In the end, there was no crying over spilt milk. Hours after France's biggest cheesemaker, Groupe Lactalis SA, launched a €3.38 billion ($5.01 billion) bid for Italy's No. 1 dairy group, Parmalat SpA, the countries' respective leaders appeared together to declare that they would cooperate, not only to ease the passage of Parmalat's ­acquisition, but to create more Franco-Italian champions.

The bonhomie of France's Nicolas Sarkozy and Italy's Silvio Berlusconi came as a surprise. In the month between Lactalis' acquisition of a 29% stake in Parmalat and the April 26 confirmation of its intention to bid for outright control, Italy had threatened to rewrite legislation to keep Parmalat in Italian hands and arm itself to resist further French corporate raids across the Alps.

Italian politicians claimed they were compiling a list of nationally strategic companies, presumed to include Parmalat, in which a hastily formed sovereign wealth fund could buy defensive stakes. The law establishing the fund would be "identical to the French one," Italian Finance Minister Giulio Tremonti told journalists in early April, referring to France's creation in 2008 of its own sovereign investment fund. "Or better still, we will submit a text [to the European Commission] written in French."

For critics of the European Union, this proved the breakdown of the single market's vaunted free movement of capital. Even better, France, the bogeyman of Continental protectionism, was reaping what it had sown.

But it didn't work out that way.

"I welcome the creation of big French-Italian and Italian-French groups that can hold together in the face of global competition," said Berlusconi at a joint press conference with Sarkozy following a scheduled meeting that fell on the day of Lactalis' bid for Parmalat.

There are two possible interpretations for the Italian change of heart. The first is the one promoted by Sarkozy and Berlusconi, who cast themselves as the brokers of a deal that pointed toward a future of cooperation. The second, and more plausible, explanation is that the Italian state, faced with a bidder willing to call its political bluff, had little option but to meekly stand aside for Lactalis.

The truth probably lies closer to the latter scenario. If that is the case, Italy's recent saber rattling might have far more in common with French protectionism than either country would like to admit.

"There is no fortress France," says Frédéric Moreau, a Paris-based partner at Allen & Overy LLP. "The French government has a good track record of vocal opposition to foreign bidders, but you have to draw a line between the political response, which has rarely gone beyond announcements that they are prepared to intervene, and laws, which limit the actions that can actually be taken."

Within Italy, there is an equal amount of skepticism over Rome's ability and willingness to intervene in M&A, particularly following its Parmalat retreat. The government "spoke about defending Parmalat for weeks, and nothing came of it," says Centrobanca SpA's Milan-based analyst Simone Ragazzi. "Let us be clear. This list [of strategic assets] they spoke of doesn't exist. It is a phantom."

The parallels are striking. Italy's protectionism mimics the French model in both style and (apparent lack of) substance. Rome's decision to invoke a list of strategic assets in defense of Parmalat was a nod to France's creation of a similar list in 2005 when its iconic French dairy company, Groupe Danone SA, was threatened with a PepsiCo Inc. bid.

Unhappily for Tremonti's narrative, Danone never appeared on the French list, which instead focused on the makers of the kind of defense technologies most countries reserve the right to protect from foreign buyers and that are already enshrined in EU law.

Though Rome backed off on defending Parmalat, some observers see worrisome protectionist rumbling in the EU.

"I think it is correct to speak about a wave of investment protectionism" in Europe, says Fredrik Erixon, director of the European Centre for International Political Economy, a Brussels-based think tank. "It started before the [financial] crisis and increased during the crisis when many countries were afraid some firms could be taken over at especially low prices."

The fear is that protectionist posturing provides foundations for future government intervention. "You cannot impose an economywide restriction on foreign investors from other European countries, but there are flexibilities there that can be used," says Erixon.

EC rules exist to punish countries that overstep the mark, but cases can take years to wind through the courts. That is more than enough time to kill deals that are often time-sensitive.

The potential for such mischief is heightened by the creation of tools, such as state-backed investment funds, that could be used to circumvent EU laws.

Italy could, for example, use its new sovereign wealth fund to buy strategic stakes in vulnerable companies, or to boost bids by Italian companies competing with foreign interlopers. The fund will be overseen by Cassa Depositi e Prestiti SpA, a manager of about €200 billion in postal savings accounts.

Then again, the fund may pose no threat, particularly if the French example, cited by Tremonti, serves as a guide.

Sarkozy, who oversaw the creation in 2008 of France's state-backed Fonds Stratégique d'Investissement, had promised that the fund would serve as a buffer against foreign raiders. It would be a "powerful arm of [France's] industrial policy," he proclaimed. In practice, it has been used to prop up a handful of obscure French companies that either needed emergency cash, such as parts suppliers to France's beleaguered automobile makers, or would have otherwise struggled to find venture capital funding, such as French green energy ventures.

Rome's protectionist rhetoric may be empty, but Italian politicians may still have legitimate reason to gripe over French hegemony in the countries' M&A deals -- and just cause to rage at France's often-evident hypocrisy.

In 2006, for example, state-owned Gaz de France SA agreed to a hastily arranged €90 billion merger with privately held utility Suez SA to repel interest in Suez from Italian utility Enel SpA. Yet France's other state-owned utility, Electricité de France SA, owns just under 50% of Italy's No. 2 power company, Edison SpA, and is widely assumed to be preparing to take control of that business.

When rumors emerged in 2008 and 2009 of a possible Italian bid for France's No. 2 bank, Société Générale, French politicians railed against the idea of a foreign owner. Yet French banks have regularly looked toward Italy for acquisition prospects. In a major transaction in 2006, BNP Paribas SA paid €9 billion for Italy's Banca Nazionale del Lavoro SpA, or BNL, Italy's then-No. 6 lender. More recently, Natixis SA, Crédit Agricole SA and Société Générale are among the bidders for UniCredit SpA's Pioneer Global Asset Management SpA unit.

The uncomfortable truth for Italy is that French suitors will continue to come. From fashion to finance, Italian companies are natural prey.

Renee Cordes contributed to this report.