The decision of the National Markets and Competition Commission (CNMC) to carry out an exhaustive examination of the purchase of Banco Sabadell by BBVA (Phase II) is very close to opening the floodgates for the Government, hostile to the takeover , seek to abort it with unacceptable conditions. With the regulations in hand, the body chaired by Cani Fernández has three regulated months ahead of it to listen to Sabadell and third parties that it considers “with legitimate interest” and resolve – the calendar can be extended each time it requests information or in negotiation because it stops. the clock.
When this process ends, your options are considered: archive the file, prohibit the operation (unlikely) or authorize it. If it prohibits it or its approval comes accompanied by commitments (they are offered by BBVA and validated by CNMC) or with conditions (impositions of the organization), Its resolution will not be effective until it passes through the Ministry of Economywhose opposition to the operation has been public since the same day that BBVA launched the takeover bid. The Minister of Economy, Carlos Body, will then be able to raise the matter to the Council of Ministers and modulate the Competition requirements. It could also support it with administrative silence, allowing the CNMC resolution to be enforceable after the regulatory deadline, although this last option today seems unviable.
Could the CNMC approve the operation without conditions or impositions (remedies) and without the Executive being involved? It seems like a scenario that is also remote if not impossible. Cani advanced before even being able to look at the first numbers that the transaction would have to face conditions as other bank mergers have done that, however, have never gone to Phase II. Even the union of Liberbank with Unicaja was closed with commitments and BBVA itself has been putting different assignments on the table: maintaining liquidity for SMEs for twelve months, not leaving localities without branches or establishing a corporate center in Catalonia for the new group, among others…
Can Economy enter into judging Competition risks? No, nor did the European Central Bank (ECB). The banking supervisor validated the transaction since the solvency of both entities is proven and their pairing would not entail any risk to financial stability. The Government is left to invoke criteria “of another nature (such as national security, environmental protection or the promotion of innovation, for example).” The quote comes from the CNMC website. Article 60 of Law 15/2007 of July 3 on the Defense of Competition establishes in a more generic way that any measure approved by the Council of Ministers “must be duly motivated by reasons of general interest other than the defense of competition.” competition” and that before setting them “a report may be requested from the CNMC”.
Body stated this week in an interview on RNE that “there are different elements” that “concern” the Executive and cited: “Elements related to the impact of that excess concentrationboth for the financial clients themselves and in terms of financial inclusion, the impact also in terms of employment, the impact in terms of territorial cohesion, credit or financing of our SMEs”.
What measures could, then, be established to mitigate these risks? “The range is infinite and unpredictable”a legal expert explains to elEconomista.es. BBVA has raised its tone after the CNMC’s decision to make it clear that it will only go ahead if the value of a takeover bid is not compromised, which, according to its defense, would have advantages for everyone. “We will not hesitate for a second to withdraw,” warned its CEO, Onur Genç.
On the other hand, Sabadell denies that the price offered reflects its potential and warns of great damage to SMEs. He was the first to appear in the process after Phase II opened but The list of potential third parties that the CNMC can validate as “with legitimate interest” is likely to be long. (associations of shareholders, consumers, businessmen…). Competition will also request a technical report from the autonomous communities “in which the concentration has a significant impact.” The Executive of the PP of Valencia rejected the takeover bid and the Catalan Generalitat is led by the PSOE, the Government party, with the support of the Catalan parties, opposed to the operation.
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