Competition Law in Italy The first 20 years of law and practice

(a) Joint Control
Joint control occurs when two or more parent companies have the power to block actions
that determine the strategic commercial behavior of another undertaking. 233
In other words,
joint control is characterized by the possibility of a deadlock resulting from two or more
persons or entities having the power to reject proposed strategic decisions.
The simplest example of joint control occurs when two undertakings each hold half of
the shareholdings, half of the voting rights and equal representation on the board of directors
or other corporate bodies of the jointly held company. The parent companies, therefore, will
be necessarily obliged to jointly make decisions concerning the controlled undertaking, each
having an effective veto right.
Joint control is also acquired when one or more minority shareholders (including those
with shareholdings well below 50 percent) have veto powers regarding strategic decisions
relating to the business policy of the joint venture. Veto rights granting joint control may be
set out in the bylaws of the controlled undertaking or, more frequently, are conferred by
shareholders’ agreements. 234 The determination of whether or not joint control exists is
based upon an assessment of these rights as a whole. The acquisition of joint control may
merely result from a shareholders’ agreement between two or more existing shareholders. 235
In exceptional cases, joint control has been found to occur on a de facto basis where two
or more shareholders share such “strong common interests” as to make it extremely likely
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that they will act together to exercise their rights in relation to the controlled undertaking.
In situations where joint control temporarily exists for a start-up period prior to being
converted to sole control, the entire transaction will usually be considered an acquisition of
237
sole control from the onset.
233 See Italian Merger Control Form, § I.A.1.(b).
234 Rights which confer joint control must go beyond the veto rights normally granted to minority
shareholders to ensure protection of their interests and typically include the right to veto the approval
of the budget or business plan, the appointment of senior management, or the decision to engage in
major investments. For example, in Credito Italiano/Banca Cattolica, 26 Jan. 1994, n. C1286,
Bulletin 4/1994, Credito Italiano held only 35% of the share capital of Banca Cattolica, the other 65
percent being held by Banca Popolare di Molfetta. The Authority maintained, however, that Credito
Italiano enjoyed joint control over Banca Cattolica since strategic business decisions of the company
required the approval of 11 of the 13 directors and, under the shareholders agreement, Credito
Italiano had the power to appoint the general manager and four directors. Also, in Networking-
Italgas-Team Management/We Cube.com, 18 May 2000, n. C3925, Bulletin 20/2000, the parent
companies each held 33.3% of the shares and the main strategic decisions required the approval of
four of the five directors. However, only two of the three parent companies had joint control over the
company because they could each appoint two directors.
235 For example, in Edison-Società Nordelettrica Sondel-Gemina/Sistemi di Energia, 9 May 2002, n.
C5221, Bulletin 19/2002, the notified transaction consisted of entering into a shareholders agreement
that required special majorities for the adoption of strategic decisions. Prior to the shareholders
agreement, none of the shareholders controlled Sistemi di Energia because none of them had a
majority of the voting rights and the bylaws provided for no special majorities.
236 In this respect the Competition Authority’s practice reflects the position taken by the European
Commission in its Jurisdictional Notice, supra note 182, 76-77.
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