Second Annual Conference
Rome, October 20th and 21st 2006
LUISS Guido Carli
SIDE Working Papers
Second Annual Conference - 2006
ENRICO LEONARDO CAMILLI
Towards a financial regulatory
network in the Italian saving law
262/05: the case of allocation of
competences on stability and
antitrust
Towards a financial regulatory network in the Italian
saving law 262/05: the case of allocation of
competences on stability and antitrust
Enrico Leonardo Camilli∗
ABSTRACT
The recent reform on the allocation of regulatory and supervisory competences
endeavoured by law 262/05 aims at building a financial regulatory network, where each
authority is appointed with a specific function. From an institutional point of view, in
the building process of the network two major aspects deserve specific attention, the
homogeneization of procedural aspects and the mechanisms to ensure coordination
between authorities. Indeed, in a multi-peaks model of allocation of functions (Di
Giorgio – Di Noia, 1999), overlapping of different competences is a likely event, as it
happens in the merger scrutiny, where both antitrust and stability assessment are carried
out. If one of the authorities of the network enjoys a substantially different degree of
freedom, a natural leader of the network will come out, and it may be able to enforce an
increased level of discretion, which may not be explicitly provided for in the law. The
former competence of Banca d’Italia (BI) on both antitrust and supervisory controls
may have favoured this role of BI; furthermore, the procedural framework of BI acting a
supervisor, as shaped by the TUB and the Handbook, shows some substantial
differences compared to the accountability arrangements characterizing the enforcement
of antitrust rules. On the other side, within a functional model, the coordination within
the network becomes crucial. The paper tries to ascertain how the new saving law (l.
262/05) and the likely future changes proposed by the government may have addressed
these aspects.
INTRODUCTION
The fear of a conflict in the banking sector between the public interest of
stability on one side and competition on the other has extensively influenced the
structure of competences between antitrust law and banking law. Actually, before the
Banking Law, D. Lgs. 385/1993 (s.c. TUB), the entrepreneurial nature of the banking
firm was itself contested, since the public interest features of banking were deemed to
be prevalent in shaping the nature of bank activity1. This latter vision supported a
PhD Law and Economics, LUISS University, Rome, email: [email protected]. I’m grateful to the useful
comments made by Prof. M. Clarich. The usual disclaimers apply.
1
On the general category of public interest service in the Italian doctrine see U. POTOTSCHNIG, I pubblici
servizi, Padova, 1964. For the qualification of banking within this category, see G. VIGNOCCHI, Aspetti
pubblicistici del credito, in Rivista trimestrale di diritto pubblico, 1961, 575. The Supreme Italian Court
too used to support this view, see Cass. Sez. Un., 10th of October 1981, n. 10467, in Foro it., 1981, II,
553.
∗
1
financial regulation style based on a comprehensive and pervasive scrutiny on the
overall firm’s operations, backed by the wide discretion the 1936 Banking Law left to
the Central Bank in arranging the regulatory framework. Obviously such a regulatory
regime was at odd with the possibility itself of a competition among firms and actually
most of the Italian banking sector was owned by public bodies. The attribution of the
financial supervision to the Central Bank was the natural consequence of its
macroeconomic role with regard to the monetary policy.
In the 80’s the effect of European Community directives on banking law
harmonization forced the Italian legislator to major changes on the features of
regulatory intervention, first of all by recognizing the entrepreneurial nature of the
banking firm2. From a control involving each act of the firm’s business, the supervision
focused on the maintenance of given ratios between the different components of the
bank balance sheet, according to the prudential supervision paradigm. The 1993 TUB
resumed the change of legislator’s approach on banking.
The turning point of the TUB was supported by the different attitude of the
economic thought with regard to the relationship between competition and stability. The
guarantee of free competition has not been anymore considered per se detrimental for
the maintenance of the macroeconomic stability of banking sector3. On the contrary in
the long term increased efficiency due to competition, backed by a coherent prudential
supervision, may reduce instability risks, by expelling the most inefficient firms that
could represent the weak elements in guaranteeing the stability of the overall banking
system. The supervision obviously does not loose its pivotal role, but it is focused on a
constant monitoring of financial healthy of the financial firms in order to forestall
instability risks and to minimize the external costs due to the gradual selection of the
most efficient firms4. Coherently, art. 5 of TUB lists both the guarantee of stability and
the guarantee of competitiveness as the objectives of banking legislation, according to
which the supervision activity of the Central Bank has to be carried out.
Actually the breakthrough of the TUB was preceded by the Italian antitrust law,
n. 287/90, that contained an explicit provision involving the application of general
antitrust rules in banking, at art. 205. The acknowledgement of the entrepreneurial
nature of the banking firm was implied in the application of the ordinary antitrust rules,
but the allocation of competences between the general antitrust authority (AGCM) and
the supervision authority (the Central Bank, BI) was still influenced by the previous
regulatory framework, which relied upon the planning role of the Central Bank. In fact,
both the application of the prohibition of anti-competitive agreements, of abuses of
dominant position and the merger scrutiny used to be carried out by BI up to the law
2
Art. 10 TUB.
Competition in banking may have ambivalent effects on stability, i.e. on the likelihood of bank failures
having external effects on the whole banking system; for an accurate survey see B. M. PARIGI, La
concorrenza nel settore bancario: una rassegna della letteratura, and E. CARLETTI, Concorrenza,
regolamentazione e stabilità, in M. POLO (eds), Industria bancaria e concorrenza, 2000, Bologna,
4
Cfr E. CARLETTI – RL HARTMANN, Competition and stability: what’s special about banking?, in
European Central Bank Working Paper Series n. 146, 2002; D. LLEWELLYN, The economic rationale for
financial regulation, in Financial Services Authorities Occasional Paper Series n. 1, 1999, 46-47.
5
At European level the full application of antitrust rules to banks was already recognized since the
famous Zuchner decision, ECJ, 14th of July 1981, Case C-172/80.
3
2
262/05, while the AGCM was appointed with a mandatory but non binding advisory
function.
