Foreign Investment in Italy 2024

FOREIGN INVESTMENT 2024

ITALY

Francesco Salerno, Kathleen Lemmens, Marco Grantaliano

(Gianni & Origoni)

LAW AND POLICY

Policies and practices

What, in general terms, are your government’s policies and practices regarding oversight and review of foreign investment?

The Italian foreign direct investment (FDI) rules (‘Golden Power’ rules) were introduced in 2012, following a judgment of the Court of Justice of the European Union holding that the rules in force at that time were not in line with the principles on free movement of capital provided by EU treaties. The FDI rules grant the Italian authorities special powers, including the power to impose conditions and prescriptions and, in certain cases, a veto on acquisitions or resolutions to protect strategic assets in certain industries.

In 2012, the industries originally concerned by FDI screening were military and defense, and energy, transportation and communication sectors. Over the past years, the scope of FDI screening rules has been progressively widened by the Italian lawmaker to take into account the adoption of Regulation (EU) No. 2019/452, establishing an EU-wide FDI screening framework and the effects of the covid-19 outbreak.

With regard to the origin of the investor, in the military and defense sectors, FDI rules apply to EU and non-EU entities. In all other sectors, there are different rules for EU and non-EU entities, with the latter usually being subject to a higher degree of scrutiny relative to the former.

The FDI screening is carried out by the Presidency of the Council of Ministers, based on a filing. However, the government may also initiate the golden power procedure ex oficio.

Most of the filings do not trigger the exercise of the FDI powers. For example, in 2021, out of the 496 notifications reviewed, the Italian authorities imposed conditions in 26 transactions (11 being supply agreements for 5G equipment); one transaction was vetoed, two transactions were opposed and all others received unconditional clearance.

Main laws

What are the main laws that directly or indirectly regulate acquisitions and investments by foreign nationals and investors on the basis of the national interest?

FDI screening in Italy is subject to EU and national rules.

Regulation (EU) No. 2019/452, which became effective on 11 October 2020, provides for the general principles and establishes an EU-wide framework. The regulation does not replace the Italian legislative regulatory framework, but rather creates an EU framework for the screening of FDI, including an obligation for member states (but not for the companies involved in the transactions) to report to the European Commission any FDIs occurring in their respective jurisdiction.

At national level, the FDI rules are set out in Law Decree No. 21 of 15 March 2012 (converted into Law No. 56 of 11 May 2012) (Law No. 21/2012), as subsequently amended. Law No. 21/2012 was implemented through a series of governmental decrees, such as:

Decree of the President of the Republic No. 35 of 19 February 2014, on the procedural rules in the military and defense sectors;
Decree of the President of the Republic No. 86 of 25 March 2014, on the procedural rules in the energy, transportation and communication sectors;
Decree of the President of the Council of Ministers No. 108 of 6 June 2014, setting out the relevant strategic assets in the military and defense sectors;
Decree of the President of the Council of Ministers of 6 August 2014, on the organization of the activities related to the exercise of the special powers;
Decree of the President of the Council of Ministers No. 179 of 18 December 2020, setting out the relevant strategic assets in the sectors listed in article 4 of Regulation (EU) No. 2019/452;
Decree of the President of the Council of Ministers No. 180 of 23 December 2020, setting out the relevant strategic assets in the energy, transportation and communication sectors; and
Decree of the President of the Council of Ministers No. 133 of 1 August 2022, introducing the pre-notification procedure and setting out the organization of the administrative activities related to the exercise of special powers.

