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The Italian government’s decision to bypass its own antitrust regulator as part of a plan to restructure two troubled banks could set a bad precedent, analysts told Bloomberg BNA.
The antitrust authority, Autorita Garante della Concorrenza e del Mercato, looked at the plan to restructure Banca Popolare SpA di Vicenza and Veneto Banca SpA anyway and found insufficient grounds to launch an investigation.
Nevertheless, the decision raises concerns about whether the antitrust authority could be written out of other future merger proposals or probes of market concentration, Alberto Pera, a partner with the firm Gianni, Origoni, Grippo, Cappelli & Partner, told Bloomberg BNA.
“It could happen in some very specific cases, and the more that happens, the greater the temptation could be to do it again,” Pera said. “But if it happened too much, I think you’ll find the authority would shout like hell.” Pera was secretary general of the antitrust authority from 1990 to 2000 and is a former board member of Veneto Banca.
Italy plans to spend at least 10.9 billion euros ($12.7 billion) to restructure the two northern Italian banks. The bailout measure, approved July 12 through a risky parliamentary vote of confidence, will separate their most solvent assets and hand them over to Banca Intesa Sanpaolo SpA, Italy’s largest financial institution. The non-performing assets from the two troubled institutions will be transferred to a “bad bank,” which the Italian government will guarantee using taxpayer dollars.
Transferring the performing assets of two regional institutions to their largest rival normally would trigger an investigation from Italy’s antitrust authority. The authority would then be tasked with determining if the transfer unfairly strengthened Intesa Sanpaolo’s hand in northeastern Italy.
Instead, the decree authorizing the bailout specifically stated that approval from Italy’s antitrust regulator wasn’t needed for the deal to get through. It was the first time in Italy that an indefinite decree about state participation in a major merger was written to exclude antitrust input. There has only been one other incidence that the antitrust bypass language was used, in a case involving Italian air carriers, and in that case the provision was time-limited.
The mere fact that the decree was written to avoid antitrust review could be repeated under similar circumstances, triggering protest, analysts said.
“I think we’re seeing a conflict between the government and the antitrust authority,” Federico Ghezzi, a law professor specializing in antitrust issues at Milan’s Bocconi University, told Bloomberg BNA. “If things develop in this direction it could be a big problem.”
It’s notable that Italy’s competition authority chose to look at the case even though the statute was written in a way that didn’t require it, Pera said. “From a legal perspective what the authority did may not be so correct,” he said. “But from a political perspective it was very correct because the authority was asserting its active role.”
It’s unlikely Italy’s antitrust authority could be written out of all cases because European Union guidelines require members’ competition regulators to look into cartels and cases involving abuses of dominance.
A press officer for Italy’s competition watchdog told Bloomberg BNA its officials are taking a wait-and-see attitude about the regulator’s treatment in the most recent bailout. He declined to speculate about whether it would be necessary consider a future case where a state decree writes the antitrust authority out of the equation.
“We’d have to look at things on a case-by-case basis,” the official said.
In the bailout of the two Veneto banks, the Italian government said it expects to recover at least 9.9 billion euros ($11.4 billion) from the soured assets and transfer 17.8 billion euros ($20.7 billion) to the “bad bank.”
The plan also calls for other assets from the two banks worth 1.7 billion euros ($2.0 billion), resulting in a total of 11.6 billion euros ($18.6 billion) that will offset the 10.9 billion euros ($12.7 billion) the Italian Treasury is providing to finance the maneuver.
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