According to the system in place up to last December, the AGCM was asked to
issue its advice, within 30 days, according to the information supplied by the Central
Bank. Actually the access to the secreted information held by BI on the basis of its
supervision role was excluded for AGCM by the law, since according to art. 7 of the
1993 Banking Law the AGCM was not included among the authorities allowed to share
the information held by BI. Although this latter aspect made more difficult an
independent evaluation of the operation, some discrepancies between the BI final
decisions and the AGCM advises happened to be (infra).
Only the decision making power involving the accordance of exemptions from
the prohibition of anticompetitive agreement was shared by both the AGCM and the BI.
Another aspect of the 1990 law was the introduction of some provisions aimed at
limiting the possible conflicts of interests between bank and industry, at art. 27 and ff.
The inclusion of the mentioned rules in antitrust law was significant, since it was
acknowledged the possible negative impact on competition of vertical integration
between banks and financed firms, besides the likely stability concerns. In 1993 the
TUB changed perspective and underlined the stability reasons as the bulk of the
discipline, by repealing the rules in the antitrust law and including them in the Banking
Law.
Up to early 90’s the division of competences for special sectors recently
liberalized (like telecommunications, television, banking) appeared to be inspired by a
sector allocation principle, and the banking sector did not represent an exception. The
sector specific regulator was competent for the application of both sector specific
regulation and antitrust rules. However, as soon as the liberalization process went on,
the principle of allocation of competences by means of the objectives of regulation took
place, thus the AGCM got the general competences for the application of antitrust rules
in every sector. In this new framework banking represented the sole exception since
1997, notwithstanding the increasing integration between banking and non-banking
financial markets already posed serious problems in defining the competent authority
for the application of antitrust rules in mixed markets, i.e. involving banking and nonbanking (financial) operators6.
6
The wording of art. 20 of the Antitrust law actually recalled an allocation criterion based on the subjects
involved in the operation (“Aziende ed istituti di credito”), rather that on the markets involved. Such a
wording of the article was justified on the basis of the legislative framework in 1990, when banks were
allowed to carry out only banking activities, see A. PATRONI GRIFFI, Antitrust e concentrazioni bancarie,
in Giurisprudenza commerciale, 1996, 400. However the legislative decree 481/1992 (and afterwards the
TUB) modified this aspect, leaving the banks free to carry out other financial activities. As a consequence
the terms banks and banking activity do not overlap anymore, thus the problem of the competence for
mixed operations (i.e. involving banks and non banking operators or having effect on other non-banking
activities) came up. The Italian Supreme Administrative Court finally opted for a restrictive interpretation
of the BI competence, limiting it only for operations (mergers, agreements, abuses) involving banks and
having effects only on banking activities, see Consiglio di Stato, sez. VI, 16th of October 2002, n. 5640,
AGCM v. Assicurazioni Generali, Unicredito, al. in Giornale di diritto amministrativo, 2003, 255, with a
comment by M. RAMAJOLI.
3
Several reasons were put forward in order to support the view according to
which the appointment of BI as general sector regulator: the cost advantages for the
undertakings stemming from a one stop shop principle; the informational advantages of
BI thanks to the duty of the banks to provide on a regular basis business information to
BI within the regulatory framework on stability; the possibility for the sector regulator
to balance stability reasons vis à vis antitrust ones in assessing the cases that may have
both stability and competitive effects.
Although the antitrust law did not provide the ground for a differentiated
application of antitrust rule7, the contemporary assessment of competitive and stability
profiles of the operations, in fact, naturally led to that outcome. That is true especially
for operations that showed the strongest interrelations between the two profiles, like
merger review, where both antitrust powers according to art. 20 l. 287/90 and
supervision on stability according to art. 19, 53, 57 TUB were carried out by the same
authority.
With specific regard to the substantial issues of this scrutiny, it can be reminded
the different attitude of AGCM and BI both on the definition of the relevant market8, on
the role of potential competition9 and on the conditions to be imposed in order to
authorize the acquisition. On the latter point, BI showed a preference towards
behavioural conditions, whereas the AGCM strongly supported the adoption of
structural measures in its advises 10. Actually the former may have a rather different
competitive impact: first of all their fulfilment is much more difficult to ascertain;
secondly, they may ease the establishment of collusive equilibriums between the local
dominant firm and the competitors11. Furthermore, among the structural measures a
different competitive impact stems from the obligation to close branches and the
obligation to sell them, especially if the authorization requires transferring them to
serious potential competitors. In fact the recent attitude of BI on that point is quite
ambiguous: in the Banco di Sicila/Sicilcassa12 case some commentators welcomed the
increased attention of BI towards structural measures; however, besides the fact that
often the structural measures were imposed together with behavioural measures13, BI
kept using behavioural measures extensively and mainly against the AGCM advises14.
7
Unless for art. 20 par.5 on the exemption for anticompetitive agreement.
Partially solved with the definition of the geographical extension and of a common threshold to be
followed in order to open the phase II of the merger review, see the BI-AGCM Agreement, 4th of March
1996, in Bollettino dell’Autorità Garante della Concorrenza e del Mercato, 10/96, point 3.
9
See Banca delle Marche/Cassa di risparmio di Loreto/Mediocredito fondiario Centroitalia, BI, provv.
n. 20, 18th of March 1997 and AGCM advise, 27th of February.
10
This different approach is underlined by P.L. PARCU, Commento, in M. POLO (eds), Industria bancaria
e concorrenza, Bologna, 2000, 378 and F. DENOZZA – NOZZTABILINI, Rapporti e possibili conflitti tra le
autorità preposte all’applicazione della normativa sulla concorrenza con riferimento al settore bancario,
in ibidem, 409, with specific reference to the 1997 Cariplo/Carinord Holding case; a similar reasoning
can be applied to the Banca delle Marche case, above.
11
See AGCM, advise n. 5657, 29th of January 1998.
12
See BI, provv. n. 22, 3rd of April 1998.