Law Decree No. 21/2012 has been amended on several occasions. In particular:

Law Decree No. 148 of 16 October 2017, converted into Law No. 172 of 4 December 2017, extended FDI rules to the high-tech sector;
Law Decree No. 22 of 25 March 2019, converted into Law No. 41 of 20 May 2019, extended FDI screening to certain transactions in the 5G sector;
Law Decree No. 105 of 16 October 2019, converted into Law No. 133 of 18 November 2019, extended FDI screening to all sectors mentioned by article 4, paragraph 1, of Regulation (EU) No. 2019/452 (new article 2, paragraph 1-ter), subject to the adoption of implementing decrees (pending the adoption of these implementing decrees, the pre-existing implementing decrees continued to apply);
Law Decree No. 23 of 8 April 2020 (the Liquidity Decree), converted into Law No. 40 of 5 June 2020, introduced a temporary regime in the context of the covid-19 outbreak, which is currently applicable;
article 10-ter of Law Decree No. 137 of 28 October 2020, converted into Law No. 176 of 18 December 2020, which extended the application of the temporary regime until 30 June 2021;
article 11-quinquies of Law Decree No. 52 of 22 April 2021, converted into Law No. 87 of 17 June 2021, which extended the application of the temporary regime until 31 December 2021;
article 17 of Law Decree No. 228 of 30 December 2021, converted into Law No. 15 of 25 February 2022, which extended the application of the temporary regime until 31 December 2022; and
Law Decree No. 21 of 21 March 2022, converted into Law No. 51 of 20 May 2022, which introduced the obligation to jointly notify transactions, amended government powers in 5G and broadband, and expanded the scope of the FDI control, which now permanently captures:
purely national and intra-EU transactions in specified sectors, and;
greenfield investments and the setup of new companies in specified sectors.

The main laws concerning FDI screening in Italy can be found on the website of the Presidency of the Council of Ministers.

Scope of application

Outline the scope of application of these laws, including what kinds of investments or transactions are caught. Are minority interests caught? Are there specific sectors over which the authorities have a power to oversee and prevent foreign investment or sectors that are the subject of special scrutiny?

FDI rules apply to assets of strategic relevance in the military and defense sectors, the energy, transportation, communication and high-tech sectors, and the sectors listed in article 4 of Regulation (EU) No. 2019/452, as specified in the implementing legislation (DPCM No. 179 and 180 of 2020), namely:

critical infrastructure, whether physical or virtual, including energy, transport, water, health, communications, media, data processing or storage, aerospace, defense, electoral or financial infrastructure, and sensitive facilities, as well as land and real estate crucial for the use of such infrastructure;
critical technologies and dual use items (as defined in point 1 of article 2 of Council Regulation (EC) No. 428/2009), including artificial intelligence, robotics, semiconductors, cybersecurity, aerospace, defense, energy storage, quantum and nuclear technologies as well as nanotechnologies and bio-technologies;
supply of critical inputs, including energy or raw materials, as well as food security;
access to sensitive information, including personal data, or the ability to control such information;
the freedom and pluralism of the media;
credit and insurance sectors; and
agro-alimentary and steel-making.

Second, as regards the types of investment, FDI rules distinguish between defense and national security sectors (including 5G) and the other sectors. In sectors other than the defense and national security sector, the FDI rules apply to:

share deals leading to an EU-based company, including companies based in Italy, acquiring control over a company that operates assets of strategic relevance in Italy in the following sectors:
communications;
energy;
transportation;
health;
agro-alimentary; and
financial (including insurance and credit);
share deals leading to a non-EU based company acquiring control over a company that operates assets of strategic relevance in Italy;
corporate resolutions that may change strategic assets’ ownership structure or purpose, or cause the winding up of the company holding such assets – more specifically, the following are considered notifiable events:
asset purchases, mergers and joint ventures;
decisions to change the use or destination of the assets;
transfer of a company’s offices abroad;
creation of share classes with multiple voting rights; and
use of the assets as collateral; and
contracts or agreements with non-EU entities relating to the supply of 5G technology infrastructure, components and services.

A temporary regime was introduced during the covid-19 emergency, which applied until 31 December 2022. Under the temporary regime, FDI rules applied also to share deals leading to an EU-based company (except Italian entities) acquiring control over a company that operates assets of strategic relevance in Italy in all listed sectors.

