Merger Control or Political Tool? Lessons from Spain’s Attempt to Stall the Sabadell Merger
The Spanish government has approved BBVA’s hostile takeover bid for Banco Sabadell but as I anticipated in an earlier Truth on the Market post, it did so while imposing stringent conditions. Both banks will be required to maintain separate legal identities, management, and operations for at least three years, potentially extendable to five. These conditions effectively delay the merger’s synergies (cost reduction, unified governance, scale efficiencies) and raise questions about the government’s legal authority to impose such constraints.
I noted in my previous post that the government could execute a form of indirect intervention through conditions so demanding that the operation would become unfeasible. What was then a hypothesis has now materialized in all its starkness. The decision, contained in a lengthy 25-page document, is light on technical or legal findings and heavy on unsupported assertions, circular justifications, and conditions that are difficult to reconcile with the principles of legal certainty and proportionality.
Justified with appeals to vague notions of the “public interest,” the decision lacks a clear legal basis under the Spanish Competition Act. Notably, the National Commission on Markets and Competition (CNMC) had already approved the merger with commitments proposed by BBVA. The additional conditions imposed by the government appear to overstep its authority—potentially rendering them unenforceable.