13
See Banca Carige/Cassa di risparmio di Genova e Imperia/Cassa di risparmio di Savona case, BI
provv. n. 32, 8th of March 2000, San Paolo – IMI /Banco di Napoli case, BI provv. n. 36 19th of January
2001
14
See BI provv. n. 43, 6th of August 2002 IntesaBci/Cassa di risparmio di Terni e Narni, and BI provv.
n. 40 29th of May 2002, San Paolo – IMI / Cardine Banca; in both cases, a substantial contrast between
8
4
That outcome was probably favoured by the role the CB endeavoured in past
times and the TUB, at art. 5, did not clarify the situation, by summing up both the
guarantee of competition and stability as the objectives of financial supervision.
Actually the enforceability of multiple and indefinite regulatory objectives is already
contested in other regulatory systems15. The Italian system made no exception,
especially due to the inclusion of potentially conflicting objectives, stability and
competition. This provision, together with the absence of a separate antitrust scrutiny,
may have strengthened the idea that BI is equipped with a pure discretionary power and
in practice is free to strike a balance between conflicting objectives, at least in the
exercise of the powers provided for by the TUB.
The prevalence of the stability objectives and their impact on antitrust merger
review may be also explained with reference to the specific features of the art. 19 TUB
authorization power and the Handbook for regulated firms issued by BI. The
authorization process for the acquisition of shares of banking firms used to have a
prevailing role in the actual dynamics of the consolidation process for several reasons.
First of all, from a substantive point of view, the assessment of sound and prudent
management of the target bank involves the evaluation of the industrial plan of the
acquirer. According to some scholars in this evaluation most of the discretion of BI is
retained, since it can carry out a structural and preventive control on the external
expansion of the firm and it can give guidance on the external and internal expansion
path the bank is to follow16. Moreover, whenever the acquirer of shares is another bank,
the operation will be assessed according to art. 53 TUB too, in order to evaluate the
impact the operation will have on the acquirer balance sheet.
Furthermore, from a procedural point of view, the art. 19 TUB power implies a
different timing, compared to merger review. On one hand, the TUB provides BI with
the power to authorize minority acquisition above 5% of capital, according to the
several quotas set in the Handbook17; BI then may influence the dynamics at a very
preliminary stage of the merger. On the other hand, the Handbook requires the firm
willing to carry out a merger to send a preliminary notice18: this step is not provided for
in the TUB, but it is only prescribed by the Handbook. Accordingly, this informal phase
does not imply for BI a duty to act expressly; in fact the obligation to notice the BI
the AGCM advise and the final decision can be found: the AGCM did not found the acquisitions
substantially affecting the competitiveness of the market (see par. 13 AGCM Advise n. 11022, 25th of
July 2002 and Advise n. 10732, 9th of May 2002), whereas BI authorized the operations with some
behavioural conditions. BI Provv. n. 48, 9th of August 2003, Banca popolare commercio e
industria/Banca popolare di Bergamo, where the AGCM in fact advised not to authorize the merger
(AGCM Advise n. 12351, 7th of August 2003).
15
With reference to the FSMA 2000, where the regulatory objectives are narrowly defined and
homogeneously grouped, the enforceability is highly contested, see E. LOMNICKA, Making the Financial
Services Authority accountable, in Journal of business law, January 2000, 77. Contrary advise has been
expressed by the Parliamentary Delegated Powers Committee, and the Joint Committee, see A. ADAMI,
La regolazione dei mercati finanziari nel Regno Unito dopo il FSMA 2000, Torino, 2004, 30.
16
See G. OLIVIERI, Tutela del risparmio e concentrazioni bancarie: il ruolo dell’antitrust, in Banca
Impresa Società, 2004, 444.
17
BI Handbook, Circolare n. 229, 21st of April 1999, Titolo II, Cap I, Sez. II, n. 1, an express
authorization is due when the shareholder exceeds 5%, 10%, 15%, 20%, 33%, 50% of the capital, and in
any case when the acquisition leads to achieve the control of the bank.
18
,BI Handbook, Titolo II, Cap. I, Sez. II, n. 3.
5
arises at a very preliminary phase, before the operation has been assessed by the
Executive Board, and nevertheless it requires the firm to supply very detailed
information on the merger19. The likely inconsistency of this provision with the national
and Community legal framework pushed the new BI Governor, Prof. Draghi, to
withdraw such a provision, thus the Handbook has been modified on that point the 28th
of August 2006.
Furthermore, it may be stressed the different structure of the antitrust merger
scrutiny, compared to the supervisory assessment on the shareholders. According to art.
16 of the Italian antitrust law, it is not provided a prior authorization model, rather a
negative licensing scheme: after the notification of the operation, the antitrust authority
is bound by a strict deadline (30 days) in order to issue the statement of objection. Once
the deadline is expired, the authority does not hold any power to forbid the operation
anymore, unless specific circumstances are verified. The scrutiny according to art. 19
TUB, on the contrary, is based on a prior authorization model, where the operation is
cleared only after an express decision is issued by BI. Actually the prior authorization
structure may be considered quite at odd with the Community provisions on access to
banking market, as contained at art. 19 of directive 2006/48. The supervisory
assessment on shareholders as shaped in the directive is clearly structured as a negative
licensing system. Actually other important European financial regulatory systems have
implemented this provision according to the wording and the spirit of the Directive. The
FSMA 2000 provides, at art. 188, par. 3, that the Financial Services Authority,
whenever decides to object the proposed operation, must issue the warning notice within
3 months from the firm’s notice20. According to art. 2b, par. 1a, of the German Banking
Act (Kreditwesengesetz, KWG) the Federal Banking Supervisory Office may prohibit
the acquisition of shares within three months from the receipt of the full application21
The Italian implementation made by the TUB as a positive licensing system may be
highly contested, in terms of consistency with the Community system. The faculty to
implement art. 19 of the Directive in a stricter way is provided for in the 12th recital, but
it is doubtful whether the introduction of a positive licensing system may be deemed
consistent with that faculty. Indeed the possibility to have stricter rules may be surely
referred to the conditions to be fulfilled, provided that the ban of structural supervision
contained in art. 7 is respected. However, with regard to the procedural system, the
general limitations on of Community law on prior authorization systems may be
recalled. According to the Guidelines of the Commission22 and the case law of the Court
of Justice, the adoption of positive licensing systems, especially when they are not
based on public, objective and stable criteria, may be not consistent with the
19
Actually the change of relevant aspects of the preliminary project will require a new notice, point 3.1.
