Is the Banca Intesa/San Paolo IMI merger case really over?

By the decision n. 20806 (case 8027B Banca Intesa/San Paolo IMI) the Italian Competition Authority (ICA) has accepted the remedies offered by Intesa SanPaolo (ISP), Credit Agricole( CA) and Assicurazioni Generali (AG) to resolve the competition problems raised in the divestiture process of the Banca Intesa/San Paolo IMI merger. The purchaser of the assets to be divested for gaining regulatory approval identified by the parties, CA , did not meet the requirement of independence. So the ICA imposed a set of further conditions to make sure that CA would be an independent operator from ISP. Believing the parties did not comply with these conditions, the ICA opened a compliance procedure.

To dispel the ICA concern, the parties proposed the following remedies, which have been accepted by the ICA:

1)CA would gradually reduce its 5% stake in ISP under an indisclosed threshold

2)CA and AG would terminate the 2009 shareholder agreement regarding their stake in ISP, which empowered CA to take part in the ISP governance

3) A monitoring trustee would be appointed with the irrevocable mandate to exercise the voting rights of the CA stake in ISP to propose candidates for the ISP board of surveillance to be elected at the 2010 general meeting.

The compliance procedure will be extended till July 2011 to enable the ICA to monitor compliance with the above remedies. As known, verifying whether the parties have implemented behavioral remedies is not so an easy task.

In conclusion, it seems that the ICA succeeded in imposing its view on the necessity for CA to reduce its stake it had in ISP under a certain threshold. The deadline set by the ICA should allow CA to comfortably find a buyer for its share without having to selling them off.

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