Golden Powers and the energy sector: New Year decrees sweep away application uncertainties

On 30 December 2020, Prime Ministerial Decrees Nos. 179 and 180 were published in the official gazette. The decrees are intended to stem the exorbitant number of golden powers notifications that have been submitted in recent months as a result of the urgent application extensions made by the Liquidity Decree.

In general terms, the regulation of golden powers, governed by Law Decrees nos. 21/2012 and 105/2019, as subsequently amended and supplemented, and by the relevant implementing decrees, imposes the obligation to notify certain transactions relating to the circulation of the corporate capital of strategic companies or internal acts carried out by such companies. It also attributes prescriptive, prohibitive or oppositional powers to the Presidency of the Council of Ministers, to be exercised whenever the notified resolutions or transactions are likely to harm public security or public order or – with specific reference to the energy sector – to cause a threat of serious prejudice to the security and operation of networks and strategic plants and to the continuity of essential supplies.

With particular reference to the energy, transport and communications sectors, Article 2 of Law Decree no. 21/2012, recognising the strategic nature of these contexts, referred to an implementing decree, to be updated every three years, for the specific identification of assets of strategic importance in these sectors. This identification was set forth by Presidential Decree 85/2014, which, with reference to the assets of strategic importance in the national energy system, indicated:

1. the national natural gas transmission network and related compressor stations and dispatching centres, as identified pursuant to Article 9 of Legislative Decree 23 May 2000, no. 164, as subsequently amended, as well as gas storage facilities;
2. infrastructures for the supply of electricity and gas from other States, including onshore and offshore LNG regasification plants;
3. the national electricity transmission network and related control and dispatching facilities; and
4. management activities connected to the use of the networks and infrastructures referred to in points a, b and c above.

The scope identified by Presidential Decree 85/2014 with reference to the energy sector was therefore particularly narrow and specifically identified.

However, as is well known, the Liquidity Decree extended the objective and subjective scope of application of the special powers of the Prime Minister's Office in the "strategic" sectors. It also established a more stringent transitional regime, until 31 December 2020 (extended to 30 June 2021), with respect to the acquisition of stakes in companies operating in strategic sectors, introducing specific exceptions to Law Decree No. 21/2012, with reference to both the nationality of the acquiring party and the percentage of voting rights acquired in the target company operating in sectors of strategic importance.

However, with particular regard to the objective scope of application, the reference made by the Liquidity Decree to the factors listed under Article 4 of EU Regulation 452/2019 had given rise to many doubts on the application of the notification obligation, especially in the energy sector.

In fact, Article 4 of the abovementioned European Regulation refers to "critical infrastructures, whether physical or virtual, including energy, transport, water [...]" (letter a), as well as to the "critical technologies and dual-use products as defined in Article 2, point 1, of the Regulation (EC) N° 428/2009 of the Council, among which artificial intelligence, [...] the aerospace, defence, energy storage, quantum and nuclear technologies, as well as the nanotechnologies and the biotechnologies" (letter b), and to the "security of supply of critical productive factors, including energy and raw materials" (letter c).

These references, in combination with the strategic assets in the energy sector already identified by the previous Presidential Decree 85/2014, had contributed to the spread of an interpretative opinion according to which, in the absence of thresholds and pending the publication of an implementing decree, the entire energy chain could theoretically be considered as included in the scope of application of the golden powers decree (thus including not only the activity of transport, distribution or storage but also production, regardless of the capacity of the relevant plant).

It is believed that these theories do not take into account the intention of the law-maker and that it is therefore not correct to give notification of transactions involving assets such as small plants powered by renewable sources, which are hardly ever of a size of strategic national importance. In spite of this, the last few months have seen an overabundance of notifications being submitted to the Presidency of the Council of Ministers, to overcome uncertainties of interpretation and prudently avoid an ex post sanction in the event of non-notification.

The publication of Decrees 179 and 180 of 2020 – finally – sweeps away the uncertainty that has characterised the conduct of extraordinary energy transactions in recent months, both by clarifying the scope of application of the sectors identified by the European regulation (Prime Minister Decree 179/2020), and by updating and replacing Presidential Decree 85/2014 for the identification of strategic assets in the energy, transport and communications sectors (Prime Minister Decree 180/2020).

With regard to the content of the aforementioned decrees, we note that the government, confirming the rationale behind the golden powers legislation and the opinions that considered the national strategic importance to be central in the individuation of the object of the notification, has identified particularly limited and restricted areas of application, with the aim of protecting only infrastructures, technologies, production factors, information and economic activities which are deemed to be "essential for the maintenance of the vital functions of society, health, security, economic and social well-being of the population."

With particular reference to the energy sector, the Prime Ministerial Decree no. 179 establishes the applicability of the Golden Powers Decree to the following assets and relationships:

• critical infrastructures where fuels, nuclear materials or radioactive waste are located or to be located, as well as the technologies and infrastructures which carry out the processing, management and transport of such fuels, materials and waste;
• fundamental buildings for the use of the critical infrastructure referred to in this Article;
• coastal depots of crude oil and petroleum products with a capacity of 100,000 m3 or more used for the domestic market, LNG storage facilities with a capacity of 10,000 m3 or more, oil pipelines for supply from abroad, including to other States, and pipelines for supply to intercontinental airports;
• critical technologies, including platforms, for the management of wholesale markets for natural gas and electricity; and
• economic activities of strategic importance carried out in the sector referred to in this article, carried out by undertakings with an annual net turnover of not less than EUR300 million and an average annual number of employees of not less than 250.

In relation to Prime Ministerial Decree no. 180, which, as anticipated, replaces Presidential Decree 85/2014, we point out that the identification of strategic assets in the energy sector has remained unchanged with respect to the previous Presidential Decree 85/2014, described above.

In conclusion, even if some interpretative uncertainties remain, due to the use of non-technical language by the law-maker and relating to the fate of transactions entered into before the effective date of the Prime Ministerial Decree 179, effective as of 14 January 2021, it can be stated that the publication of this decree, perhaps also dictated by the overcrowding of notifications occurred in recent months, has dispelled the main interpretative doubts that arose with reference to extraordinary transactions in the energy sector, strongly limiting the scope of the notification obligation.