Moreover, non-EU entities must notify acquisitions of equity investments that, considered cumulatively with the stakes already held, allow them to reach a threshold of voting rights or share capital equal to 10 per cent when the value of the investment is at least equal to €1 million; a notification is due regardless of the size of the investment when the threshold reaches 15, 20, 25 or 50 per cent.

In the defense and national security sectors, the application is even broader. Besides the corporate resolutions, the types of investment covered by the FDI rules include:

transactions that affect the security of supplies, information, technological transfers and export controls in case of an acquisition of a stake in a company that is active in the defense or national security sector; and
acquisitions by any entity (whether EU or non-EU), other than the Italian state or related entities, that allow the purchaser to acquire, through subsequent acquisitions or acquisitions by related parties, a stake with voting rights sufficient to affect the defense and national security interests.

Definitions

How is a foreign investor or foreign investment defined in the applicable law?

A foreign investor is an entity based outside the European Union.

In particular, these are entities or persons that: (1) do not have their headquarters, administrative office or main center of interest in an EU member state; (2) have their headquarters or administrative offices in the European Union, but these are controlled, directly or indirectly, by an entity that does not have its headquarters, administrative office or main center of interest in an EU member state; or (3) have their headquarters, administrative office or main center of interest in an EU member state, but there is evidence of circumvention (article 2, paragraph 5-bis of Law No. 21/2012).

Special rules for SOEs and SWFs

Are there special rules for investments made by foreign state-owned enterprises (SOEs) and sovereign wealth funds (SWFs)? How is an SOE or SWF defined?

Article 1, paragraph 3-bis and article 2, paragraph 6(a) of Law No. 21/2012 provides that to establish whether an investment can threaten national interest and public order, the authorities can take into account, inter alia, if a non-EU public authority directly or indirectly controls the acquirer. Therefore, the authorities will check to what extent SOEs or SWFs fall within this provision.

Relevant authorities

Which officials or bodies are the competent authorities to review mergers or acquisitions on national interest grounds?

The FDI screening is carried out by the central government. In particular, the review process starts with the filing submitted by the notifying parties to the competent department within the Presidency of the Council of Ministers – the general administrative coordination department.

The final decision on the exercise of the special powers takes the form of a decree of the President of the Council of Ministers, which is adopted in the framework of a meeting of the Council of Ministers.

Notwithstanding the above-mentioned laws and policies, how much discretion do the authorities have to approve or reject transactions on national interest grounds?

The decision on the exercise of the special powers is based on an assessment on whether a transaction leads to current or potential threats to national security and public order. The screening is carried out by a committee of members drawn from various ministries with competence over the strategic assets involved (Ministry of Foreign Affairs, Ministry of the Interior, Ministry of defense, Ministry of Economy and Finance, and Ministry of Economic Development).

There are general criteria that must be observed by the authorities (eg, the imposition of conditions should be preferred to the veto power, the principle of proportionality has to be applied), but the assessment entails a significant degree of discretion. Moreover, the decisions are not published and often the motivation is very succinct. That said, the exercise of golden powers is subject to judicial review by the administrative law courts. For instance, in 2020, the court with jurisdiction over FDI decisions annulled a golden power decision that had imposed conditions to a corporate reorganization (judgment of the Regional Administrative Tribunal of Rome of 24 July 2020).

Moreover, pursuant to article 3, paragraph 2 of Regulation (EU) No. 2019/452, the exercise of the special powers must comply with the principles of transparency and non-discrimination against third countries.

PROCEDURE

Jurisdictional thresholds

What jurisdictional thresholds trigger a review or application of the law? Is filing mandatory?

There are no general jurisdictional thresholds in terms of turnover, asset size, sector, purchase price or enterprise value.

In the defense and national security sectors, in a transaction entailing a listed company, a filing is due if the purchaser acquires a stake higher than 3 per cent of the share capital. Any subsequent transaction that results in the stake being increased above 5, 10, 15, 20, 25 or 50 per cent of the share capital must also be notified. If the transaction entails a company that is not listed on a public exchange, the filing is due when the purchaser acquires a participation that is above the said thresholds.

