Italy has rejected the European Union’s criticism of Rome’s authority to block or restrict deals, a power Prime Minister Giorgia Meloni recently exercised during UniCredit SpA’s unsuccessful attempt to acquire Banco BPM SpA.
According to sources familiar with the situation, the Italian government stated in a letter to Brussels that the conditions it imposed for the deal to proceed complied with EU law. This response came after the European Commission’s preliminary finding suggested that Meloni’s government might have breached EU regulations.
The European Commission acknowledged receiving Italy’s response to its warning but did not reveal the details of the letter.
“The Commission will now assess Italy’s response and consider next steps,” spokesperson Lea Zuber said in a statement.
Last month, UniCredit chose to withdraw its bid for the smaller competitor, concluding an eight-month dispute with Banco BPM and the Italian government over the proposal to form Italy’s largest bank, Bloomberg reports.
Although the bid was dropped, the EU’s investigation is still ongoing and may result in formal infringement proceedings against Italy for violating EU law.
The result of this process could also impact UniCredit’s future acquisition plans, as CEO Andrea Orcel has indicated he might restart the Banco BPM bid if the circumstances change significantly.
The dispute between Brussels and Rome highlights the ongoing political resistance to bank consolidation across Europe. Similar government opposition has become an obstacle in Spain, where BBVA SA is attempting to acquire its competitor Banco Sabadell SA.
Brussels, which had earlier approved the potential UniCredit-Banco BPM deal, argues that Italy’s interference may violate the EU’s merger regulations and lacks adequate justification.
It cautioned that the government’s stance seemed “incompatible with other provisions of EU law, including on the free movement of capital and on prudential oversight by the European Central Bank.”
UniCredit stated it withdrew the bid because it was unable to obtain government approval. Although some progress was made in discussions with authorities, a final agreement would have extended beyond the already prolonged offer deadline.
The unsolicited all-share bid for Banco BPM encountered opposition from the outset in November, partly because it conflicted with Rome’s plan to create a major banking group focused on the previously rescued Banca Monte dei Paschi di Siena SpA. Banco BPM was considered a likely partner for a merger with Monte Paschi.
Rome subsequently set conditions on the deal using a provision called golden power, which applies to transactions involving strategic assets. The government has remained firm in its opposition, despite a court invalidating two of the conditions and warnings from the EU to refrain from interference.