“If the Authority decides to give a warning notice under this section, it must do so before the end of the
period of three months beginning: (a) in the case of a notice to be given under section 187(1), with the
date on which it became aware of the failure to comply with the duty in question; (b) in the case of a
notice to be given under section 187(3), with the date on which it became aware of the matters in
question. ”. The wording of the article suggests that a warning notice issued after the expiring period may
be considered an ultra vires act.
21
“Die Bundesanstalt kann innerhalb von drei Monaten nach Eingang der vollständigen Anzeige nach
Absatz 1 den beabsichtigten Erwerb der bedeutenden Beteiligung oder ihre Erhöhung untersagen, wenn
Tatsachen die Annahme rechtfertigen…“
22
Communication of the Commission on certain legal aspects concerning intra-EU investment, in OJ,
19th of July 1997, C 220/15.
20
6
fundamental freedoms of the Treaty. Moreover, the Court has clearly stated that positive
licensing systems affecting the fundamental freedoms may be admitted only in case that
less restrictive mechanisms would not be able to achieve the public interest23. With
regard to the prudential supervision on shareholders, this argument looses most of its
strength, since the suitability of a negative licensing system is evidenced by the
directive itself. Finally, in December 2005, the Italian system of supervision on
acquisition of shares has been the object of an infraction procedure by the Commission.
Moreover, a recent Commission proposal aims at modifying the wording of art. 19 of
directive 2006/48, with the explicit objective of achieving a full harmonization of the
supervisory control on shareholders24; the proposal recalls the negative licensing system
contained in the actual art. 19, but it does not allow the adoption of stricter rules and, in
addition, it specifies the sound and prudent requirements, by setting up five conditions
to be fulfilled in order to forbid the operation.
Finally, the concentration of competences, by internalizing both the assessment
on stability and competitive effects of the operation, allowed BI to implement an active
supervisory policy, i.e. an assessment of positive stability effects of the operation vis à
vis the negative ones on competition. This “implied” power, which is not expressly
mentioned in the TUB and the antitrust law, probably emerged from the concentration
of competences.
Thus the discretion the BI enjoyed in carrying out its function stemmed both
from the several public interest objectives it was asked to look after and its supremacy
(in procedural terms too) in the application of antitrust and stability rules. That led to a
softened application of the failing firm defence25, a strict control on the aggregation of
local banks and a general prejudice against hostile bids26. Both these attitudes are
grounded on sole stability reasons, as minimizing the external costs of bank failures
meanwhile limiting the too big to fail problem or limiting the stability concerns due to
excessive price paid by the hostile bidder, without reference on the possible competitive
impact.. In general terms the discretion the BI was left with may ease the perpetuation
of an implicit planning role of CB, by means of its moral suasion. Moreover, the
procedural framework characterizing the division of competences and the individual
proceedings, the resulting lack of transparency, may have helped to minimize the
substantive impact of the epochal change in financial sector regulation brought on by
the substantive rule of Community directives and the internal application by means of
the TUB.
The idea underlying the present paper is that path dependency with regard to the
style of banking supervision did not actually stemmed directly (or only) from the
substantive provisions, but from the allocation of competences and, in some measure,
the procedural structure the legal framework designed too. Despite the Community
23
Cfr Corte di Giustizia, sent. 14 dicembre 1994, Sanz de Lera, cause riunite C-163/94, C-165/94, C250/94, parr. 23-38; sent. 1° giugno 1999, Konle, causa C-302/97; sent. 20 febbraio 2001, Analir et al.,
causa C-205/99, par. 35.
24
Art. 5 of the Commission proposal on the harmonization of shareholders control
25
See BI provv. n. 1, 5th of April 1993, Banco di Sardegna/Banca popolare di Sassari.
26
V. MELI – LI IOCCHIO, Contendibilità del controllo delle banche: il ruolo della vigilanza, in
Concorrenza e Mercato, 2000, 309, 327.
7
Directives on financial regulation do not explicitly impose a given regulatory structure
and procedure, the provision of a conditional regulatory regime27 called for a change of
the enforcing system too. In law 262/05 a first attempt to change the structure of
supervisory architecture of financial regulation may be found: being politically
unfeasible the institution of a single regulatory agency on financial markets, articles 1924 may be interpreted as a first step in order to sketch the fundamental elements for a
network of financial regulators, with common procedural rules and based on a common
informational base. Besides these basic elements, the law leaves the regulatory bodies
involved with the task to build the network. In fact, beyond the homogenization of the
administrative regime, the law does not go further towards the definition of the network,
whereas the uncertainty in the allocation of competences between the AGCM and BI
may represent a serious obstacle for the establishment of a cooperative setting.
THE
INTERRELATION GAME BETWEEN ANTITRUST AND STABILITY CONTROLS: THE
SPECIFIC CASE OF MERGERS
In recent times, boosted by bank scandals involving the Governor of BI and in
the view of the evolution/consolidation of banking sector, the Italian legislator was
forced to reconsider the allocation of competences between the AGCM and the Central
Bank. Actually this has been a clear occasion to review the efficiency of the path
dependent allocation of antitrust competences made in 1990.
An interesting interpretation of the interrelations between AGCM and BI was
put forward by Messori (2004)28, where a game theory approach in the explanation of
possible strategic interactions between the two authorities is proposed with specific
regard to the merger authorization procedure, the most problematic issue. The author
points out as a cooperative outcome may not be feasible in the short period, when
AGCM and BI will have to establish the relative reputation in defining the borders of
their new competences. Moreover it is stressed that a simultaneous interrelation may
worsen the non cooperative feature of the game and may lead to a joint refusal of
authorizations, in order not to admit the veto power of the other authority. If built
sequentially, the incentive not to act cooperatively is lessened, especially if backed by a
clear definition of the objective of the administrative intervention and a transparent
procedure, which may help to avoid strategic behaviour of the authorities.