Moreover, in all listed sectors, non-EU entities have to notify acquisitions of equity investments (in all sectors other than defense and national security) that, considered cumulatively with the stakes already held, allow them to reach a threshold of voting rights or share capital equal to 10 per cent when the value of the investment is at least equal to €1 million; a notification is due regardless of the size of the investment when the threshold reaches 15, 20, 25 or 50 per cent of the share capital.

Filing is mandatory when a transaction meets all the conditions set out by foreign direct investment (FDI) rules. A breach of the filing obligations can trigger monetary sanctions for the purchaser. The minimum amount of the fine is 1 per cent of the global turnover realized by the companies involved in the transaction.

National interest clearance

What is the procedure for obtaining national interest clearance of transactions and other investments? Are there any filing fees? Is filing mandatory?

The Italian FDI screening process is based on a system of filing. The parties to a transaction falling within FDI rules scope have an obligation to file a notification to the competent department within the Presidency of the Council of Ministers.

Notification forms are available through the website of the Presidency of the Council of Ministers. In practice, the notification must include detailed information on the business and financial plans pursued with the transaction, a general description of the transaction project and its effects, and detailed information on the buyers and the chain of control until the level of the ultimate beneficiary.

In share deals, the notification is due within 10 days of the purchase. It is customary to notify after signing and time the closing to match the 45-working day review period that is available to the authorities. In case of corporate deliberations, the notification is due within 10 days of the adoption of the deliberation, and in any case before its implementation.

Finally, the authorities can start ex officio the FDI review if parties fail to notify.

Which party is responsible for securing approval?

The law provides that in share deals, the parties shall proceed with a joint notification if possible. Otherwise, the purchaser shall file a notification that includes all necessary information, giving proof that the other party has received notice of the notification; such notice is necessary to allow all parties to participate in the proceedings.

In corporate resolutions, the party responsible for the filing is the company that owns or manages the strategic assets (article 5 of the Decree of the President of the Republic No. 86 of 25 March 2014). Asset deals usually fall within the scope of resolutions adopted by the entity owning or managing the strategic assets. As a result, for asset deals, the party responsible for the filing is the seller. However, in practice, the parties to a transaction often prepare and file the notification jointly as information from both sides may be required.

Review process

How long does the review process take? What factors determine the timelines for clearance? Are there any exemptions, or any expedited or ‘fast-track’ options?

The review period starts on the date of the notification and can last up to 45 working days. The national authorities can suspend this period once, for a maximum of 10 working days, if information is requested from the parties involved, and for a maximum of 20 working days if information is sought from third parties.

Following the implementation of Regulation (EU) No. 2019/452, Italian FDI rules also allow the suspension of the review period when other EU member states or the European Commission intend to intervene, until their opinions and observations are submitted (article 2-ter of Law Decree No. 21 of 15 March 2012 (Law No. 21/2012)). In practice, this will add 20 calendar days to the review period.

Following the provisions in Decree Law No. 21/2022, DPCM No. 133/2022 introduced a pre-notification procedure, which aims to clarify the applicability of the Golden Power legislation in cases of doubt, before a specific transaction is finalized. The pre-notification proceedings have a maximum duration of 30 calendar days.

Within this term, the Presidency of the Council of Ministers specifies whether the proposed transaction:

does not fall within the scope of the Golden Power legislation;
falls within the scope of the Golden Power legislation, but the conditions for the exercise of the special powers are manifestly lacking, and therefore no formal notification is needed; or
it is necessary to submit a formal notification. In case it were necessary to submit a formal notification, the 45-working day review period starts anew.

If no decision is taken within the aforementioned 30-day period, pre-notification must be followed by a formal notification.

Must the review be completed before the parties can close the transaction? What are the penalties or other consequences if the parties implement the transaction before clearance is obtained?

