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EC finds Hungary violated merger rules with VIG-Aegon veto

EU

The European Commission said on Monday that it has concluded that Hungary breached Article 21 of the EU Merger Regulation (EUMR) when it decided to veto the acquisition of the Hungarian subsidiaries of Aegon Group by Vienna Insurance Group (VIG), according to a report by state news wire MTI.

The EC said "under this Article, the Commission has exclusive competence to examine concentrations with a Union dimension and Member States may only take measures to protect legitimate interests under certain conditions".

VIG announced in November 2020 that it agreed to acquire the businesses of Aegon in Hungary, Poland, Romania, and Turkey for a price of EUR 830 million, a deal that would have made VIG market leader in Hungary. In April 2021, VIG said its acquisition of Aegon's business in Hungary was denied by the Interior Ministry.

Under state-of-emergency powers vested by parliament, Hungary's government has been equipped with legal tools to block foreign takeovers of domestic companies.

In October 2021 the EC opened an investigation in relation to the Hungarian decision. Following its initial assessment, in January 2022, the Commission informed Hungary of its preliminary conclusion that the veto violated Article 21 of the EUMR.

The state of Hungary signed a contract on Monday to acquire a 45% stake in the local businesses of VIG and Aegon, Finance Minister Mihaly Varga said in a post on Facebook. The minister said he signed the contract on the sale yesterday with representatives of VIG.

"Following its investigation, and having heard the arguments of the Hungarian authorities, the Commission had reasonable doubts as to whether the veto genuinely aimed to protect Hungary's legitimate interests within the meaning of the EUMR. In particular, it is unclear how the acquisition by VIG of AEGON's Hungarian assets would pose a threat to a fundamental interest of society," the EC said later on Monday.

The EC also found "that veto restricted VIG's right to engage in a cross-border transaction, and the Hungarian authorities failed to show that the measure was justified, suitable and proportionate".

With the decision the EC orders Hungary to withdraw its veto by March 18, 2022. If Hungary fails to implement the decision, the commission may decide to launch an infringement procedure.

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