In particular, the author proposed a two stage game were AGCM is asked to
decide on the antitrust compatibility of the operation and afterwards BI has to assess the
stability effects of the mergers deemed to be compatible by AGCM. Messori’s proposal
relies on the strong assumption that mergers may not be used as a stability instruments,
thus anticompetitive mergers may not be authorized on the basis of their necessity for
stability reasons29. In this setting the admissibility of the failing firm defence would be
judged only by the AGCM, on the basis of the very strict requisites set by the European
Commission in the Kali/Saltz decision. According to this view, BI is asked to exercise
27
L. TORCHIA, Il controllo pubblico della finanza privata, Padova, 1992.
M. MESSORI, Un commento, in Mercato Concorrenza Regole, 2004, 401.
29
Ibidem, 403.
28
8
its authorization power only with regard to the negative effects on stability the operation
may bring out.
The interrelation game between the two authorities becomes even more complex
in the likely case of conditioned authorizations. According to art. 6 par. 2 of the antitrust
law, the antitrust authority may authorize a merger, meanwhile imposing conditions in
order to cut off the possible anticompetitive concerns of the operation. Similarly, BI
currently imposes prescriptions to be followed in implementing the operation, on the
basis of its prudential supervisory powers (art. 53 TUB). In a simultaneous setting, the
risk of a conflict between the conditions prescribed by one authority and the other’s is
high, and actually they can change the evaluation itself of the operation carried on by
the other authority30.
A solution endeavoured during the legislative process: art. 26 of proposal
2436/05
In practice among the several proposals presented at the Italian Parliament, it
may be worthy underlining art. 26 of the joined proposal n. 2436 presented at the
Chamber of Deputies the18th of January 2005. In this proposal the allocation of
antitrust competences between the AGCM and BI turned out to be finally based on a
functional criterion, i.e. on the objectives of regulation31.
The application of the prohibitions of art. 2 and 3 of law 287/90 (anticompetitive
agreements and abuses) did not generally raise excessive problems: the system would
have provided general competence for the AGCM with an advisory role of BI,
symmetrically with the former regime. BI would have had the possibility to express its
view only on the light of stability reasons, but without the possibility to forbid the
operation, unless it implied a violation of other rules of TUB. Exemptions would have
been accorded with a joint decision, but anyway on the ground of the conditions laid
down in art. 4 par. 1 l. 287/90, with the need that benefits to consumers derive from
stability reasons being assessed by BI.
The merger review brought about more problems, since more clearly stability
and competitive effects may derive simultaneously and the control on the structural
dynamics of the market is at the stake. The proposal provided a parallel procedure,
where the notification of the operation would have been addressed to both the
authorities, but each one would have had scrutinized the application according to the
regulatory objectives of its competences (stability concerns for BI, competitive ones for
AGCM), coherently to an allocation scheme based on the function carried. According to
the outcome of the scrutiny, the relationships between the AGCM and BI powers would
have had different shape. In the case the concentration may negatively affect the
30
The risk of miscoordination is particularly high in one way, as the supervisory prescriptions (like sale
of some assets in order to fit the capital ratios) may change the competitive effects of the operation and
require different evaluations on the antitrust side.
31
See G. DI GIORGIO – ORGII NOIA, Financial market regulation and supervision: how many peaks for
the Euro area, 28 Brooklyn journal of international law, 2002, 463.
9
stability of the system, the refusal to carry on the operation by BI was to be notified to
AGCM, and that would have led to the impossibility to strike the deal, lacking one of
the authorizations needed. In case the operation would be deemed necessary for the
guarantee of the stability, BI was called to communicate its decision to AGCM, which
in turn had to concede its authorization unless the competitive concerns of such an
operation are not proportional to the stability gains. Finally if the stability effects had
been irrelevant, the AGCM would have been free to adopt its decision only on
competitive grounds. The dual system shaped by the proposal implied a dynamic setting
of coordination between BI and AGCM: whenever the intervention of BI aims at
protecting the stability in negative terms, the BI refusal absorbed the AGCM
competence, since the operation may not be concluded, regardless the outcome of the
competitive scrutiny. On the contrary, if the BI intervention aims at protecting the
stability in positive terms, the AGCM was left with the ultimate power of balancing the
stability gains vis a vis the competitive concerns. Corollary of this allocation of
competences would have been the application of transparent procedural provisions
aiming at guaranteeing due process of law, both in front of the AGCM and BI, with the
application of AGCM procedural provisions contained in Reg. 217/98 meanwhile ad
hoc regulation with a similar degree of transparency would have been adopted by BI.
Despite the fact that for the first time the BI antitrust competences were at the
stake, the art. 26 proposal probably did not manage to cut off the prominence of BI
within the system. Actually the proposal relied on a formalization of BI-AGCM
coordination directly by the law. In game theory terms the proposed art. 26 may be
interpreted as a sequential game where BI acts as first mover, but its power to influence
the decision of AGCM by selecting the possible choices of AGCM is limited. Actually
the only inhibitory power BI had, involved cases where the stability may be negatively
affected by the operation, whereas in the other cases (indifference or necessity for
stability) the AGCM keeps the last word, even if in the latter case its discretion is
limited to evaluate the proportionality of measures involved. The positive planning role
of BI is reduced since its solitary power is retained only in negative terms and it may be
grounded only on stability reasons. On the other side there could have been a perverse
incentive for BI to expand its veto power by denying the authorization in order to limit
AGCM power. In order to limit this incentive, the transparency of procedure carries out
a crucial role, since the adversarial nature the relationship between BI and the
undertakings in this case would make more likely and effective and stringent judicial
review.
In any case the proposed art. 26 was not approved by the Parliament Committee,
and the problem of the allocation of competences has been solved in a different way in
the recent law 262/05, s.c. “legge a tutela del risparmio”, or saving law
The allocation of competences in law 262/05
Actually the solution of the problem adopted by the recent art. 19 para. 11-14 of
the saving law disregarded the text and the philosophy itself inspiring the former art. 26
of the proposal 2346. On one hand it might have positive effects in reducing the Central
Bank-centrism of the balance of competences, whereas on the other the new setting is
already raising some conflicts of competences because of a lack of clarity in the scope
10
of new AGCM powers. Actually the wording of the article suggests an intensification of
the regulatory burden, with an extension of the scrutinizing agencies even for non
concentrative operations.
