Romano Prodi’s Italian government is again at the centre of a business controversy following the scrapping by Abertis and Autostrade on Wednesday of their €25bn ($33bn) infrastructure merger. Mr Prodi expressed reservations the moment the deal was announced in April, shortly after he had been elected prime minister.
The government looked as if it was trying to resolve two issues at once: ineffectual regulation that had led to poor investment in Italy’s roads; and perceived discomfort with the proposed “sale” of national assets to Abertis of Spain.
The government says it is not guilty of adding to the rising tide of “economic nationalism” in Europe. But it effectively tore apart the regulatory and business framework governing the industry and then failed to replace it for months with anything but uncertainty.
The killer blow was a move by the government to review the concession under which Autostrade operates motorways and collects tolls. The review could end in Autostrade losing a right it had gained after privatisation in 1999 and which was supposed to run until 2038.
Antonio Di Pietro, the combative infrastructure minister, said on Wednesday: “The problem was not the merger in itself . . . but concession rules that are too favourable towards the motorway operator, so much so that they had led to the bad habit of automatic tariff hikes.”
The refusal to back down on the concession review, even in the face of legal action from the European Commission, has prompted accusations of improper meddling in business.
Maurizio Lupi, responsible for infrastructure in the opposition Forza Italia party, said: “On Autostrade-Abertis the government must immediately intervene to stop minister Di Pietro who . . . is seriously damaging a company quoted on the stock exchange.”
Even one government minister, Emma Bonino, acknowledged that the scrapping of the deal risked sending the wrong signal to international investors.
Others have pointed to Mr Prodi’s ugly fight this year with Telecom Italia, also a privatised company, as another example of unwarranted government action. TI said it might try to sell its mobile arm, the only remaining Italian mobile operator in the country, alarming Mr Prodi. Marco Tronchetti Provera, TI’s chairman, resigned and the new management scrapped the possible sale.
In September, Giovanni Perissinotto, co-chief executive of Generali, Italy’s largest insurer, told the Financial Times that intervention by politicians had been “negative for the market”. He said: “The problem is [in being] perceived as a country that [has] ad hoc intervention.”
Another business person, the chief executive of a large company in Milan who did not want to be named, said he thought the government was trying to copy an example set by French politicians for managing the economy so that Italy did not become marginalised, with its few large companies falling into foreign hands.
To be fair, the government has been far from the only critic of Autostrade’s poor investment record. The company has fallen billions of euros behind in investment, a point it does not dispute but blames on chronic planning delays and incessant changes to the law.
The two companies said on Wednesday there were insurmountable obstacles to their merger, blaming legal moves by the government or regulators that had made it impossible for shareholders to value Autostrade.