Italy limits 'golden share' rules to avoid hefty EU fines

(MILAN) - Italy eased its grip Friday on state-controlled holdings in the energy, defence and telecoms sectors, as EU commissioner turned Prime Minister Mario Monti pushes for greater respect for EU rules.

"The measures adopted concern new rules on special powers in the defense and national security sectors," a government statement said after the cabinet adopted a decree following threats of EU legal action.

Italy's so-called "golden share" holdings breached European Union rules on free movement of capital, and in November the European Commission threatened to take Italy to the European Court of Justice.

"Golden shares" give the government the right to veto decisions by other shareholders and is often used as a protectionist measure to prevent assets from being sold off.

"Italy has conformed with European Union regulation, giving the government powers to intervene to take care of the country's legitimate, essential and strategic interests," the government said.

Italy had been accused of not complying with a previous EU ruling outlawing "golden shares" with regards to energy giants Enel and Eni, defence company Finmeccanica and Telecom Italia in particular.

Monti, who came to power in November after his predecessor Silvio Berlusconi fell from grace, is a former competition commissioner.

He had been given extra time by the Commission to relinquish Rome's grip on the sectors in question and the new rules take effect immediately.

With the new decree, the government said it hoped to "close the violation procedure opened by the European Commission in 2009."

Whilst the government has given up some control in the energy and telecoms sectors, it retains a firm grip on the defence sector.