Breach of the Mandatory Bid Rule. Italy in the Public vs. Private Enforcement Debate
25 Pages Posted: 30 Dec 2019
Date Written: December 9, 2019
The mandatory takeover bid has been broadly investigated in the literature. The economics of such control acquisition and the pros and cons of the mandatory bid rule are nowadays well-established. Uncertainty still reigns with respect to the fundamental question whether private law remedies are available to minority shareholders in the case of a breach of the statutory duty to make a takeover bid. Statutory law is silent on this matter, and at a supranational level the CJEU’s case law does not offer valid precedents. European policymakers rely on public enforcement mechanisms, while an action for damages against the bidder is not made available or only reluctantly accepted by the courts. Italy is an exception in the comparative landscape and its leading case Fondiaria-SAI represents an ideal benchmark for the assessment of the functional efficiency of public vs. private enforcement remedies. This article shows that, for the purpose of good functioning and competitiveness of capital markets, private enforcement plays an important role against violations of the mandatory bid rules. Thus, public enforcement, which often proved to be ineffective or bypassed especially in cases of acting in concert, should be complemented by the recognition of civil liability of the bidder for breach of the duty to launch a takeover bid. Furthermore, the legal regime of such liability is outlined, thereby investigating the (contractual or tort) nature of the bidder’s liability and the operativeness of such a regime (e.g., amount of damages, application of compensatio lucro cum damno rule).
Keywords: takeover law, mandatory bid rule, minority protection, private enforcement, public enforcement
JEL Classification: K22, G34
Suggested Citation: Suggested Citation