Future Hungarian 'superbank' exempted from merger control scrutiny

Future superbank
Government's power to exempt certain mergers from scrutiny – what this means in practice
Decree on superbank's exemption
Context

Future superbank

The planned merger of three banks into a new Hungarian bank holding (a so-called 'superbank') was announced in Spring 2020. Budapest Bank, MKB Bank and the savings group Takarékbank will be owned by the newly created Magyar Bankholding and will thereby form the second largest banking group in Hungary after OTP Bank.

Government's power to exempt certain mergers from scrutiny – what this means in practice

Normally, such a merger would require competition authority approval. However, pursuant to a 2013 amendment to the Competition Act, in matters relevant to the public interest (ie, to preserve jobs and assure security of supplies), the government can declare that a certain concentration of companies is strategically important at a national level. Such a declaration must be ordered on a case-by-case basis by way of a government decree. This exempts certain specific mergers from the Hungarian Competition Authority's (HCA's) scrutiny (ie, merging parties have no obligation to notify such a merger to the HCA and the HCA has no competence to evaluate and rule on (including prohibit) such mergers).

Decree on superbank's exemption

On 9 December 2020 the government issued a decree exempting the superbank's merger from competition scrutiny. The government held that the measure was required from a public interest in order to boost the Hungarian financial sector's competitiveness.

Context

This is not the first time that the government has deployed this exemption. Since the amendment's introduction in 2013, the government has exempted almost 30 mergers of strategically important Hungarian companies from competition scrutiny, primarily in the gas and electricity (including e-mobility) sector, but also with regard to:

• train transport (eg, control over Bombardier's Hungarian company);
• state control of infertility centres; and
• the state's acquisition of Alföldi printing house, which prints Hungarian textbooks that are available to students for free.

The banking sector has also seen such decrees in recent years. For example, the state acquired control over, and exempted from competition scrutiny:

• MKB Bank in 2014;
• Budapest Bank in 2015; and
• the integration of the savings group (ie, the banks which will form the new superbank) in 2014.

As such, the government's marking of the new merger as one of strategic importance may not have come as a surprise to those that are familiar with the banking sector's history.

For further information on this topic please contact Anna Turi at Schoenherr Attorneys at Law by telephone (+36 1 8700 700) or email (a.turi@schoenherr.eu). The Schoenherr Attorneys at Law website can be accessed at www.schoenherr.eu.