<h6><strong>The Diplomat</strong></h6> <h4><strong>The Minister of Economy, Carlos Cuerpo, assured Congress this Monday that the government's intervention in BBVA's takeover bid for Sabadell is "perfectly aligned with European regulations, both in terms of banking union and the free movement of capital."</strong></h4> "What we are putting on the table is the creation or generation of a precedent according to which value can be generated for the shareholders of both entities without this being detrimental to the general interest. In other words, the value derived from this transaction does not come solely and exclusively from misunderstood synergies, such as those associated with layoffs or branch closures," Cuerpo stated before the Committee on Economy, Trade, and Digital Transformation of the Congress of Deputies. The minister's appearance took place days after the European Commission announced the opening of formal infringement proceedings against Spain, considering that the national regulations on which its intervention in BBVA's takeover bid for Sabadell was based violate the European Union's legal framework for banking and competition. According to Cuerpo, the government's intervention was in accordance with the provisions of the Competition Law, which is "perfectly aligned with European regulations on both banking union and the free movement of capital" and allows the government to impose additional conditions to those proposed by the National Commission on Markets and Competition (CNMC) "for reasons or criteria of general interest other than those of competition." "What BBVA's decision to move forward with the transaction demonstrates is that value can be generated for the private shareholders of both entities without harming the general interest," he added. <h5><strong>Brussels and the Government</strong></h5> Last Thursday, the European Commission announced its decision to open formal infringement proceedings against Spain, considering that the national regulations—in force for ten years—violate the European Union's legal framework on banking and competition matters. Therefore, the Commission has sent a letter of formal notice to the Spanish authorities regarding what it considers an overreach of the government's powers by intervening in banking mergers such as BBVA's takeover bid for Banco Sabadell. In this regard, Carlos Cuerpo assured this Monday that the government will collaborate "constructively" with the European Commission. On June 23, the Council of Ministers authorized the merger between BBVA and Sabadell on the condition that they "maintain legal personality, separate assets, and management autonomy" over the next three years. With this decision, the government tightened the conditions initially imposed by the CNMC for accepting BBVA's hostile takeover bid for Sabadell. The Competition Law, relied upon by the Council of Ministers, allows the Government to soften or tighten the conditions of the CNMC in the name of the general interest. According to Carlos Cuerpo at the press conference following the Council of Ministers, this measure will allow Sabadell to maintain its independence in terms of autonomy in management, financing and credit to SMEs, human resources, its branch network, and social welfare. With this decision, Sabadell will remain a legally separate entity for at least three years, extendable for another two. "Each entity must preserve its autonomy in the management of its activity, aimed at maintaining the criteria of general interest, distinct from those related to the defense of competition, which underpin the Council of Ministers' decision," the Ministry stated in a press release. "These criteria are rooted in the Spanish Constitution, are promulgated by various provisions of the legal system, and are endorsed by the jurisprudence of the Court of Justice of the European Union," it added. Specifically, these criteria are: ensuring adequate maintenance of sectoral regulatory objectives linked to supporting growth and business activity, worker protection, territorial cohesion, social policy objectives related to the foundations' social work, financial consumer protection and affordable housing, and the promotion of research and technological development. The process began more than a year ago. During this period, the European Central Bank approved the transaction in September and the CNMC did so in May. After this, the Ministry of Economy was given a 15-day period to decide whether to refer the matter to the Council of Ministers, which it ultimately did.
