The Merz government's spotlight on Snam's German campaign

ROME – The German government is unconvinced by Snam's announced billion-dollar acquisition of a substantial stake in Open Grid Europe (OGE) . Berlin's concerns are not about the strategic direction of the operation nor the intentions of the Italian group, which with a 24.99% stake in OGE would extend its managed gas pipeline network to 40,000 kilometers, in line with the goal of developing a multi-molecule pan-European network, as outlined in its strategic plan. What's drawing the Germans' attention is the connection between the buyer, Snam, and the State Grid Corporation of China (SGCC) , the world's largest energy supplier, part of the enormous conglomerate of approximately 95 state-owned companies that reports directly to the Chinese State Council.

According to the German newspaper Handelsblatt , the Berlin Ministry of Economy and Finance has launched an in-depth investigation to determine whether the €920 million acquisition could constitute "a compromise of public order or security." OGE is the largest independent gas transmission operator in Germany , with a network spanning approximately 12,000 kilometers, nearly 21 billion cubic meters of redelivery annually, and over 400 end customers. Its strategic role for the German economy is unquestionable. This partly explains the ministry's focus. That said, the possibility of China gaining control of the German network through Snam is remote, to say the least.

The numbers and the ownership structure demonstrate this. A company owned by the State Grid Corporation of China—State Grid Europe Limited (Sgel)—holds a 35% stake in CDP Reti, a company controlled by CDP with 60% and Snam's largest shareholder with a 31.4% stake. In terms of governance, the Chinese appoint one out of nine directors on Snam's board of directors and are granted certain rights typical of minority shareholders, which, however, do not allow them to block board decisions. Sgel does not even have veto powers at CDP Reti, where it has been present since 2014.

For the transaction to go through, approval from the German Antitrust Authority is required, as is foreign direct investment authorization from the German Ministry for Economic Affairs and Climate Action, and the other shareholders of Vier Gas—the company selling its stake in OGE to Snam—must not exercise the right of first refusal established by the shareholders' agreement. In any case, therefore, the dossier would have ended up on the ministry's desk, if only for the usual checks. But in a historical moment in which political intervention in market matters is increasingly frequent, the move certainly cannot go unnoticed. Now it remains to be seen whether this is excessive zeal or necessary precautions.