For share deals, if the parties close the transaction after filing the notification, but before clearance is obtained, all the rights associated with the purchased shares are suspended until clearance is obtained (article 2, paragraph 6 of Law No. 21/2012). For corporate resolutions, the FDI rules provide that the effects of these resolutions are suspended for the duration of the review period. Any resolution, act or transaction breaching the suspensory duty is null and void (article 2, paragraph 4 of Law No. 21/2012).

In practice, once the parties have filed, it is customary to wait until the final clearance of the authorities.

Involvement of authorities

Can formal or informal guidance from the authorities be obtained prior to a filing being made? Do the authorities expect pre-filing dialogue or meetings?

DPCM No. 133/2022 introduced a new pre-notification procedure, which aims to clarify the applicability of the Golden Power legislation in cases of doubt, before a specific transaction is finalized. The pre-notification proceedings have a maximum duration of 30 calendar days.

Within this term, the Presidency of the Council of Ministers specifies whether the proposed transaction:

does not fall within the scope of the Golden Power legislation;
falls within the scope of the Golden Power legislation, but the conditions for the exercise of the special powers are manifestly lacking, and therefore no formal notification is needed; or
it is necessary to submit a formal notification. In case it were necessary to submit a formal notification, the 45-working day review period starts anew.

If no decision is taken within the aforementioned 30-day period, pre-notification must be followed by a formal notification.

When are government relations, public affairs, lobbying or other specialists made use of to support the review of a transaction by the authorities? Are there any other lawful informal procedures to facilitate or expedite clearance?

What post-closing or retroactive powers do the authorities have to review, challenge or unwind a transaction that was not otherwise subject to pre-merger review?

If the parties fail to notify, the authorities can start ex officio the FDI review. As a result of the review, the authorities could impose conditions with retroactive effect, or they could order to unwind the transaction. In asset deals, the authorities can also order the parties to eliminate any consequence of the transaction, at their expense (article 2, paragraph 4 of Law No. 21/2012).

SUBSTANTIVE ASSESSMENT

Substantive test

What is the substantive test for clearance and on whom is the onus for showing the transaction does or does not satisfy the test?

The substantive test for foreign direct investment (FDI) clearance revolves around the question of whether the notified event poses a serious threat to public interests or a danger for national security or public order. In all sectors, including the energy, transport and communication sectors, the assessment includes the potential damage to the security and functioning of the network and plants, and the continuity of the supply. It is up to the notifying parties to provide all the elements that the authorities require to make this assessment.

The powers of the authorities are exercised based on objective and non-discriminatory criteria, and in the light of principles stemming from the jurisprudence of the Court of Justice of the European Union, notably the judgment from July 13, 2023, Xella, where the Court of Justice held that the provisions of the TFEU on freedom of establishment preclude a foreign investment filtering mechanism blocking a transaction in the absence of ‘a genuine and sufficiently serious threat to a fundamental interest of society’ (point 66).

Indeed, the Italian authorities can veto a transaction only in exceptional cases where the notified event poses a risk to national security or public order and this risk cannot be removed through mitigating measures. In practice, the vast majority of cases are green-lighted unconditionally and some cases require the imposing of mitigating measures.

According to article 2, paragraph 7 of Law Decree No. 21 of 15 March 2012 (Law No. 21/2012), in exercising their powers, Italian authorities can take into account the following circumstances:

if there are grounds to conclude that there are possible links between the acquirer and third countries that do not recognize the principles of democracy and the rule of law, that do not respect international law or that behave in such a way as to pose threats against the international community, also based on their alliances, or direct or indirect relations with criminal or terrorist organizations; and
the adequacy of the structure resulting from the transaction, considering also the ways of financing the transaction and the economic, financial, technical and organizational characteristics of the acquirer, to guarantee:
security and continuity of supplies; and
maintenance, security and operability of the networks and plants.

