A group representing Italian municipal utilities said on Thursday it would appeal a European Commission ruling against incentives which could hit their coffers.

The Rome-based group, Confservizi, called on the Italian government to protest the ruling but said it would appeal to the European Court of Justice.

The European Commission on Wednesday ruled that incentives including three-year tax exemptions and access to cheap loans in the 1990s must be considered aid to state-owned utilities that distorted competition and therefore should be recovered by the state.

Shares in listed Italian municipal power utilities fell on Thursday on concern that the EU ruling could hit their balance sheets.

Milan utility AEM closed almost four per cent down, its Turin peer AEM Torino shed 4.5 per cent and Rome’s Acea was 4.9 per cent off.

Milan’s AEM which distributes gas and electricity in Italy’s financial capital, said in a statement on Thursday the EU Commission decision was unlikely to have a negative effect on its accounts, but reserved the right to appeal the decisions in court.

Acea said benefits received totalling €28.4m in 1998 and €45.5m in 1999 could be at risk from the EU ruling.