What is the golden power and how does it work

In Italian legislation, “golden power” is defined as the power guaranteed to public authorities to intervene in market transactions that concern companies that qualify as strategic.

The golden power was introduced by the Monti government through legislative decree n.21 March 15, 2012, then was developed through a series of laws and regulations as the urgency of defending the more strategic scope of assets held by the national economic system gradually became more notable. The reference model is that on which the British system of golden share and the French action specific are based.

The golden power essentially assigns the government powers of prohibition, direction and positioning in the transactions of sectors such as defense and national security, as well as in some fields considered strategically relevant for the energy, transportation and telecommunications sectors.

And it is precisely within this last sector that the system of golden power recently gained notoriety after its application on 5G networks by the newly formed Conte II government. From 2012 to today, the legislation regarding methods for identifying intervention areas, the methods of action of the council of Ministers and the consequences of its actions experienced important development with the Dpcm August 6, 2014, implemented by the Renzi government, which guaranteed a more substantial definition of the measure’s scope of pertinence.

Through the golden power, by law and in practice, the government can dictate very precise conditions in the procedure of purchasing shares by foreign parties in strategic sectors, veto specific deliberations taken by the governing body of the interested company or, in extreme cases, impose a stop on a share purchasing operation.

As Ispi notes in its research, “In 2017, the golden power was extended to sectors ‘of high technological intensity’, like the storage and management of data and financial infrastructure, as well as critical technologies, including artificial intelligence, robotics, semi-conductors, technology with potential double-use applications, network safety and spatial and nuclear technology.” Parallel to the evolution of the normative context, it can be considered that the golden power complements the protective mechanisms of financial nature implemented by Rome in 2011, a year in which “the government had in fact authorized the Cassa Depositi e Prestiti (Cdp) to acquire shares in companies of relevant national interest, which is strategic for employment and for repercussions on the economic/manufacturing system of the country.”

In the same year, the Gentiloni government used the golden power to stop the actions of Vincent Bolloré and his French giant Vivendi in Italian national telecommunications, which had led the aggressive transalpine financier to try and get his hands on Tim. In 2019, there was the already mentioned intervention by the Conte II government, his first official act, on the territory of 5G through the use of the golden power in order to condition and supervise the Linkem, Vodafone, Tim, Wind Tre and Fastweb relations with Chinese Huawei and Zte.

The golden power has become, as Agi writes, “a stop button” in the hands of the government, and it is a tool that will acquire increasingly greater value as the strategic interest of the Italian national economic system increases, mainly by the companies of non-European countries and non-NATO countries like China. In this regard, for Italy, protecting itself is vital in order to avoid being crushed between the anvil of China’s silent infiltration and the hammer of inevitable economic and political retaliation by allies, especially the USA.

The golden power is, therefore, meant to be looked at not as a limit to or conditioning of entrepreneurial activity but as an actual tool for guaranteeing sthe national economy. The safety and intelligence services watch over this like guards and are authors of a broad sensibility campaign on the subject, which recently culminated in a publication from DIS, the department for information and safety. “All the support from the intelligence agency for the actions of the government is not aimed at persuading its choices nor in steering it,” Alessandro Pansa, former head of the police and DIS, writes in the publication. “But rather to suggest which paths to take in order to make the political decision-maker, who will carry out his/her choices of suggesting strategies that intelligence will receive and not come up with, more informed and aware.”

International competition is increasingly more decisive and complex, and the government needs protective tools that are able to impose the role of policy on that of markets. And the golden power is going precisely in this direction.