A sort of acquittal has arrived for Silvio Berlusconi by the Court of Justice of the European Union. Although belated, the ruling by the judges in Luxembourg “exonerates” the Italian politician and industrial magnate, annulling a decision by the European Central Bank (ECB). The latter in 2016 had denied the acquisition of a qualified stake in Banca Mediolanum by Berlusconi through his holding company Fininvest. In doing so, it had “frozen” the shares for the part exceeding 9.9%.
According to the European magistrates, the ECB could not legitimately oppose because the holding of the share by Fininvest (of approximately 30%) resulted solely from the retention, by the interested party, of a qualified participation that he had acquired before the implementation of the provisions of the Union law on which the ECB had based itself. Let’s reconstruct the story that led to this ruling.
Berlusconi’s lack of honorability to acquire Mediolanum
Fininvest, the Italian holding company majority-owned by Silvio Berlusconi, held shares in Mediolanum, a well-known listed financial company that in turn held 100% of the capital of the credit institution Banca Mediolanum. In 2014, the Bank of Italy had ordered the sale, within 30 months, of Fininvest’s shareholding in Mediolanum exceeding 9.99% and the immediate suspension of the voting rights attached to the corresponding shares. This measure had become necessary following the conviction of Silvio Berlusconi, who had been found guilty of tax fraud. According to officials of the Bank of Italy, the industrialist no longer met the requirement of integrity to which the holding of a qualifying shareholding is subject. The decision of the Bank of Italy was then annulled by the Italian Council of State on 3 March 2016. In the meantime, in 2015, Mediolanum was incorporated into its daughter company Banca Mediolanum.
ECB’s opposition to excess quotas
Following the absorption and the ruling of the Italian Council of State, the Bank of Italy and the ECB considered that Silvio Berlusconi and Fininvest had acquired a qualifying holding in the capital of Banca Mediolanum. Under EU law, such an acquisition had to be preceded by a notification and be subject to an assessment by the competent national authority, which would then have to send a proposal for a decision to the ECB.
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The ECB had thus opposed Berlusconi’s acquisition, since he did not meet the requirement of integrity. Following that decision, Silvio Berlusconi and Fininvest filed an appeal to an Italian court to obtain annulment, but it was rejected. At that point they moved to the next level: the appeal to the European judges that found in favor of Berlusconi.
Why Fininvest could acquire a stake in Banca Mediolanum
According to the EU Court, “the General Court distorted the facts of the dispute and committed an error of law in declaring that the appellants acquired a qualifying shareholding in Banca Mediolanum in 2016”. The error would derive from a misinterpretation of the decision of the Bank of Italy of 2014. The latter “did not have the consequence of reducing Fininvest’s shareholding in Mediolanum, but only of suspending the voting rights attaching to the shares subject to an obligation to transfer”. This transfer was to take place only subsequently, within a period of 30 months, through a trustee in charge of the sale. On the day on which the Italian Council of State declared the annulment, the ruling continues, the disputed shareholding had remained unchanged. Therefore, the fact that Mediolanum had been incorporated by Banca Mediolanum did not change this situation.
Consequently, the judges wrote, “it could not be considered that Silvio Berlusconi had acquired a qualifying shareholding in 2016, which would have required notification and assessment by the competent authorities”. The owner of Fininvest “only retained a qualifying shareholding that had been acquired well before, at a time when the provisions of Union law applied by the ECB had not yet been transposed into Italian law”. Finally, the Luxembourg judges underlined that since the European rules “have no retroactive effect”, they could not be invoked by ECB officials to oppose the holding of a qualifying shareholding in Banca Mediolanum by Silvio Berlusconi.
