The European Commission has preliminarily concluded that the decision of 6 April 2021 by Hungary to veto the acquisition of the Hungarian subsidiaries of the AEGON Group by Vienna Insurance Group AG Wiener Versicherung Gruppe (‘VIG’) constitutes a breach of Article 21 of the Merger Regulation.
The European Commission opened an investigation in this respect on 29 October 2021. The acquisition forms part of a wider transaction unconditionally cleared by the Commission under the EU Merger Regulation on 12 August 2021, whereby VIG would acquire AEGON’s Hungarian, Polish, Romanian and Turkish life and non-life insurance, pension fund, asset management and ancillary services businesses.
Prior to the Commission’s clearance, Hungary issued a veto decision based on emergency amendments to the Hungarian foreign direct investment screening legislation introduced in the context of the coronavirus pandemic, arguing that the acquisition threatened Hungary’s legitimate interests. Under Article 21 EU Merger Regulation, the Commission has exclusive competence to examine concentrations with a Union dimension and requires Member States not to apply their national laws to these transactions.
Member States can only take appropriate measures to protect legitimate interests provided that such measures are compatible with the general principles and other provisions of EU law, and are communicated to the Commission except for limited instances.
The Commission exercises a control not only on the appropriateness of these measures and on their compatibility with EU law, but also ascertains that such measures are genuinely aimed at protecting a legitimate interest. The Commission’s preliminary assessment takes a preliminary position that there are reasonable doubts as to the measure being aimed to protect Hungary’s legitimate interests within the meaning of the EU Merger Regulation.
Therefore, the Commission preliminarily considers that Hungary’s reasoning is insufficient and that the veto should have been communicated to, and approved by, the Commission before Hungary implemented it. The preliminary assessment also argues that the veto decision is incompatible with Article 21 of the EU Merger Regulation as it infringes the freedom of establishment.
The preliminary assessment invites Hungary to respond within 10 working days. The Commission will assess Hungary’s response and consider next steps. If the response is not adequate to remove the concerns, the Commission might adopt a final decision concluding that Hungary has infringed Article 21 of the EU Merger Regulation and ordering it to withdraw the veto.