CNMC is complicating BBVA’s takeover bid for Sabadell by moving it to the second stage.

The Competition Chamber of the National Markets and Competition Commission (CNMC) has agreed to examine the concentration operation between BBVA and Banc Sabadell in a second phase, thus opening a period of in-depth analysis in which no decision will be made, expected until 2025. In a statement today, the CNMC confirmed the expanded analysis: “Taking into account the circumstances of the transaction and its potential impact on the maintenance of effective competition, the Competition Chamber has made a decision in accordance with Article 57.2.c.” ) Law 15/2007 of July 3 “On the Protection of Competition”, to deepen the analysis of the case in the second stage of the procedure.”

In the same statement, Competition indicated that “the economic sector affected by this operation is the financial sector, especially banking and payment services.” At the same time, he clarified that “the parties are simultaneously present in the market for the production and distribution of insurance services, in the market for pension funds and plans, as well as in the asset management market.”

The first reaction was that of the bank led by Carlos Torres: “BBVA will continue to work closely with CNMC to finalize the commitment agreement and approve the file as soon as possible.” In a statement sent to the CNMV, BBVA recalled that “obtaining authorization from the CNMC is one of the conditions on which the effectiveness of the proposal depends.”

Sabadell assured that “the decision of the CNMC confirms the complexity of the hostile takeover initiated by BBVA, which makes it necessary to study in more depth the consequences that this operation will have for the competition of the Spanish financial system.”

The court’s decision comes four months after BBVA announced its takeover bid for Sabadell in early May and disrupts the originally planned schedule. The first phase has a deadline of one month, but the CNMC decided to stop the clock to collect more information. For the second, the period is three months with the possibility of extending the period.

When moving to the second stage, business associations, unions or any other interested party will have the opportunity to present their allegations. Added to this is the government’s right to add or remove conditions.

In two previous bank concentration transactions in which CNMC analyzed the impact on competition: CaixaBank with Bankia and Unicaja with Liberbank, the cases were resolved in the first stage.

Sabadell defended the second phase, while BBVA trusted the first phase.

The Law on Protection of Competition establishes that when possible competition problems are detected, the analysis moves to the second stage with the aim of studying it in more detail. This is an aspect that Sabadell insists on, especially in the SME segment and in regions such as Catalonia and Valencia.

On the other hand, BBVA was always confident that the case would be resolved at the first stage. At a recent press conference where the results were presented, its CEO Onur Genç insisted on this aspect.

After the second phase of the study, the CNMC must determine whether the concentration should be approved without conditions or with conditions. In this process, the buyer usually makes obligations, the sufficiency of which must be accepted by the Competition.

The government now has the opportunity to intervene

In cases where the resolution of the CNMC council is a resolution of prohibition or submission to obligations or conditions, the Ministry of Economy may intervene and transmit it within fifteen days to the Council of Ministers, which in turn will have one month. make a decision with the opportunity to request a report from the Antimonopoly Agency itself.

The law does not specify under what conditions the government can add conditions, only that the final agreement must be “properly motivated.” This may be done on the basis of criteria of general interest not related to competition, such as national defense and security, public health, the free circulation of goods or the maintenance of services within Spanish territory.

It is expected that the deadline for obtaining permits will be extended.

CNMC’s decision also represents a setback for BBVA, whose operation schedule is now disrupted. In announcing its proposal, the company expected it would take six to eight months to obtain all approvals and close the merger in mid-2025.

The government, which also has the power to veto subsequent mergers after the takeover bid is completed, opposed the move due to its impact on competition and territory.

The takeover offer is also awaiting approval by the National Securities Market Commission (CNMV) of its launch prospectus. In presenting the proposal, BBVA recalled that it could submit a takeover bid without the need for CNMC approval, although CNMV President Rodrigo Buenaventura advocated waiting for the decision of the Competition before publishing the prospectus.