Blind fury

1 March 2006

One can understand the indignation at French protectionism. But an eyeforaneye is a recipe for everybody going blind. Two ideas blocking BNPP’s bid for BNL and allowing companies to use any country’s laws to frustrate hostile bids look quite batty.

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Romano Prodi, the centreleft candidate to be Italy's next prime minister, said in an interview that if France does not open up its market we have to prohibit [French] acquisitions in Italy. He did not rule out that the possibility of freezing Electricite de France's voting rights in the Italian electricity company Edison. Prodi also said that, if the situation continued to deteriorate, he wouldn't like things to get to the paradoxical stage where even existing bids were blocked.

Meanwhile, Giulio Tremonti, Italy's finance minister, said that at the moment Italy isn't planning new laws in response to the French defensive merger between Suez and Gaz de France.

On Tuesday, a report in Italian daily La Repubblica said the Italian treasury was studying two potential measures. One would allow any Italian company which receives a hostile bid to choose whether it would prefer to defend itself under Italian takeover law or that of any other state in the European Union. The second measure would prevent companies that were directly or indirectly controlled by a foreign state and had a dominant position in their own market from acquiring stakes higher than 5% in natural gas or electricity companies.

Mario Draghi, the new governor of Italy's central bank, said that the French protectionist model was doomed to failure and that it was better to follow the British and German examples.

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