More specifically, with regard to the application of art 2 and 3 of l. 287/90
(agreements and abuses), art. 19 par. 11 provides full competence of AGCM, without
any advisory role of BI, whereas for the exemption ex art. 4 par. 1 it has been
maintained the joint competence of BI and AGCM provided for in art. 20 par. 5, law
287/90. In fact the most serious problems are due to the allocation of competences for
merger review. Rather than simplifying the relative competences of the two authorities
and reducing the burden of regulation of the consolidation process in banking sector, the
new setting may lead to an extension of ex ante regulatory powers of both BI and
AGCM. The major problem lies in the fact that the AGCM ex ante scrutiny would be
extended to all the cases covered by art. 19 TUB, which involves the need of
authorization for the acquisitions of shares of banks above 5%. Actually the scope of
application of art. 19 is only partially coincident with the scope of application of the
classical merger review, since it can involve non concentrative operations. Obviously
the assessments of BI and AGCM will be carried out with regard to different public
interests objectives and motivations, being the safeguard of stability for the former and
the guarantee of competition for the latter. However the law prescribes that the two
assessments have to be attached in a joint decision issued by both the authorities within
60 days from the application.
It is not clear from the text of the article whether the art. 19 gives the ground for
a new competence of AGCM which is different (at least from a procedural point of
view) from the merger review or it just implies that applications according to art. 19
TUB may be substantially scrutinized by AGCM only in case the acquisition turns out
to be a merger32. Actually the wording of the article would suggest a new competence at
least with regard to the procedural grounds, first of all because the new terms introduced
by art. 19 par. 13 (60 days) are incompatible with the normal merger review procedure
(the two steps procedure lasts up to 75 days, 30 days for phase I and 45 for phase II). On
the other side the grounds upon which the AGCM may be called to express its antitrust
evaluation of the non concentrative operations is less clear. There may be vertical
effects of participations in banks, mainly affecting the principle of separation of banks
from industry, and this rule may reintroduce a competitive assessment of these
relationships as provided once in art. 27 and ff. of the original version of law 287/90.
Moreover there could be horizontal effects of cross-participations. However these
effects may be scrutinized by AGCM according its normal antitrust competences in
applying art. 2 and 3 of law 287/9033, so it is doubtful whether a specific ex ante
authorization procedure is really necessary.
32
See M. CLARICH – RICH ARAMILLI, Regolazione a tutela della stabilità e concorrenza¸ text of the
intervention at Paradigma Workshop on the new law 262/05, Milan, 1st of March.
33
For a review of the possible anticompetitive effects of minority acquisition of shares and the juridical
framework at the EC level, see R. A. STRUIJLAART, Minority share acquisitions below the control
threshold of the EC Merger control Regulation: An economic and legal analysis, in 25 World
Competition, 2002, 173 and ff.
11
On the other side the new setting of competences contained in art. 19 l. 262/05
may have effects of the extension of BI powers too. Actually the joint competence of BI
and AGCM could be interpreted as involving the faculty of BI to scrutinize operations
being a merger according to art. 5 l. 287/90 but that do not involve the acquisition of
shares by the participants and thus that would not need the authorization by BI
according to the competence set out by art. 19 or 57 TUB. Some of these aspects have
been afforded by the two authorities, looking for coordination in the definition of their
respective competences (see infra)
Furthermore, procedural problems may be given by the relationships between
the BI Handbook, regulating the art. 19 TUB authorization procedure in front of BI,
and their effects on the AGCM competence, even on the basis of their ambivalent
juridical nature34: for instance it is doubtful the need for a preliminary notice to AGCM.
Similarly, if the AGCM review is based on a new competence linked to art. 19 TUB, the
firm will be asked to attach the industrial plan of the acquisition to the AGCM notice
too. On the other side, if the AGCM is not to act according to art. 19 TUB, but just on
the basis of its general merger review competence, that would imply the application of
the antitrust law provisions on procedure, which highly differ from the actual secreted
procedure characterizing the BI competence (f.i. with regard to the participation of third
parties).
In the law 262/05 no words are spent for the definition of competences in case of
necessary mergers for the safeguard of stability of the system, unlike the proposed art.
26. As a consequence it could be sustained that BI does not have anymore any active
role in defining in positive terms the need of some market operations in order to secure
stability objectives. According to art. 19 par. 13 each authority has to provide a
motivation to its decision with regard to its competences, thus BI may not bind AGCM
to authorize a merger for its positive effects on stability if it has a negative impact on
competition. Actually AGCM does not have this exemption power in mergers35, without
a Ministerial Decree according to art. 25 law 287/90, and according to the European
Commission the failing firm defence may be applied only under strict conditions36.
Finally it will be interesting to evaluate the effects of the new setting of
competences with regard to merger remedies the two authorities may impose on the
firms involved in order to authorize operations which raise problematic issues. As
recently confirmed by the Lazio Regional Administrative Court, BI is enabled to impose
conditions (melius prescriptions) on the firm seeking to acquire bank shares, in order to
34
On the several problems on the normative or administrative nature of the BI Instructions, see M.
CLARICH, Per uno studio sui poteri normativi della Banca d’Italia, in Banca Impresa Società, 2003, 65;
M. A. STEFANELLI, Le istruzioni di vigilanza della Banca d’Italia – Parte generale, Padova, 2003
35
Unlike art. 21 of Reg. 139/04.
36
Being a) the target firm would have been inevitably forced out of the market, b)the acquiring firm
would inevitably acuire the market share, being the only relevant competitor, c) no less anti-competitive
purchase was admitted, see Case IV/M308, Kali und Salz/MdK/Treuhand in Common Market Law
Review, 1994, 526 and ECJ, case C-68/94 and 30/95, France v. Commision, SCPA v. Commission, 1998,
ECR I-1375.
12
maintain the “safe and sound” management of the target bank and of the acquirer37.
