Belgium, (Brussels Morning Newspaper) The European Commission has found Hungary’s decision to veto the Vienna Insurance Group (VIG)’s acquisition of AEGON’s Hungarian subsidiaries to be unlawful.
VIG financial services company is planning to acquire AEGON insurance group’s businesses in Hungary, Poland, Romania and Turkey, which the EC previously cleared.
The Commission stressed that Hungary’s veto is not in line with Article 21 of the EU Merger Regulation, which grants the EC the exclusive authority to decide on acquisitions with an EU dimension.
It pointed out that VIG’s plan to acquire AEGON’s pension fund, asset management, life and non-life insurance, and ancillary services businesses in the four countries had been cleared unconditionally in August last year.
Before the EC approved the plan, Hungary vetoed the acquisition of AEGON’s subsidiaries in the country, arguing that the move threatened Hungary’s interests. The veto was based on foreign direct investment regulations introduced in the coronavirus crisis.
The Commission launched its investigation into Hungary’s decision at the end of October last year, informing Budapest in January that, according to its initial assessment, the veto was not in accord with EU rules.
The EC reiterated its exclusive authority to decide on such acquisitions, adding that EU member states may only implement measures under certain conditions. Measures implemented by member states must be in line with EU rules and aimed at protecting their legitimate interests, it declared.
After completing the investigation, the Commission expressed its doubts that the veto had been aimed at protecting Hungary’s interests. It noted that VIG and AEGON “are well-established EU insurance companies with an existing presence in Hungary.”
“The Commission therefore concluded that the Hungarian authorities should have communicated their intended veto to the Commission prior to its implementation and that Hungary’s failure to do so infringed Article 21” of the EU Merger Regulation.
“Hungarian authorities failed to show that the measure was justified, suitable and proportionate”, the EC determined in ordering Hungary to withdraw the veto by 18 March this year.
The Commission also concluded that Hungary’s failure to comply with the decision may result in the launch of “an infringement procedure before the Court of Justice.”