The guidance on the application of the above-mentioned principles is limited, as FDI decisions are generally not published. Information on reviewed cases can be found in the reports prepared by the Presidency of the Council of Ministers for Parliament.

To what extent will the authorities consult or cooperate with officials in other countries during the substantive assessment?

Prior to the introduction of Regulation (EU) No. 2019/452, Italian authorities did not have to consult or cooperate with officials in other countries during their assessment. Since October 2020, owing to the entry into effect of Regulation (EU) No. 2019/452, the cooperation tools between national authorities and the European Commission apply. In particular, authorities from other EU member states will now be able to provide comments to the Italian authorities reviewing an investment when they consider that the investment is likely to affect their security or public order. The European Commission can issue an opinion, when it considers that an investment is likely to affect security or public order in more than one EU member state.

Other relevant parties

What other parties may become involved in the review process? What rights and standing do complainants have?

Upon receipt of the notification, the Presidency of the Council of Ministers will liaise with the ministry that has competence over the strategic assets involved. Each ministry has a designated point of contact to this effect. Italian FDI rules further provide for a cooperation mechanism between the services of the Presidency of the Council of Ministers and other public authorities, such as the Bank of Italy, the national surveillance agency for the stock exchange, the national surveillance agency for the insurance market, the national authority for transport sector, the national competition authority, the national authority for communication sector, and the national authority for the energy sector, networks and environment (article 2-bis, paragraph 1 of Law No. 21/2012).

Moreover, the Presidency of the Council of Ministers can request information or documents from other public authorities, public and private entities, companies or any other third parties (article 2-bis, paragraph 2 of Law No. 21/2012, as amended by article 16 of Law Decree No. 23 of 8 April 2020).

Italian FDI laws do not formally provide for third parties to file complaints. Yet, third parties are free to submit their views if they have grounds to believe that a competitor has breached the FDI rules. In such cases and in light of its ex officio powers the government can initiate a screening after the transaction has taken place and become public.

Prohibition and objections to transaction

What powers do the authorities have to prohibit or otherwise interfere with a transaction?

The FDI rules allow the competent authority to block a transaction in exceptional cases, when it is not possible to impose conditions or implement other mitigating measures (article 2 of Law No. 21/2012).

Is it possible to remedy or avoid the authorities’ objections to a transaction, for example, by giving undertakings or agreeing to other mitigation arrangements?

Companies can avoid a transaction being blocked by accepting commitments. In the past, Italian authorities cleared notifications imposing one or more of the following commitments and conditions:

divesting certain parts of a business;
introducing management, organizational and technical solutions that guarantee that R&D activities and facilities will remain in Italy;
introducing management, organizational and technical solutions that guarantee that certain patents, know-how and proprietary rights will remain in Italy;
appointing a public official with specific competences (or a group of officials) to monitor production and supply of certain products and services;
introducing reporting obligations, such as to provide advance notice of major strategic decisions to a committee (composed of officials of the Italian state), which would check whether these decisions are a threat to national interests;
maintaining employment; and
increasing investments in the strategic activities located in Italy.

Challenge and appeal

Can a negative decision be challenged or appealed?

FDI decisions can be challenged before the Regional Administrative Tribunal of Rome. First instance judgments can be appealed before the Council of State.

Confidential information

What safeguards are in place to protect confidential information from being disseminated and what are the consequences if confidentiality is breached?

All the documents and information of the FDI review proceeding are treated as confidential by national authorities. In particular, according to article 9 of the Decree of the President of the Republic No. 86/2014, the information and documents fall outside the general right of third parties to access administrative documents. Moreover, pursuant to article 3, paragraph 4 of the Regulation (EU) No. 2019/452, national authorities have an obligation to protect confidential information, including commercially sensitive information.

RECENT CASES

Relevant recent case law

Discuss in detail up to three recent cases that reflect how the foregoing laws and policies were applied and the outcome, including, where possible, examples of rejections.

