Public Interest or Political Interference? The BBVA-Sabadell Merger and the Limits of Impartial Competition Law
- UCL Law for All Society
- Oct 31
- 3 min read
By Alex Feeney
The BBVA-Sabadell merger exemplifies a critical problem in competition law: the influence of political factors in company mergers. One of competition law’s key risks is excessive political interference, where political objectives override the fundamental principle of maintaining a healthy, competitive market. Significant tension lies in the extent to which such factors should shape merger decisions. In certain cases, intervention serves the public interest, but in other cases it undermines competition. This Spanish case highlights this dilemma. Here, ‘public interest’ government intervention into the BBVA-Sabadell merger was arguably too extensive, and consequently prompted EU scrutiny and calling into question the impartiality of competition law. The analysis of this case reveals the blurred boundaries between legitimate and illegitimate public interest in competition law.
In 2024 the Spanish bank BBVA made a hostile takeover bid for another Spanish bank Sabadell. As required, the Spanish competition authority reviewed and approved the merger subject to conditions, as is common practice. The controversy caused by this deal emerged when the Spanish government intervened and imposed additional conditions beyond what the competition authorities required. These included the requirement that Sabadell maintain a separate legal identity for three years, as well as imposing conditions related to ‘general or public interest’ concerns. The deal ultimately failed due to insufficient shareholder support, but the EU Commission criticised the Spanish government’s conduct and launched further review.
A critical problem has arisen from the intervention of the Spanish government, namely, its imposition of additional conditions driven by politically motivated objectives. The official justification provided was protection of employment and enforcement of regulatory stability. However, tension was caused by the fact that Sabadell is a Catalonian bank, whilst BBVA is headquartered in Madrid; this tension in turn reveals a politically sensitive element. Founded in a region of Spain with a strong national identity and history of independence movements, BBVA’s attempted takeover of Sabadell triggered significant backlash in Catalonia. A joint letter was sent to the Prime Minister by Catalan businesses and the 13 Catalan chambers of commerce, demanding a veto of the merger. Although the government did not block it outright, its conditions, particularly its requirement that Sabadell maintain a separate legal identity for three years, effectively rejected the deal. The vagueness of “general interest” is also problematic given that competition concerns such as SME lending, branch preservation in underserved areas, vulnerable customers and territorial balance were already addressed by the relevant authorities. What remained to be resolved was not economic in nature, but political, reflecting fears that Catalonia might lose one of its key institutions to Madrid.
Mergers with political dimensions often highlight how economic transactions can acquire powerful symbolic meaning in regions with strong nationalist identities. For Catalonia, the takeover of Sabadell by a Madrid-based bank was seen as the loss of a key regional institution to the ‘anti-Catalan’ central state. Spain’s move to effectively prevent the merger may therefore reflect a desire to avoid reigniting tensions over Catalan autonomy and to prevent the deal from being interpreted as an economic assertion of central authority.
More broadly, the government’s actions raised legal concerns. The Ministry of Economy’s decision to launch a public consultation on the merger, inviting feedback from individuals, businesses, and institutions, was unusual, as such procedures are not anticipated by Spanish merger legislation. Moreover, the absence of safeguards to verify participants’ identities or ensure non-discriminatory participation further undermined the legitimacy of this process.
Although Spain has not been formally sanctioned, its interference exposes the broader difficulty of maintaining a truly competitive market free from political influence. However, interference is not always problematic and in some cases could even be seen as necessary. In 2003, public interest considerations led the German Minister for Economics to set aside a prohibition decision issued by Germany's competition authority in the E.ON/Ruhrgas transaction. The transaction was approved, despite competition concerns, as it was deemed necessary for the stability of national gas supply and would have improved E.ON's international competitiveness, especially against Russian enterprises. It is important here to distinguish between legitimate and illegitimate public interest. Legitimate public interest relates to the influence of mergers and acquisitions on national security, financial stability and energy supply, whilst illegitimate reasons for interfering in mergers could involve regional politics and electoral considerations. In this case, the German government’s interference can be considered legitimate as the merger affected both the financial stability and energy supply of Germany, meaning that interference was of critical value. The BBVA-Sabadell case differs in its regional rather than national focus, indicating a fear of internal and regional political tensions, rather than being guided by a focus on national security.
Ultimately, the Spanish government’s interference in the BBVA-Sabadell case illustrates the difficulty of distinguishing legitimate public interest from protectionism. The case exposes the vulnerability of independent competition authorities to political influence and underscores the need for clearer legal boundaries separating economic regulation from political discretion.
Edit by Artyom Timofeev