Italy approves decree to curb energy costs, strengthen anti-takeover powers

Italian luxury shoemaker Tod's logo is seen at the flagship in Rome
Electricity masts are seen at the sunset in Milan's neighborhood, Italy, February 21, 2016. REUTERS/Stefano Rellandini

March 18, 2022

By Giuseppe Fonte and Angelo Amante

ROME (Reuters) -Italy on Friday approved measures to help consumers and firms cope with surging energy costs exacerbated by the Ukraine crisis, in a wide-ranging decree that also strengthens Rome’s powers to shield key assets from foreign bids.

The package, worth 4.4-billion euro ($4.86 billion), is the latest step to curb energy and fuel prices and comes on top of some 16 billion euros budgeted since last July to try and soften electricity and gas bills for firms and households.

“We have taken important and motivated measures to respond to the consequences on our country of the war in Ukraine,” Prime Minister Mario Draghi told a news conference after a cabinet meeting on the issue.

The measures are funded by taxing extra profits of energy firms that benefited from surging energy prices and will not worsen the public deficit. The levy takes the form of a 10% one shot contribution on profit margins that rose significantly in the last six months on an annual basis.

“This redistributive intervention … allows us to avoid extra borrowing and keep public accounts under control,” Draghi said.

Rome last autumn targeted the fiscal gap to fall to 5.6% of GDP this year from 7.2% in 2021.

In beefing up Rome’s “golden power”, the decree introduces a specific set of measures to oversee and block takeovers and commercial agreements on 5G networks and cloud technology.

Firms operating in these two sectors will be required to supply on an annual basis considerably more detailed notification to the authorities for proposed mergers and supply deals.

A new 10-member body at the prime minister’s office will be responsible for vetting any potentially sensitive deals, said a draft decree seen by Reuters.

Since the golden power was introduced in 2012, government authorities have blocked foreign forays into Italy six times. Five of those headed off Chinese bids, and four have come since Draghi took office 13 months ago.

The government also told public authorities to replace anti-virus software linked to Russia, and says it is considering measures to block exports of raw materials to shield domestic industries from shortages.

In the energy part of the decree, Rome set out plans to cut excise duties on petrol and diesel. This would cut prices paid at the pump by 25 cents per litre until the end of April.

Italy’s economy, which grew 6.6% last year following a record contraction of 9.0% in 2020 caused by extended coronavirus lockdowns, is now facing an increasingly weak growth outlook.

The Treasury is preparing to downgrade Italy’s growth target significantly below 4% this year from a previous 4.7% goal made last autumn, a government source said.

($1 = 0.9051 euros)

(Writing by Gavin Jones, Angelo Amante and Giuseppe Fonte; Editing by Leslie Adler, Bernard Orr)