Recent Developments and Prospects Regarding the Decisional Practice of the Italian Competition Authority in Banking Mergers

Abstract:     
This article deals with the decisional practice on banking mergers the Italian Competition Authority (AGCM) has developed since 2006 when it was given full jurisdiction over banking. More precisely, the article focuses on the noteworthy aspects of the AGCM practice that are believed to be the narrow definition of retail banking markets, a 30% market share threshold to identify the mergers presumed to lead to dominance and a pro-active regulation of anticompetitive interlocking directorates. From these aspects it can inferred that the AGCM has taken a strict approach in vetting banking mergers. The article also dwells on the appraisal of rescue banking mergers. Arguably, these merger fall within Article 20(5 bis) of the Italian Competition Act that codifies a failing firm defence, by giving the Bank of Italy the power to clear an anticompetitive mergers on stability grounds. The banking regulator should invoke Article 20(5 bis) only in exceptional cases meeting a systemic standard, which occurs when a merger is necessary to preserve financial stability. This position is consistent with the thinking of the European Commission, which opposes to relax competition law enforcement at harsh economic times.

Keywords: competition law, merger control, definition of relevant markets, interlocking directorates, failing firm defence

JEL Classifications: K21

Working Paper Series