Syngenta – Verisem (2021)

On 21 October 2021, the Italian government exercised its veto powers over the agreement as a result of which Syngenta would have acquired the entire equity of Verisem, active in the seed sector. For the first time, the Council of Ministers did not follow up on the proposal made by the Ministry responsible for the investigation. In this regard, on the appeal, the Tar Lazio pointed out the independence of the decision phase from the investigation phase.

Pirelli – ChemChina (2023)

On 15 June 2023, the Italian government exercised its power to impose conditions over a shareholders’ agreement regarding the corporate governance of enterprise Pirelli & C SpA, notably, as regards the role of China National Tire and Rubber Corporation, Ltd. In its analysis, the Presidency deemed sensors that are inserted in the tyres and that enable data collection to be strategic assets. The conditions imposed include (1) the institution of an autonomous organizational unit for security, (2) an approval power of the government for the transfer of sensitive data and (3) a super-majority vote on certain matters reserved to the board of directors.

Safran – Microtenica (2023)

In November 2023, the Italian government vetoed the acquisition of Microtecnica, Collins Aerospace’s Italian subsidiary, by French aerospace group Safran. Notably, Microtenica is active in the sector of defense, being one of the key suppliers for the Eurofighter and Tornado jet fighter programs. The Italian government considered that Safran did not offer sufficient guarantees that (1) the Italian production lines would be maintained after the deal and that (2) supplies to the armed forces would be maintained after the transaction.

UPDATE AND TRENDS IN FOREIGN INVESTMENT IN ITALY

Key developments of the past year

Are there any developments, emerging trends or hot topics in foreign investment review regulation in your jurisdiction? Are there any current proposed changes in the law or policy that will have an impact on foreign investment and national interest review?

Over the past years, the scope of foreign direct investment (FDI) screening rules has been progressively widened by the Italian legislature to consider the adoption of Regulation (EU) No. 2019/452 establishing an EU-wide FDI screening framework and, most recently, the effects of the covid-19 outbreak.

Today, both the sectors and the relevant transactions falling within the scope of the FDI rules are extremely broad. In many cases, it is not easy to establish whether a transaction must be notified. In practice, this has led to an extensive and prudential approach in interpreting the scope of FDI sectors, encouraged by the government. Therefore, in case of uncertainty and considering the harsh sanctions for failure to notify, the trend is to file to receive negative clearance (i.e, a formal confirmation of non-application of the rules). However, this had led to an exponential growth of filings. By way of comparison, between 2014 and 2019, 199 filings were made; the number increased to 342 in 2020, and then up to 608 in 2022.

In December 2020, Italy adopted the implementing legislation to better identify strategic assets. This new legislation has contributed to improving legal certainty, but the scope of application of the FDI rules remains quite broad.

In March 2022, Italy adopted new legislation that provides for the review of both intra-EU and purely national transactions under the FDI framework, whereas, before then, the review of intra-EU transaction was only possible under covid-19-related temporary provisions (which expired on 31 December 2022).

Thus, the trend towards an expansionist approach to FDI control is likely to continue.

Recent enforcement trends include a heightened attention to the following topics: (1) security of supply, with an increasing number of requests of formal guarantees that no disruption to supply chains will derive from the transaction; and (2) employment, with an increasing number of cases in which the government seeks confirmation that no shutdown of Italian plants will follow the transaction. The focus on semiconductors and defense continues from previous years.

Together with the expansion of government control, a pre-notification procedure has been created, aiming to expedite controls in non-contentious cases. There is not yet any public data regarding pre-notification proceedings. Currently, however, the instrument is regarded as less attractive than a formal notification, as it carries a material risk that the total duration of FDI control proceedings (including pre-notification and formal notification) be longer than the 45-working day statutory term for formal notifications. This is because, after the 30-calendar day pre-notification review, a formal notification may be requested. In that case, the clock would start ticking anew on the 45-working day review period, irrespective of the time elapsed in the pre-notification proceedings.

* The information in this chapter was accurate as at November 2023.

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