The Competition Authority has launched an investigation to assess Intesa Sanpaolo’s takeover bid for MPS

The Competition Authority has launched an investigation into Intesa Sanpaolo’s takeover bid for MPS. Following the preliminary screening of the Ca’ de Sass bid and the merger with Siena, the Authority has launched an in-depth investigation and is consulting with the parties involved. In effect, this is a ‘Phase 2’ investigation, which will serve to analyse the critical issues surrounding the transaction and identify possible remedial measures.

The Authority’s analysis, led by Saverio Valentino, ‘given the significance of the operators involved in the merger and the breadth of the competitive sectors affected’, aims to ‘assess the possible effects on competitive dynamics in numerous and diverse banking and insurance markets, at both local and national levels’. To this end, it is already taking into account the agreement with Unipol for the sale of 635 MPS branches: of these, at the conclusion of the analysis, 445 were deemed to fall outside the future scope of the Intesa-MPS group, whilst a further 190 constitute a variable scope that may be subject to analysis with a view to possible remedies. On this basis, as things stand, the Authority considers that the proposed transaction is ‘likely to significantly impede effective competition’ in certain markets. In particular, 20 provincial markets are under scrutiny in terms of deposit-taking, whilst the critical scope extends to 72 provinces for lending to consumer households and 17 for lending to producer households and small businesses.

Other areas of potential concern include certain ‘regional lending markets’ for medium-to-large enterprises and 27 provincial markets relating to assets under management, as well as the distribution of managed assets. Finally, the ‘markets for the provision of asset management services’ and those for ‘the provision and distribution of insurance’ are under scrutiny. The Authority does not regard these as issues that have already been established, but rather as areas requiring further investigation. The phase now beginning could serve to ascertain whether the ‘package’ of the other 190 branches is sufficient to resolve the territorial overlaps identified, or whether further corrective measures will be necessary.

A specific analysis then focuses on Leone, given that Intesa, by acquiring MPS and, subsequently, Mediobanca, would come to hold 13.2 per cent of the company. The Authority highlights the ‘potential competition concerns arising from the structural links between Intesa and Generali’ and the ‘risks associated with the exchange of sensitive information’. In terms of market share, the two groups’ combined market shares reach 30–35 per cent in life insurance and 25–30 per cent in non-life insurance, and exceed 30 per cent in 62 and eight provincial markets respectively. Hence the need to assess the consequences of this link, including the ‘risk of vertical foreclosure effects’ on competitors. However, one thing is certain: ‘it can be ruled out that Intesa, in the event of a “takeover”’ of Mediobanca, ‘would be able to exercise de facto control over Generali’ because ‘it would not have the power to appoint’ a majority of Generali’s board.

The adversarial phase of the preliminary investigation is now beginning. Intesa and MPS have ten days from notification of the decision to exercise their ‘right to be heard’. Following this, consideration will be given to any remedies, prior to the Authority’s final decision.