Italy Focusing on Industrial Policy, Geopolitical Issues in FDI Reviews, Law Firm Says
Several recent applications of Italy’s foreign direct investment regime “appear to be the bellwether” for how the new government plans to approach future FDI reviews, Cleary Gottlieb said in a June 30 client alert.
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The firm said the Italian government is increasingly likely to intervene in investments with a connection to industrial policy or geopolitics even “when the strategic assets and technologies owned or operated by the target company do not seem to be particularly relevant in the broader context of the target business.” The government also is increasing its scrutiny on investments that may transfer sensitive data to non-European entities, the firm said, and is closely analyzing investments with “significant ties” to China and Russia.
It specifically noted that industrial policy and “geopolitical considerations,” along with “traditional national security” issues, seem to be driving FDI reviews by the current Italian cabinet, which started in October. The firm pointed to several recent cases, including the sale of a refinery to a Cypriot fund, the sale of a home appliance business to a Turkish buyer and the renegotiation of tire company Pirelli’s governance arrangements involving a Chinese state-controlled investor.