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Brussels, 27 March 2000

Financial services: Commission closes infringement cases against Portugal concerning BSCH/Champalimaud

The European Commission has decided to close the two infringement procedures it had opened in 1999 against Portugal in the so-called Champalimaud affair. The Commission considered that measures taken by the Portuguese authorities to veto the acquisition of a controlling interest in the Champalimaud group by Banco Santander Central Hispano (BSCH) of Spain had violated EU Internal Market and competition rules. However, Portugal has now withdrawn the measures in question. Simultaneously, Portugal is withdrawing its case against the Commission before the Court.

In June 1999, the Spanish bank BSCH and Antonio Champalimaud of the Portuguese Champalimaud group reached an agreement under which BSCH would have obtained joint control and 40% of the holding companies in the Champalimaud group which is active in both banking and insurance. This concentration was, however, opposed by a decree ("despacho") of the Portuguese Authorities on 18 June 1999.

The Commission decided on 20 July 1999 to open a formal infringement procedure against Portugal because it was concerned that the "despacho" was not justified on prudential grounds and therefore violated EU Insurance Directives as well as EC Treaty rules on freedom of establishment and the free movement of capital (see IP/99/551). The Commission adopted simultaneously an interim decision suspending the decision taken by the Portuguese Authorities and declaring it incompatible with the EU's Merger Regulation. Article 21 of the Merger Regulation states that no Member State shall apply its national legislation on competition to any concentration that has a Community dimension unless justified on prudential grounds. The concentration itself was authorised by the Commission under the Merger Regulation on 3 August 1999. Following its interim decision, the Commission adopted a final decision on 20 October 1999 declaring the "despacho" incompatible with the EU's Merger Regulation. The Portuguese Authorities challenged before the Court of Justice both Merger Regulation decisions of the Commission: the interim decision of July and the final decision of October.

The Commission pursued the infringement procedure based on the violation of Internal Market rules by sending a reasoned opinion given that the Portuguese Authorities's response to the Commission's letter of formal notice (first stage of infringement procedures) failed to satisfy the Commission's concerns (see IP/99/773). It also opened a second infringement procedure against Portugal for failure to abide by the Commission's Merger Regulation decisions. In the framework of this second infringement procedure, the Commission decided on 3 November 1999 to go before the Court of Justice.

On 29 November 1999 a new concentration was notified to the Commission which authorised it under the Merger Regulation on 11 January 2000. By this new operation, which cancels the previous one described above, BSCH acquires control of Banca Totta i Açores and Banco de Crédito Prédial Português, both belonging to the Champalimaud group. On 19 January 2000 the Portuguese Authorities declared that they did not oppose this new concentration and in the meantime it has received all the necessary authorisations, including those from the financial services supervisory authorities. Furthermore, the original "despacho" has been withdrawn, as have the complaints addressed to the Commission by BSCH and Champalimaud.

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