Merger Control and Bank Consolidations in the EU: Financial Stability vs Market Competition

This thesis examines how EU merger control addresses bank consolidations in an institutional setting where two public objectives coexist but do not always align: financial stability and effective competition in the Internal Market. Against the background of the post-crisis Banking Union architecture, persistent pressure on profitability and cost bases, and the need for major digital investment, the study asks two related questions: (i) whether the EU Merger Regulation’s Significant Impediment to Effective Competition (SIEC) test under Regulation 139/2004 is sufficient for banking mergers, or whether a distinct “bank-specific” substantive test is required; and (ii) how the interaction between DG COMP and prudential review by the ECB/SSM and national competent authorities can be improved, especially in light of CRD VI/CRD6, which from January 2026 formalizes additional notification and, in certain cases, prior approval requirements for bank M&A and reorganizations. The methodology combines doctrinal legal analysis of EU merger control (market definition, unilateral and coordinated effects, efficiencies, and remedies, together with recent tool updates such as the 2024 Market Definition Notice and referral practice) with banking and industrial-organization economics on what makes banks special (maturity transformation, interconnectedness, systemic externalities and risk-taking incentives) and with case-based evidence illustrating how the two regimes operate in practice. Two case studies structure the empirical discussion: Intesa Sanpaolo/UBI Banca, which was cleared subject to structural divestitures to address local overlaps in retail and SME banking, and the attempted Deutsche Bank/Commerzbank combination, which was abandoned before any formal merger review because execution risk, capital and resolvability constraints, and political acceptability outweighed the prospective synergies. The central finding is that there is no automatic trade-off between competition and stability: outcomes depend on prudential design, the transparency and boundedness of supervisory discretion, and the quality of competition analysis in local or national retail markets where banking harm often materializes through non-price parameters such as access, service reliability, switching frictions, innovation and credit availability. The thesis argues that a separate “bank SIEC” test would be conceptually redundant and institutionally risky, because systemic risk is already priced and managed through the prudential toolkit (capital requirements, O-SII/G-SII buffers, MREL and resolution planning). Instead, it proposes a bank-proof application of the existing SIEC framework: stronger emphasis on local overlaps and entry conditions; systematic use of non-price indicators; and a structured role for prudential evidence (e.g., SREP findings, capital trajectories, funding resilience, IT migration and integration risk) to test both theories of harm and the credibility of efficiency claims, without turning competition authorities into shadow supervisors. As a governance principle, the thesis endorses a two-track architecture: prudential authorities remain responsible for resilience and resolvability, while DG COMP decides on market power and consumer harm, avoiding an open-ended “public interest” gateway that could politicize merger control. Finally, the study develops pragmatic reform options through soft law and procedures, including a banking annex to best practices and remedies guidance, early information sharing and aligned timetables under CRD6, and clearer treatment of failing-firm or resolution-driven combinations. The conclusion maps a research agenda for testing these proposals empirically.