US embassy cable - 03ROME5481

UNCLAS ROME 005481 
 
SIPDIS 
 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: EFIN, ECON, IT, EUN 
SUBJECT:  ITALY PLEASED WITH TAKEOVER AGREEMENT, INSISTS 
    U.S. FIRMS NOT PREJUDICED 
 
REF: A. ROME 4980 
 
B. FRANKFURT 7111 
 
1. (SBU) MARKING THE END OF A FIFTEEN-YEAR, OFTEN BITTER 
STRUGGLE AMONG EU MEMBER STATES TO AGREE ON A SINGLE 
TAKEOVER CODE, THE UNANIMOUS VOTE BY INDUSTRY MINISTERS ON 
NOVEMBER 27 IN FAVOR OF THE ITALIAN-SHEPHERDED PROPOSAL WAS 
A VICTORY FOR OPEN MARKETS, GOI OFFICIALS CLAIM.  THEY ALSO 
INSIST THE TAKEOVER CODE WILL NOT DISCRIMINATE AGAINST NON- 
EU FIRMS IN TAKEOVER BIDS. 
 
2. (U) FOLLOWING UP ON THE NOVEMBER 27TH APPROVAL BY THE 
COMPETITIVENESS COUNCIL OF THE CONTROVERSIAL TAKEOVER CODE, 
WE SPOKE WITH VITTORIO LA ROCCA, DIRECTOR GENERAL, INTERNAL 
MARKETS, MINISTRY FOR EU INTEGRATION, AND CARLO MONTICELLI, 
SENIOR DIRECTOR OF THE G7 AND EU AFFAIRS OFFICE, FINANCE 
MINISTRY.  PRIOR TO THE NOVEMBER 27TH VOTE IN BRUSSELS, WE 
HAD SHARED WITH THESE OFFICIALS, AS WELL AS WITH THE 
INDUSTRY MINISTRY, U.S. CONCERNS ABOUT THE ISSUE OF 
RECIPROCITY. 
 
3. (SBU) BOTH LA ROCCA AND MONTICELLI STATED THAT U.S. 
FIRMS WILL NOT BE ADVERSELY AFFECTED BY THE TAKEOVER 
DIRECTIVE.  THEY INSISTED THAT THE RECITAL IN THE DIRECTIVE 
EXPLICITLY STATES THAT ALL EXISTING INTERNATIONAL TREATIES 
AND CONVENTIONS APPLY IN FULL FORCE AND WITH NO DEROGATION. 
ITALIAN OFFICIALS SPECIFICALLY PUSHED FOR SUCH PREAMBLE 
LANGUAGE TO ENSURE THAT MEMBER STATES AND THEIR COMPANIES 
DO NOT TRY TO USE THE CODE TO FEND OFF TAKEOVER BIDS FROM 
    NON-EU FIRMS, PARTICULARLY THE UNITED STATES, LA ROCCA AND 
MONTICELLI REMARKED. 
 
4. (U) ITALIAN OFFICIALS ARE PLEASED THAT ITALY 
SUCCESSFULLY CHAMPIONED ITS COMPROMISE PROPOSAL, AND 
CONSIDER THE APPROVAL OF A SINGLE TAKEOVER CODE ONE OF THE 
CROWNING ACHIEVEMENTS OF ITS EU PRESIDENCY.  MONTICELLI 
EXPECTS THAT THE DIRECTIVE WILL SAIL THROUGH THE EUROPEAN 
PARLIAMENT SINCE NO ONE WANTS TO UNDO WHAT HAS TAKEN 15 
YEARS TO ACHIEVE, HE WRYLY REMARKED. 
 
5. (U) EU COMMISSIONER FRITS BOLKENSTEIN DOES NOT SHARE THE 
ITALIANS' SANGUINE OPINION ABOUT THE POSITIVE MARKET 
EFFECTS OF THE TAKEOVER DIRECTIVE.  BOLKENSTEIN LAMBASTED 
THE TAKEOVER DIRECTIVE, AND ARGUED THAT IT WILL REVERSE 
STRIDES MADE TOWARD MAKING THE EU THE MOST COMPETITIVE 
ECONOMY IN THE WORLD.  IN AN ASIDE, MONTICELLI ADMITTED 
THAT TIME WILL TELL WHETHER THE COMPROMISE AGREEMENT WILL 
LEAD TO A MORE COMPETITIVE EURO-ZONE ECONOMY. 
SEMBLER 
 
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 2003ROME05481 - Classification: UNCLASSIFIED