Brussels, 16/03/2006 (Agence Europe) - The Commission has launched a consultation, which will run until 199 April 2006, on how to improve prudential rules for mergers and acquisitions which allow a national regulatory authority to block proposed mergers and acquisitions in the banking, insurance and securities sectors. Without questioning the need for such rules, it considers that the clarity, transparency and application of the rules could be improved. In summer 2006, the conclusions of the consultation will be published in a report and, if necessary, proposals will be made for modifying the regulatory framework. European legislation allows, among other things, national regulatory authorities to block a proposed merger of acquisition if they are not satisfied with the quality of the potential purchasers. The Commission says that the absence of a definition of the term “quality” permits broad and varying interpretations. It is asking stakeholders if it would be appropriate to define clearly this term.
The sort of information a national regulator could ask from a potential purchaser are determined on a case by case basis. The Commission wonders if maybe it would be better if purchasers knew in advance what they would be asked. European legislation also requires national regulators to give their decision on a merger or acquisition within three months. This timescale can, however, be exceeded when the regulator seeks supplementary information. The Commission would like players to give their views on this. The consultation also focuses on those parts of prudential supervision not covered by existing European legislation, such as assessment of competing merger or acquisition transactions and cooperation between national regulators.
In a press statement Charlie McCreevy European Commissioner for the Internal Market declared, “Current rules for prudential approval leave too much room for manoeuvre for protectionism and divergent prudential practices…We have to ensure that these rules are perfectly clear and transparent and applied coherently”. They should not leave any room for political interference”. In November 2005, the Commission submitted a report on obstacles to cross border consolidation in the financial sector which proposed the amendment of banking legislation on insurance (EUROPE 9067 and 9061).