Actually these measures may have both structural and behavioural aspects. Since the
remedies imposed may overturn the initial features of the operation, it would be
necessary to coordinate the conditions imposed by both the authorities within the joint
decision that has to be issued within 60 days from the application.
The provision of a joint statement including the decisions of two independent
authorities is a novelty for the Italian juridical system. Unlike the usual scheme of
compounded decisions, art. 19 par. 13 suggests that actually two different final
decisions are taken, whereas the overall authorizative effect will derive only from the
consistency of the provisions. In this way the system aims at imposing a forced informal
coordination between the two authorities,. The degree of such a coordination, however,
highly depends from the interpretation given to the joint act: on one side a formalistic
interpretation may lead to a mere joint publication of two different administrative acts;
on the other side, a substantial interpretation may provide an enforceable mechanism of
coordination, due to the fact that inconsistency of the two final decisions may be
challenged in the Court (see infra)38. Actually the first case handled by the two
authorities showed a very formalistic approach: the two proceedings (in front of the
AGCM and BI) have been carried on separately, and the joint act resulted in a simple
joint publication of two different decisions39.
Compared with the former setting, the externalization of antitrust scrutiny will
surely require a clear definition of the relationship between the juridical grounds of the
powers of the two authorities. However it may have a further effect: the new setting of
competences sharpens the problem of a clear definition of the boundaries between the
two objectives of regulation within the TUB, the competitiveness and the stability, as
provided at art. 5 TUB. Actually the new setting may imply a deep change of the
“regulatory regime”40, with a shift from the former “monitoring monopoly power”41
towards a strengthened role of market incentives, especially with regard to corporate
control, secured by the antitrust scrutiny. In other words, by externalizing the different
functions, the clash of objectives will be made public, thus observable, since it will
cause an institutional conflict. The main problem, thus, relies on the procedural means
to solve such a conflict.
From a comparative point of view, the 2000 Financial Services and Markets Act
in UK faces this problem in an interesting way. Notwithstanding the English experience
is characterized by the single regulator model, the FSA is not appointed for the
application of antitrust rules. But the relationship between competitiveness and stability
37
See TAR Lazio, sez. I, 19th of July 2005, n. 6157, in Giornale di diritto amministrativo, 2006, 309,
with a comment by A. TRAVI and in Foro amministrativo – TAR, 2005, 3564, with a comment by E. L.
CAMILLI.
38
About the two possible interpretations of the joint act see E. GUERRI, Le modifiche alle competenze in
materia antitrust introdotte con la legge di riforma della tutela del risparmio e la disciplina dei mercati
finanziari, in Il diritto dell’economia, 2006, 285-286.
39
Provv. C7669 del 5 luglio 2006 - Société Générale Italia Holding/2s Banca, in Bollettino AGCM, n. 27
del 24 luglio 2006, 5-12.
40
For the concept of regulatory regime in financial markets see D. LLEWELLYN, A regulatory regime for
financial stability, ONB Working paper, n. 48, 2001.
41
D. LLEWELLYN, op. cit. supra, 20.
13
of the financial system is not only addressed in negative terms. In a highly regulated
market, the implementation of a competitive market is highly based on the minimization
of the anticompetitive impact of sector rules. Indeed, in an attempt to increase as much
as possible the accountability of the financial regulator42 the FSMA does not mention
the need to maintain the competitiveness of the financial system as a positive objective
to be pursued by the sector specific authority, rather it represents a negative boundary of
the FSA regulatory powers (see Sec. 2 par. 3 FSMA 2000)43. The idea of a practical
conflict between the financial objectives and the competitiveness suggested a clear
definition of competences the sector regulation is aimed at. Within these objectives, the
FSA is left with ample discretion in implementing its regulatory powers, but it is
obliged to minimize the impact of its measures on the competitive process. The
fulfilment of this requirement, however, is not left to the judicial review, that probably
might sanction only macroscopic infringement of the proportionality principles
involving a discharge of the positive objectives. Actually, the antitrust agency, the OFT,
is given the power to review this latter aspect, by means of public reports to the
Competition Commission and the Treasury. The discretion of the FSA is then limited by
means of a possible scrutiny of the antitrust agency, in the extent the FSA regulation
may distort competition. That implies that regulation is entitled to derogate the normal
market discipline as far as its action is proportional to the aim, and the respect of this
boundary is given to the competitive review by OFT and eventually solved at political
level by the government. (Part. X, Chapter III, “Competition scrutiny”, sec. 159-164).
Whenever the two set of regulations are in conflict with regard to single cases, however,
the FSMA provides for an exclusion of application of the 1998 Competition Act, being
in general not applicable the cartel and the abuse of dominant position prohibition for
action carried out according to FSA rules and guidance (Sec. 164 FSMA 2000). The
UK, then, adopted a system, where a possible conflict between objectives will not be
dealt with regard to the specific case, but it will lead to a more general scrutiny of the
regulatory system set up by the FSA. In terms of reputation, this competition scrutiny
may be even more harmful than the contrast within a single case, then it incentives the
FSA to minimize the anticompetitive impact of its regulation. Moreover, that system
makes the conflict public and it shifts the decision on the conflict at a political level,
since the balance between public objectives is at stake44.
At domestic level, given that the saving law does not provide any substantive
and procedural solution of a possible conflict between the antitrust agency and the
supervisory authority, first of all it may be useful verify what are the boundaries (in
42
See E. HÜPKES – PKESUINTYN – INTYN LAYLOR, The accountability of financial sector supervisors:
Principles and practice, IMF Working Paper n. 05/51, 2005, 11 and ff., where it is underlined the
importance of the definition of clear and not conflicting objectives.
43
The FSMA clearly distinguish between “regulatory objectives” and “relevant considerations”. While
the former entail sector specific targets of financial regulation aimed at stability protection (market
confidence, public awareness, protection of consumers, reduction of financial crime), the latter have a
broader value and surely lack of binding power, see A. ADAMI, op. cit., 2004, 41.
