UniCredit-Bpm: European Commission clears takeover

Brussels – The European Commission has approved the proposed acquisition of Banco BPM SpA (‘BPM’) by UniCredit S.p.A. (‘UniCredit’) under the EU Merger Regulation (‘EUMR’). The Commission’s approval of
the merger “is conditional upon full compliance with the commitments offered by UniCredit to address the Commission’s concerns related to the level of competition in the Italian banking sector,” a Brussels note underlined. In parallel, the Commission rejected the Italian competition authority’s request to refer the merger to the Commission for an assessment under Italian competition law.

The Commission’s investigation

The Commission’s investigation found that:

• At local level, the proposed transaction would raise competition concerns in the markets for deposits and loans for both retail consumers and SMEs banking services. Given the strong horizontal overlap between the companies’ activities and branches in 181 local areas, the Commission was concerned that the companies could have gained excessive market power, potentially leading to higher prices and reduced competition in those areas.
• At the regional level, the proposed transaction would conversely not raise competition concerns for LCCs banking services, as several other well-established competitors would remain active in the market following the transaction.
• Further, the transaction does not raise concerns regarding possible risks of coordination in the Italian banking market, due to (i) the market’s fragmented and competitive nature; (ii) low transparency in consumer pricing; and (iii) limited monitoring by competitors of their respective market behaviour both at the regional and provincial level.

The proposed corrective measures

To address the Commission’s competition concerns, UniCredit has committed to divest 209 physical branches located in problematic overlap local areas across Italy.

These commitments fully address the competition concerns identified by the Commission, by removing the horizontal overlap between the companies’ activities in those areas and ensuring that competition is preserved.

Rejection of the request for postponement

In parallel, the Commission has rejected a request from the Italian competition authority to refer the merger to it for assessment under Italian competition law.

Article 9(3) of the EUMR allows the Commission to refer all or part of the assessment of a case to a Member State provided that the competitive effects are restricted to markets within that Member State. In deciding whether to accept or reject such a referral request, the Commission takes into account, among others, which authority is better placed to deal with the case.

The Commission concluded that there are no compelling reasons that would justify a referral of the transaction to Italy in application of Article 9(3) of the EUMR. The Commission has a particular interest in ensuring that competition is preserved in sectors such as banking and insurance, which are of crucial importance for the economic development of the Capital Market Union and Savings and Investment Union.

The two companies

UniCredit provides retail, commercial and private banking, as well as insurance and asset management services. It is mainly active in Italy, Germany, Central and Eastern Europe. It also has a small presence in the UK and in the US. In Italy, UniCredit is the second largest banking group by assets and is a public company with shares listed on the Milan, Frankfurt and Warsaw stock exchanges.

BPM provides retail, commercial and investment banking, as well as insurance and asset management services in Italy. BPM is currently the third largest banking group in Italy by assets and is a public company with shares listed on the Milan stock exchange. It was created in 2017 through the merger between Banco Popolare and Banca Popolare di Milano.