13.5.3.2 Purchaser requirements

In some cases, there are requirements that have to be met by the purchaser of the divestment business. This can be illustrated by the decision on Royal Bank of Scotland (RBS). This bank committed to divest the Rainbow Business. The purchaser of the Rainbow Business had to meet the requirements listed in recital 99 of the decision. In the assessment-part of the decision, the Commission elaborated two of the purchaser requirements. The Commission noted positively that there was a special commitment that the buyer’s share in the SME market might not exceed 14%1 after the purchase of the divested entity.2 The rationale of this commitment was to prevent that the divestment would not result in the strengthening of another leading market player. The condition that the buyer had to be vetted by the FSA was also noted positively. The Commission welcomed these purchaser requirements, since these requirements would ensure “that the planned divestment of the Rainbow Business would lead to increased competition on the concentrated UK banking sector by introducing a challenger or reinforcing a small existing player”.3

The purchaser requirements that appear in the other decisions are not always expressed in the same terms as in the decision on RBS, but they more or less amount to the same. Most of these decisions contain the condition that the purchaser of the divestment business should be independent of and unconnected to the beneficiary bank. The ATE-decision mentions that “the notion of independence follows from the rationale of a compensatory measure, which requires a bank to dispose of an asset and not to sell it to a connected entity like a subsidiary or shareholder (independence is not hampered by a very small interconnection that does not give the other party a significant influence)”.4 The RBS-decision even contained an elaboration of ‘independent and unconnected’.

The condition that the purchaser must have the financial resources, proven expertise and incentive to maintain and develop the Divestment Business can also be found in many decisions. The RBS-decision included the condition that the capability of the purchaser to develop the divestment business should be analysed by the financial supervisory authority.

Some decisions contain the requirement that the purchaser “must neither be likely to create prima facie competition concerns nor give rise to a risk that the implementation of the commitments will be delayed”.5

The only purchaser requirement that does not typically figure in every decision is the requirement that market share may not exceed x%. It should be recalled that the decision on RBS included the requirement that the market share of the purchaser would not be higher than 14%. This specific purchaser requirement only appeared in the decision on RBS, LBG and KBC. The other decisions containing purchaser requirements do not include this specific purchaser requirement. In the LBG-decision, the requirement was formulated in similar terms as in the RBS-decision. The KBC-decision contained purchaser requirements with respect to Centea and Fidea.6 These subsidiaries may not be bought by a bank with a post-acquisition market share of greater than […]%. The case of KBC is somewhat special, since the market share ceiling is the only purchaser requirement; the other purchaser requirements are not mentioned in the KBC-decision.

In my opinion, the relevance of most of these purchaser requirements is quite limited. To some extent, they are self-evident. The condition that the purchaser should be independent and unconnected to the beneficiary bank follows from the very logic of creating a new competitor. The condition that the financial supervisory authority should verify that the purchaser has the “financial resources, proven expertise and incentive to maintain and develop the Divestment Business” also does not contribute much. The existing financial regulations already provide that acquisitions of financial institutions should be authorised by the relevant financial supervisory authority. Only the condition that the market share of the purchaser must not exceed x% has real relevance.