AGCM

PRESS RELEASE

CASSA DEPOSITI E PRESITI: ANTITRUST AUTHORISES ACQUISITION OF SNAM ON THE BASIS OF A NEW GOVERNANCE STRUCTURE IN THE TENDERS MARKET FOR GAS DISTRIBUTION

CDP has announced changes sufficient to alleviate the worries about competition, removing the risk that the operation could favour collusion when faced with future competition.

The Antitrust Authority has given the green light to the acquisition by Cassa Depositi e Prestiti of 30% minus one share of the share capital of SNAM, held by ENI. The Authority, at their meeting on 8th August 2012, decided to authorise the operation in light of the changes to the governance put forward in recent days by CDP connected to its holdings in Italgas (through SNAM) and in F2i (which has indirect control over Enel Rete Gas). The newly communicated structure is sufficient to alleviate the potential competition worries stemming from the operation in relation to the market for gas distribution tenders, which will take place on a staggered basis, starting in the coming months and lasting until 2016. The tenders will cover the distribution service in 177 supramunicipal areas for a period of 12 years. Italgas and Enel Rete, the only companies to operate in more than 70% of the areas up for tender, currently appear to be the only operators capable of taking part in future tenders on a national scale. However, the governance measures appear to be sufficient to alleviate the danger that the operation could facilitate the creation of joint policies by the two companies in bidding for tenders.

The governance measures presented are the following:

A)      for the minority shares held in F2i, CDP will abstain from participation in the group’s decision-making processes on subjects related to the tenders for gas distribution through the following measures:

1)      no member of the Board of Directors of F2i who is simultaneously a member of the Board of Directors or an employee of CDP will take part in the discussion or voting on the decisions made by F2i in connection with F2i Reti or with direct reference to the natural gas distribution sector; no member of F2i’s Investments Committee who is simultaneously a member of the Board of Directors or an employee of CDP will take part in the Investments Committee’s activities in connection with F2i Reti or with direct reference to the natural gas distribution sector;

2)      no individual who is employed by CDP, has a self-employed working relationship with CDP or is a member of the Board of Directors of CDP will accept positions at F2i Reti or its subsidiaries;

B)      given its indirect shareholding in Italgas through SNAM, CDP will assure the independence of Italgas on subjects related to the distribution tenders by promoting the role of independent individuals in the governing bodies of Italgas and by formalising internal decision-making procedures that protect the independence of Italgas. In particular:

1)      the Board of Directors will increase from three to five members, two of which will be independent, and for decisions connected to participating in tenders a majority of 4/5 of the Board of Directors will be required;

2)      the members of the Board of Directors of Italgas will not be allowed to be CDP employees or to have significant business relations with CDP;

3)      the rule currently in existence in the internal company documents of SNAM and Italgas, according to which the choices made by Italgas regarding bidding for tenders for the provision of natural gas distribution are not subject to discussion or prior approval from the Board of Directors of SNAM, must be formalised.

The operation, meanwhile, does not cause problems of a horizontal nature in any of the markets in which SNAM operates. In fact, CDP is not present in some areas (gas transportation and dispatching and stockpiling of gas and flexible parts). In the only market in which it is already operating (the gas import infrastructure market, where it has joint control of the TAG gas pipeline), CDP, despite taking control of the Panigaglia regasification plant, will continue to be the secondary operator. In any case, this infrastructure is subject to Community and national regulations regarding third party access and charges.

Finally, the Authority decided that the vertical effects that could derive from the fact that CDP, by holding a significant proportion (29%) of shares in ENI (operating in the gas sales to the power generation market) could be tempted to manage SNAM, so as to maximise ENI’s results, were not an issue. In fact, the operation causes a change from a situation of full vertical integration between ENI and SNAM (and their subsidiaries) to a situation in which the vertical link is much weaker, because it is brought about only through the shares held in ENI by CDP. The operation therefore essentially leads to an improvement on the previous state of affairs.

The only exception to this could be the company that manages the transportation network (SNAM Rete Gas), for which, before the operation, vertical integration with ENI was counteracted by the functional separation (according to the model from the Independent Transmission Operator - ITO) imposed by the regulations. However, the Authority judged that, even if the operation leads to the loss of the restrictions currently in place for the management of SNAM Rete Gas, the resulting conflict of interests generated by CDP holding shares in ENI would have practically no effect. In actual fact, both the management and the development plan of the transportation network are subject to strict regulation. This involves many institutions (Government Authorities, the sector regulator and local bodies) and is committed to preserving, in the general interest, an energy policy objective that aims to create a fluid natural gas market in the Mediterranean region.

Rome, 9th August 2012