The proposed takeover of Banco Sabadell by BBVA has attracted
significant attention and widespread media coverage, putting
Spain's merger control regime under the spotlight. Following
conditional clearance from the Spanish Competition Authority
(CNMC), the transaction prompted an unusual degree of government
involvement. This included a public consultation launched by the
Ministry of Economy and, subsequently, the imposition of additional
and more stringent conditions by the Council of Ministers. These
actions have sparked legal debate and raised questions about the
limits of governmental authority in merger control. The European
Commission has reportedly announced that it is considering
initiating infringement proceedings against Spain.
This article examines the legal framework, key procedural
milestones, and the ongoing legal debate surrounding one of the
most closely watched corporate transactions in Spain in recent
years.
The Spanish merger control process - Phase III
Under Spanish law, a transaction may be cleared following the CNMC's review either at the end of Phase I or, if further scrutiny is required, after Phase II proceedings. If, during Phase II, the CNMC decides to prohibit the transaction or to approve it subject to commitments, the so-called "Phase III" proceedings are triggered.
At that stage, the Ministry of Economy may either implicitly confirm the CNMC's decision or escalate the matter to the Council of Ministers. The Council may then uphold the CNMC's ruling or authorise the transaction—either with or without conditions. In the latter case, the decision must be duly reasoned on public interest grounds that are distinct from competition policy.
The scope of the Council's authority to impose additional or more stringent commitments beyond those imposed by the CNMC remains a matter of legal interpretation and ongoing debate. However, the Council is not empowered to prohibit the transaction.
Before the BBVA/Sabadell transaction, the only precedent concerning the interpretation of the Council of Ministers' role within the current Spanish merger control framework was the 2012 merger between Antena 3 and La Sexta. In that case, the CNMC conditionally approved the transaction in Phase II. The decision was referred to the Council of Ministers, which amended the commitments by reducing both their scope and duration.
The BBVA/Sabadell case
CNMC'S assessment of the BBVA–Sabadell transaction
BBVA's public offer for Banco Sabadell was announced on 9 May 2024 and formally notified to the CNMC on 31 May. The CNMC initiated Phase II proceedings on 12 November 2024, and cleared the transaction on 30 April 2025, subject to a series of commitments aimed at addressing competition concerns in the retail banking and payment services sectors.
These commitments included creating and promoting a "Vulnerable Customer Bank Account," preserving physical branch presence in certain municipalities, and for SMEs and the self-employed, maintaining existing product conditions and credit levels. BBVA also committed to ensuring continued access to Sabadell's ATMs under the same conditions as existing agreements. Most of the commitments are set to last three years, with the possibility of a two-year extension for those related to SME financing.
Involvement of the Ministry of Economy
In a novel development, the Ministry of Economy launched a public consultation on the transaction, inviting feedback from individuals, businesses, and institutions. The consultation marked the first time such a mechanism was incorporated into a merger control procedure in Spain.
The initiative raised several concerns, particularly because such a consultation is not expressly contemplated under Spanish merger control legislation. Additional questions arose regarding the absence of mechanisms to verify respondents' identities or to ensure equal and non-discriminatory access to participation.
Involvement of the Council of Mininsters
Ultimately, the Council of Ministers authorised the transaction, imposing additional commitments that went beyond those set by the CNMC. These included obligations for BBVA and Banco Sabadell to retain separate legal identities, independent assets, and operational autonomy for a period of three years. This autonomy covers decisions related to financing and credit, human resources, branch networks, and the social activities of their respective foundations. The additional commitments were justified on public interest grounds, including economic development, employment preservation, territorial cohesion, social policy, and the promotion of research and innovation.
The Council's move gives rise to significant legal and economic questions. Some legal commentators have argued that, while the decision does not formally prohibit the transaction, it may produce equivalent effects in practice. Critics have also questioned whether the Council sufficiently substantiated the public interest grounds invoked to justify the commitments. Nevertheless, BBVA has confirmed its intention to proceed with the transaction and is reportedly considering a legal challenge to the Council of Ministers' decision before the Spanish Supreme Court.
Shortly after the Council's announcement, a representative from the European Commission voiced concerns, suggesting that the additional commitments could hinder progress toward the Banking Union. Last week, the European Commission reportedly announced that it may initiate infringement proceedings against Spain, arguing that the Government may have exceeded its powers and infringed the EU principle of free movement of capital.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
