisory committee for privatisations.

In order to ensure greater transparency and efficiency, the Italian Government could have opted for an international tendering procedure or a public share offer, which would have ensured that the companies were acquired by Italian or foreign purchasers with better knowledge of how to manage privatised companies and who would have been prepared to pay a higher price.

In the light of the above, does the Commission not think that the procedure followed by the Italian Government betrays its desire to control the ownership structure among operators on the national electricity market and that this is in breach of Community rules which protect competition and the free movement of capital, as well as consumer rights in the European Union?

Does the Commission not think that the Italian Government's attitude is designed to allow ENEL S.p.A. to abuse the dominant position which it enjoys, in violation of Article 82 of the EC Treaty, point (b) of which prohibits practices consisting of limiting production, markets or technical development to the prejudice of consumers, in other words practices designed to create barriers to market entry by unwanted competitors?

Answer given by Mr Monti on behalf of the Commission

(31 March 2000)

The Commission has examined the decree issued by the Italian Treasury Minister on 25 January 2000 specifying the conditions for the sale of production plants operated by ENEL, the Italian state electric power company.

In so far as the free movement of capital and establishment is concerned, the position of the Commission was set out in detail in its communication on certain legal aspects concerning intra-Community investment(1). The Commission has had concerns on certain aspects of the legal regime in Italy governing privatisation, as well as in certain other Member States. These concerns are reflected in several cases currently before the Court of justice (C-58/99 in the case of Italy). It might be noted that the issues in contention have generally concerned the reservation of special powers to the state in companies that have been, or are being, privatised, or explicit restrictions on foreign participation. With the guarantee that Community's rules on free movement of capital and establishment and the principles settled by the Court's case-law and set out in the Communication are respected, the Commission would not feel that the freedom of capital movements and establishment would extend to prescriptions on how exactly a privatisation should be organised or, should this not be by way of a public offering, on the Member State's freedom of choice as to which interested party a particular company is sold. Nevertheless, the implementation of such a decision, if restrictive of free movement of capital, must be based on measures which fulfil four conditions settled down in the above-mentioned case-law: they must be applied in a non-discriminatory manner; they must be justified by imperative requirements in the general interest; they must be suitable for securing the attainment of the objective that they pursue; and they must not go beyond what is necessary in order to attain it.

Having studied the ministerial decree in the light of Community competition rules, the Commission notes above all that whatever procedure is followed, the sale will enable new operators to acquire production capacity hitherto in the hands of ENEL. The ultimate objective of the decree is to allow new competitors to enter the electricity production market. Thus, the measure in itself pursues an objective favourable to competition.

The Honourable Member underlined the risk that the sale procedures followed by the Government might enable ENEL to abuse its dominant position. The Commission considers there is no evidence for the time being that the procedure selected will enable ENEL to abuse its dominant position.

(1) OJ C 220, 19.7.1997.