Italy's "Golden Power" Complicates M&A

Originally introduced in 2012 to shield defense, energy, and telecommunications assets, Italy's "Golden Power" has expanded dramatically. Following the COVID-19 pandemic, its scope was broadened to include critical technologies like AI, robotics, semiconductors, and cybersecurity, as well as the agri-food and healthcare sectors. The number of transactions requiring notification has surged, growing from 83 in 2019 to 835 filings in 2024, a more than tenfold increase. This reflects not only the wider range of strategic sectors but also the legal ambiguity that often leads companies to file on a precautionary basis. Scrutiny now extends beyond non-EU acquirers to include investors from within the European Union and, in some cases, even purely domestic Italian transactions. This shift indicates the government is using the Golden Power not just as a foreign investment screening tool, but as a broader mechanism for strategic oversight of national assets. In late 2025, the government's use of Golden Power to impose conditions on the proposed acquisition of Banco BPM by UniCredit triggered a formal infringement procedure from the European Commission. The EU argued that the intervention overstepped into banking supervision and compromised the free movement of capital. While outright vetoes are rare, the government frequently imposes conditions on deals. Notable interventions include blocking the sale of a 70% stake in LPE, a semiconductor manufacturer, to a Chinese company and placing specific obligations on supply contracts involving 5G technology. To mitigate uncertainty, authorities introduced a pre-notification procedure in September 2022. This allows companies to get a preliminary assessment on whether a transaction falls within the Golden Power scope before a formal filing is made, aiming to reduce the number of purely precautionary notifications. A 2026 reform recalibrated the Golden Power regime, particularly for the financial sector, in response to the EU's concerns. The new rules introduce an "economic and financial security" test and establish that the Golden Power review for banks and insurers now formally follows clearance from EU regulators, creating a staggered timeline for dealmakers. Failure to notify a relevant transaction can lead to severe penalties, including the nullification of the deal and fines that can amount to double the investment's value. This significant compliance risk forces M&A teams to factor in a potential 45-day review period, which can be extended, into their transaction timelines.