EC orders Hungary to withdraw its veto over the acquisition of AEGON's Hungarian subsidiaries by VIG by 18 March 2022

22 February 2022 — Daniela GHETU
The European Commission has concluded that Hungary's decision to veto the acquisition of the Hungarian subsidiaries of the AEGON Group by Vienna Insurance Group (VIG) breached Article 21 of the EU Merger Regulation (EUMR). Hungary has to withdraw its veto by 18 March 2022.

The Commission investigation

VIG's acquisition of AEGON Group's Hungarian subsidiaries forms part of a wider transaction whereby VIG plans to acquire AEGON's Hungarian, Polish, Romanian and Turkish life and non-life insurance, pension fund, asset management and ancillary services businesses. The Commission unconditionally cleared the transaction under the EU Merger Regulation on 12 August 2021.

Prior to the Commission's clearance, the Hungarian government vetoed VIG's acquisition of AEGON Group's Hungarian subsidiaries, based on an emergency legislation on foreign direct investment introduced in the context of the coronavirus pandemic. The Hungarian authorities argued that the acquisition threatened Hungary's legitimate interests.

On 29 October 2021, the European Commission opened an investigation in relation to the Hungarian decision. Following its initial assessment, on 20 January 2022, the Commission informed Hungary of its preliminary conclusion that the veto violated Article 21 of the EUMR. 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. Measures taken by the Member States must be compatible with the general principles and other provisions of EU law and must be genuinely aimed to protect a legitimate interest.

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, given 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 EUMR.

In addition, the Commission 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. As a result, the Commission has concluded that the veto was incompatible with EU rules on the freedom of establishment and that it therefore infringed Article 21 of the EUMR.

With today's decision the Commission orders Hungary to withdraw its veto by 18 March 2022. If Hungary fails to implement the decision, the Commission may decide to launch an infringement procedure before the Court of Justice.

Today's decision affirms the Commission's exclusive competence to examine concentrations with a Union dimension. Member States must ensure that their actions respect this division of competence, so that businesses can invest and make use of the single market with confidence.

Background

Under Article 21 EUMR, 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 reviews not only the appropriateness of these measures and their compatibility with EU law, but also whether such measures are genuinely aimed at protecting a legitimate interest.

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