European Commission Not Intervening on Italy Concessions

(Bloomberg) --

The European Commission cast doubt upon a bid by international investors to reverse rule changes that make it easier for Italy’s government to revoke highway license contracts.

Investors in Atlantia SpA, which runs over half the country’s 3,000 kilometers of toll roads, have been working on a direct appeal to European authorities in reaction to an Italian decree signed last month that changed the concession rules, according to two people familiar with the matter.

Prime Minister Giuseppe Conte is under pressure from parts of his divided coalition to strip Atlantia’s Autostrade per l’Italia SpA of its concessions after a bridge collapse in Genoa killed 43 people in 2018. The decree, which took effect at the start of this year, must be approved by parliament by the end of February.

“This is a matter for the Italian authorities only” the EU’s executive arm said in an email, in response to a question on whether it’s looking into the matter.

For Autostrade, potential compensation for a loss of its concession would be reduced under the new legislation to as little as 6 billion euros ($6.7 billion) from more than 20 billion euros.

The anti-establishment Five Star Movement, the biggest party in the coalition, is demanding the company’s concession be taken away, while the center-left Democratic Party has favored a negotiated settlement.

In a letter to European authorities, investors want to demand a strong, swift intervention to restore respect for the rule of law and for the internal market, according to one of the people familiar.

Investors involved in the plan to appeal to Brussels include GIC Pte Ltd. and Silk Road Fund, Il Sole 24 Ore reported on Tuesday.

Regulatory Issues

The letter, set to be sent this week to commissioners including Valdis Dombrovskis and Margrethe Vestager, charges that the Italian decree undermines regulatory predictability, discourages investment and unjustifiably restricts the free movement of capital.

A spokesman for Autostrade declined to comment.

Conte has promised that his government will decide on the concession issue soon.

“The job of this government is to safeguard the public interest, not to guarantee an advantageous future to private license holders, especially if they are in breach of contract,” the premier said in an interview with Corriere della Sera Monday.

Ex-premier Matteo Renzi, leader of a junior party in the coalition, has taken up investors’ interests, saying he’ll press for changes to the decree when it’s debated in parliament later this month. His position has added to tensions in Conte’s fractious majority.

Autostrade has denied negligence in the Genoa disaster and has stepped up maintenance works on its other bridges.

Atlantia on Monday appointed Carlo Bertazzo as chief executive officer for its Italian business.

©2020 Bloomberg L.P.

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