BBVA withdraws its appeal to the Supreme Court against the Government’s conditions for the takeover bid for Sabadell
BBVA backs down and withdraws from the appeal presented to the Supreme Court against the Government’s decision to veto the merger with Banco Sabadell for at least three years, in the event that the takeover bid for the Catalan bank had been successful, as ‘El Español’ has advanced and knowledgeable sources confirm to this newspaper. “BBVA confirms that it has withdrawn the appeal presented to the Supreme Court, given that its main objective was to annul the condition of the Council of Ministers, which has lost its validity as the takeover bid has not been successful,” the same sources detail.
Last June and after the analysis carried out by the National Markets and Competition Commission (CNMC)the Government through the Council of Ministers gave the ‘green light’ to the operation with the requirement that for at least three years, extendable for another two, both entities operated independently, something that complicated obtaining the expected synergies of 800 million. It was then that the team chaired by BBVA opted for the legal route.
The group of Basque origin interprets that, under the protection of the Competition Law, the Government can “maintain or soften” the commitments agreed upon in the regulator’s analysis but, in no case, tighten them. In no case did this resource paralyze or stop the hostile offer, which continued until last October, when the bidding period closed. acceptance of it with an acceptance of only 25.4%an insufficient level to move it forward.
Legal sources have explained to ‘Europa Press’ that this decision responds to a technical-legal issue motivated by the disappearance of the objective principal of the appeal, that is, once the takeover bid has become voidit is no longer necessary to look for the aforementioned synergies of the merger. After the failure of the operation, it was one of the main unknowns that remained.
The position of the Executive against the operation and the legal tools that it has used to impose its conditions have also validated a legal front with the European Commission. Last July, the Community Executive opened an infringement file against Spain for this reason. Specifically, they consider that it failed to comply with European legislation by granting in national regulations “unlimited powers” to the Government to intervene in bank mergers that conflict with European laws.
The Ministry of Economy, Commerce and Business, in charge of this procedure, has argued that Spanish regulations are “fully compatible” with European Union law and that the two rules questioned by Brussels have been in force for at least a decade and have been applied in other operations. These are the Law on the Defense of Competition, approved in 2007, and the Solvency of Credit Institutions, which saw the green light seven years later, in 2014.
In Brussels they doubt whether the Executive’s intervention in the operation really responds to reasons of general interest, They also understand that in financial matters it is not possible to refer the decision adopted by the National Markets and Competition Commission (CNMC) to the Council of Ministers. The highest decision-making body of the Executive established this measure under the aforementioned Law for the Defense of Competition, which allows governments to intervene in a transaction when the CNMC extends its analysis to ‘phase II’ and in case of agreeing on commitments, as happened in this case.
