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Investing.com -- The European Union has initiated legal proceedings against Spain over its intervention in banking mergers, specifically targeting the government’s decision to block the merger between BBVA (BME:BBVA) and Sabadell (BME:SAB) for at least three years.
In a formal notice issued Thursday, the European Commission stated that Spanish laws giving Madrid authority to intervene in banking acquisitions undermine the exclusive powers of the European Central Bank and national supervisors. The Commission also argued that these laws restrict fundamental EU freedoms of establishment and capital movements.
The Spanish economy ministry acknowledged receiving the communication about the infringement procedure, noting that the regulations in question "have been in force for years and have been applied on several occasions."
This legal challenge follows Spain’s recent imposition of strict conditions on BBVA’s proposed takeover of its smaller competitor Sabadell. Last month, the Spanish government said it would only approve the deal if the entities and assets of both banks remain separate and their activities independently managed for three years, with a possible two-year extension.
The government justified these conditions on general-interest grounds unrelated to competition concerns.
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