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Finland's two largest energy companies are to merge. Imatra Power, the state-owned power generator, will join with Neste Oy, the partially privatized oil company. After EU merger clearance, minority shareholdings will be transformed into shares in the new holding company, IVO-Neste Group. The company will have a combined turnover of approximately FIM55 billion (US$10 billion) and will list on the Helsinki stock exchange. Full privatization is likely to follow. The government holds stakes of 95.6% in IVO and 83% in Neste. Gasum, Nesté's natural gas joint venture with Gazprom, will not be included in the merged company. The Ministry of Trade and Industry and IVO-Neste have appointed Finnish firm Roschier-Holmberg & Waselius as legal adviser. The firm's team comprises partners Tomas Lindholm, head of the capital markets group, and Gunnar Westerlund, head of the tax group.

Federal Mogul, the global automobile parts manufacturer, announced on January 12 its plans to purchase Fel-Pro, a privately owned manufacturer, for US$720 million. The transaction includes US$225 million in common stock and US$495 million in cash. The deal will make the combined company a single source for engine-dealing systems, considered vital for auto-parts makers as the industry consolidates. Advising Federal-Mogul on all corporate aspects of the deal is Cleary, Gottlieb, Steen & Hamilton, New York. Lead partner is M&A specialist William Groll. Also involved is the Chicago office of Baker & McKenzie, advising on tax issues. Representing Fel-Pro is Katten Muchin & Zavis, Chicago. Lead partner is corporate specialist David Shavitz.

Several deals have been signed this month following Boris Yeltsin's visit to Italy. Foremost among them is the Eni-Gazprom strategic alliance. Eni, Italy's partly privatized oil and gas group, signed a deal which should lead to direct investment of at least US$1 billion in Gazprom, the Russian gas monopoly. The alliance will also create a separate joint venture company focusing on the exploration and development of oil and gas fields in Astrakhan, southern Russia. Further talks may lead to a joint exploration, production and marketing effort in other countries. Last November Royal Dutch/Shell signed a similar agreement and invested US$1 billion in a Gazprom convertible bond. Eni confirmed that it is seeking to agree the basis on which it may also acquire an equity stake.

On January 1 1998 a new Competition Act (Mededingingswet) came into effect fitting competition and merger control in the Netherlands to European law standards.

Under Legislative Decree No. 239 of April 1 1996, payments of interest and any other proceeds from bonds issued by banks or companies whose shares are listed on Italian regulated markets, are not subject to withholding or deduction. Under the Decree, payments are made to a legal entity resident in Italy (with certain exclusions) or to non-Italian-resident legal entities/individuals.

In December 1997, the Ministry of Finance released its draft for a government bill on flagging rules. The draft proposal included, among other things, amendments to the thresholds triggering the flagging obligation.

Quebec has moved to drop the requirement that prospectuses must be published in French, as well as other discouragements to foreign issuers. By Andrew Fleming of Ogilvy Renault, London

China's new foreign loans regime bars non-profitable companies from seeking international finance, and also limits the profitable ones. Worries about the Asian crisis have ensured caution. By Guanxi Zheng of Stikeman, Elliott, Hong Kong

The collapse of BCCI resulted in a number of cases. The Hong Kong Court of Appeal and the Privy Council (replaced by the Court of Final Appeal in Hong Kong since July 1 1997) have recently delivered two judgments.

On November 1 1997, the Investment Fund Ordinance was amended to include an Institutional Investor's Exemption for foreign investment funds. The amendment states, provided there is no public solicitation, non-registered foreign investment funds may be offered and sold in Switzerland to institutional investors with professional treasury, such as banks, insurance companies and pension funds. The limitation to investors with professional treasury does not exclude institutional investors, which have outsourced the treasury department to a bank or the like.