Takeover bid: Junts' setback; banking and power in Catalonia

The announcement by the member of the Competition Commission (CNMC) close to Junts, Pere Soler, of the unanimous support for BBVA's hostile takeover bid for Sabadell has been received with disbelief, bewilderment, and a certain degree of ill humor in the Catalan economic and political power circles. This green light blurs the radical opposition that the pro-independence party led by Carles Puigdemont, in line with the rest of the political forces, had maintained against the disappearance of the century-old Valles-based bank. This is proof that there is a vast gap between parliamentary negotiation skills and intelligence and a sense of power. The business sectors committed to rejecting the takeover bid have already expressed their discontent with the outcome of the momentous CNMC session to Junts leaders.

It's almost certain that Carlos Torres, BBVA's chairman, didn't factor in the political implications of the reaction to the hostile takeover bid for Sabadell in Catalonia. The frustrated desire for financial power has been embedded in the very fabric of Catalan economic and political society since the birth of capitalism in Spain. Failure to take this into account has been and continues to be the great flaw in BBVA's offensive, a problem that still has the potential to sink it.

Josep Oliu appealed to this collective sentiment, which is stirring at the surface, when he decided to return the headquarters to Catalonia. Beyond the considerable harmful effects on competition, the unanimity in Catalonia against the takeover bid reveals a reflex reaction to the loss of financial and economic power and influence.

Sources close to Junts justify what happened and point out that in exchange for withdrawing their dissenting vote against the takeover bid, the CNMC's resolution includes recognition that there are competition issues in Catalonia and the Balearic Islands. This was the compromise intended to reach a unanimous resolution, as its president, Cani Fernández, intended. But, of course, bourgeois Barcelona is not only concerned about local competition, but also about its influence in the rest of the country—Madrid—which would be seriously undermined if the fourth-largest bank evaporates.

Junts maintains that its radical rejection of Sabadell's dissolution remains the same as at the beginning of the process. And that this has been conveyed to the highest levels of the government, namely its president. This emphasis on political pressure, which, while not new (it comes from the first day), attempts to cover up the lapse from last Wednesday.

Foment is still awaiting a decision from the Court on its request for injunctions against the CNMC.

Catalan business leaders have not yet ruled out a possible, though certainly difficult, favorable resolution in the courts. Foment, the large Catalan employers' association chaired by Josep Sánchez Llibre, has not exhausted its judicial toolbox. It is keeping its claim alive in the National Court to be admitted as a party to the case and has requested precautionary measures, a suspension of the proceedings until it is accepted. The court has not yet ruled on these measures, although it has requested submissions from the State Attorney's Office, which represents the Commission. The deadlines have not yet expired.

In any case, in the end, BBVA's hostile takeover bid for Sabadell reaches the government's side; initially, that of Economy Minister Carlos Cuerpo, although the final challenge will be in the Council of Ministers chaired by Pedro Sánchez. A month and a half that will give rise to all kinds of speculation, pronouncements, and contacts, especially political ones.

Neither Sánchez nor the Corps have, to date, backed away from their outright rejection of the hostile operation launched against the Catalan bank. Now, the time has come to see if this government opinion can be translated into some kind of resolution.

Is the existence of this governmental and political decision-making body legitimate once the Competition Commission (CNMC), an independent body, has issued a favorable ruling? This is a pressing concern in business circles, always concerned with keeping their hands as free as possible to dive into the game of lucrative corporate deals.

Current legislation leaves room for the executive branch to impose stricter conditions on these types of transactions. However, without relying on competition considerations, the competent authority in this area is the CNMC, which is there for that purpose in this case. However, it does allow for other considerations of general interest. More specifically, a section of Article 10 of the Competition Law establishes that "The Council of Ministers may assess economic concentrations based on criteria of general interest other than the defense of competition." In other words, it recognizes that when considering the merits or drawbacks of a merger or acquisition, competition is not the sole or determining criterion.

The Catalan economic world has not understood the favorable vote of the Junts member in the CNMC

And it points out other possible options, "in particular"—which means not only—: national defense and security; the protection of public safety or health; the free movement of goods and services within the national territory; environmental protection; the promotion of technological research and development; and ensuring the proper maintenance of sectoral regulatory objectives.

It doesn't seem like an overreach to allow the range of criteria to be considered in certain procedures to be expanded, from the political to the social, employment, or impacts on a particular territory of particular importance. Perhaps for this reason, President Sánchez has repeatedly used the concept of "territorial cohesion" to justify his position against the operation. Also appealing to all of this, from the left, is Yolanda Díaz, the Third Vice President and Minister of Labor and currently the government's most vocal opponent of the operation.