_share ownership by a private group, a region or ANAS, which does not involve control over the management. The remaining percentage of ownership is on the share market._ It is surprising, yet not unexpected, that since 2005 there have been average equity composition changes only for auctioned highways. The private groups have reinforced their control and significantly dismantled the presence of the public authority at the regional/direct public level, and especially have phased out ANAS. The reasons for this move are to be found in the private concession mechanism, but also and mostly in the new power of ANAS. It is still a fully public company, yet ranges from highway management to control, tariff regulation and contract enforcement. In fact, up to 1999, ANAS was mostly managing highways. But after the beginning of the concession system, it also acquired the role of regulatory agency under the total share control of the MEF and the technical and operational control of MIT.

**Box 3.  The Auction of Autostrade, the Italian Mass Concession.** Autostrade was a group held by a gigantic public holding, IRI, enjoying a traditional concession on more than 40 percent of the national highway network. The so-called “privatization” of Autostrade occurred in several steps. First the Parliament passed a law creating a 40-year concession to Autostrade.<sup>12</sup> Then IRI issued a call to sell Autostrade. And finally, after the sale, IRI was dismantled and its resources were transferred to the MEF. The call to sell Autostrade was structured as follows: 70 percent of its shares would be sold on the public stock market to individuals and 30 percent to an individual group ( _nocciolo duro_ ) through a private negotiation. Ten groups participated in the auction of Autostrade: Edizione Holding, owned by the Benetton family and some Italian banks (who later became Atlantia group), the Spanish highway private company Acesa, the Portuguese highway company Brisa, the Gavio group (which controlled the ATM group previously cited), the Australian bank Macquarie, the McDonald’s group, two English private equity funds and three other individual companies.<sup>13</sup> The MEF selected Macquarie Bank and the Benetton group and allowed them the due diligence,<sup>14</sup> choosing the Italian group because of the comparatively more convenient last offer. The plan of government regulators forecasted a large private group listed and traded on the market, with broad control over its investments and a massive dividend-redistribution scheme to numerous small shareholders. This failed in a few years, as in 2003 the Benetton group launched a tender offer on the remaining 70 percent of traded shares, quickly passing from 30 to 50.1 percent and establishing total control over the company.

Has the concession to private groups increased highway quality? Although it may be difficult to fully measure this claim, there are some proxies that can be studied and seem to confirm a significant rise in quality and safety standards. If we refer to maintenance expenditure, Figure 3 seems to suggest that the highway management has improved, as between 1999 and 2004 both mean and median expenditure on the whole network was much higher than before 1999.

> 12 This law and its application have created problems because the independent public authorities dealing with National Accounts (Corte dei Conti) and competition (Antitrust) rejected it and were forced by the Parliament to accept a prolonged concession. For reference refer to: <u>http://archiviostorico.corriere.it/1998/giugno/02/Autostrade_Antitrust_campo_co_0_98060211313.shtml http://archiviostorico.corriere.it/1998/febbraio/18/Autostrade_vendita_accelera_co_0_9802185056.shtml</u>

> 13 <u>http://ricerca.repubblica.it/repubblica/archivio/repubblica/1999/07/30/corsa-dieci-per-autostrade.html</u>

> 14 <u>http://ricerca.repubblica.it/repubblica/archivio/repubblica/1999/10/19/autostrade-domani-la-scelta-dell-iri.html</u>

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