ROME -(Dow Jones)- Italian banks and insurers are too strongly tied at the board of directors level and this is "worrying" for competition, the country's top antitrust regulator Antonio Catricala said Tuesday.
The first indications of a fact-finding investigation on the governance of banks and insurers have found "a very strong practice" of ties between competitors, said Catricala at the regulator's annual presentation to parliament in Rome.
About 80% of listed companies in the sector have board members who are present on the boards of rivals, Catricala said. "Companies should follow rigid criteria to block the possibility of conflicts of interest among their board members."
Since the end of World War II, Italy's financial world has been characterized by a web of cross shareholdings linking its biggest players in defensive alliances.
The regulator also said insurers should end their "ironclad" relationship with their sales agents and favors a distribution network based on brokers that advise policies based on their clients' best interest.
Catricala said the watchdog is "monitoring" Italy's former monopolists. " Unfortunately these sometimes are tempted to return to former exclusive practices." He didn't name any.
Italy's former monopolies are Enel SpA (Milan:ENEL) (ENEL.MI) for electricity, Telecom Italia SpA (NYSE:TI) (TI) for telecommunication and Eni SpA (NYSE:E) (E) for natural gas.
The watchdog also urged the government of Prime Minister Silvio Berlusconi to promote liberalization to encourage competition, including in the energy sector.
Catricala said the regulator will focus on combating cartels. To aid it in its work, the watchdog has asked Italy's parliament to boost protection for whistleblowers.
Under current rules, a whistleblower is still liable to be sued in a civil court by a damaged party.
Watchdog Web site: www.agcm.it
-By Liam Moloney, Dow Jones Newswires; +39 06 4227 2071; liam.moloney@ dowjones.com
(Sabrina Cohen in Milan contributed to this article.)
(END) Dow Jones Newswires 06-24-08 0610 Copyright (c) 2008 Dow Jones & Company, Inc.