44
A partially different competitive scrutiny of the sector specific regulator can also be found in the
American system. The adversarial nature of the conflict in this case is however more evident: the
application of antitrust rules is demanded to the several sector specific regulator, but the Department of
Justice may challenge the decision in front of the court (the s.c. revolving door). In this case the
institutional conflict will be dealt at the judiciary level, rather that at the political one, as it happened in
the famous Philadelphia case.
14
substantive and procedural terms) each authority has to respect in order to reach a deal
within the single case. On one side, as already said, the 1993 Banking law includes the
achievement of a competitive banking system among the general objectives of the
supervisory authority (art. 5). That implies the need to choose, among the different tools
available in order to achieve the stability objective, the ones that better match the
competitive process45. Despite the different wording with respect to the FSMA, where it
is stated in negative terms, it may be supported the idea that the article implies the need
to minimize the anticompetitive impact of its power (being rule-making or adjudicatory
powers). A different vision, that would require an interventionist approach of the
supervisory authority, may be at odd both with the shift of competences happened with
the saving law on antitrust matters and with the need to preserve the undertaking’s
business autonomy.
On the other side the 1990 antitrust law does not provide the same degree of
flexibility with regard to the balance between different public interest objectives: the
possibility to disregard the anticompetitive impact of some measures is provided for by
the antitrust law at art. 4 and 20 par. 5 (exemption for anticompetitive agreement) under
strict conditions, whereas with regard to merger scrutiny the AGCM does not have any
autonomous exemption power. As long as the Government will not exercise the power
provided for at art. 25 (see supra), the AGCM is not entitled to grant exemptions for
anticompetitive mergers. Furthermore, it is very unlikely that the actual banking market
structure may impose serious competitive concerns that can lead to a prohibition of the
operation46. It is more likely that an operation will be cleared, under specific conditions.
However, the AGCM power to impose conditions on mergers is subjected to a strict
judicial review, according to the recent developments of the Supreme Administrative
Court on that point47. Together with the open procedure applicable in merger review,
that shows a remarkable difference on the accountability degree of the two authorities’
decision-making process.
In game theory terms the new setting seems to refer to a simultaneous game,
where neither the AGCM nor the BI competences are well ex ante defined. The non
cooperative outcome may lead to increased difficulty to obtain an authorization or the
imposition of coherent remedies, especially at the initial stage of application of the law.
Actually at the beginning of the interaction game, the pay offs of the Authorities
involved in terms of relative reputation will be even higher in case of non collaboration
45
C. LAMANDA, Le finalità della vigilanza, in F. FERRO LUZZI – ZASTALDI (a cura di), Commentario al
testo unico bancario, Padova, 1996, 174.
46
During the 1990-2005 period, the AGCM advised not to authorize the merger in only two cases, Banco
di Sardegna/Banca popolare di Sassari in 1993 and Banca popolare commercio e industria/Banca
popolare di Bergamo in 2003.
47
See Consiglio di Stato, Sez. VI, 1st of October 2002, n. 5156, in Foro Italiano, 2003, 3. The review by
the Supreme Administrative Court on the remedies imposed by the AGCM in the merger Enel-Infostrada
has been quite strict. As a consequence of the conglomeral merger between Enel and Wind, the AGCM
found that the dominant position of Enel in the electricity distribution market may be strengthened, since
it would be the sole multiutility firm operating both telecommunication and electricity services. In order
to mitigate the anticompetitive impact, the AGCM required Enel to sell some generation capacity. With
regard to remedies, the Court focused on two major points: first of all, on the causality link between the
dominated market and the market where remedies were imposed, secondly on the proportionality of
measures imposed, vis à vis the anticompetitive advantage stemming from the merger (par. 25). On the
proportionality principle.
15
if the competences are not clearly defined, since it is necessary to establish a precedent.
Each authority could look for an extensive interpretation of its competences and a
reduction of other’s scope of powers.
The recent Government proposal, issued the 31st of August and still under
parliamentary review, aims at solving some inconsistencies of the saving law, as
showed supra. First of all, the link between the art. 19 TUB power and the antitrust
scrutiny is severed, in order to make clear that the AGCM merger review is carried out
only on the ground of the antitrust law. As a consequence, the scope of application of
AGCM power will be defined by art. 5 of the antitrust law, whereas BI will be left with
the supervisory controls contained in art. 19 and 57 TUB. Secondly, the joint act is
deleted, but at the same time the adoption of a unique deadline (60 days) for the two
proceedings is maintained. In other words the simultaneous feature of the interrelation
game is maintained. This will not be the case whenever a balance between stability and
competitive reasons are at the stake. Grounded on stability reasons involving one or
more of the banks involved in the operation, BI may ask the AGCM to authorize an
operation that would strengthen a dominant position. In this case the last word on the
compatibility of the operation is given to AGCM, which has to assess the
proportionality of the competitive restraints vis à vis the stability objectives.
THE COORDINATION WITHIN THE NETWORK
With reference to the second aspect of the building process of the network, the
saving law just sketches the possible instruments of collaboration among the authorities
dealing with financial markets, as set up in art. 20 of the law. Actually the headless
collaboration recalled in art. 20 may be of little utility: the article does not seem to have
an innovative nature, since the instruments were already available according to normal
administrative law (see art. 15 law 241/90, which was already used to arrange the
AGCM-BI relationship within the old setting) and there is no explicit sanction for the
infringement of cooperation obligation. Notwithstanding that, some rumours suggest
that an agreement between the two antitrust authorities and the Central Bank with
regard to the scope of competences on merger scrutiny has been achieved. According to
this “agreement” the AGCM won’t open an investigative phase if the transfer of shares
does not involve a merger, according to art. 5 of the antitrust law.
However, the solution of the substantive problems related to the coordination of
the public interests on competition and stability have not been addressed by the two
authorities. If a cooperative attitude between the two authorities will come up with
regard to merger scrutiny, i.e. if the pay offs of both authorities arising from the choice
to collaborate will be anyway higher than the pay offs resulting from a non cooperative
outcome, it is left to the two bodies to strike a balance, in order to cooperatively carry
out this new “mixed” competence. For instance, it will be necessary the adoption of
coherent remedies for stability and antitrust purposes. The remarked differences on the
accountability of the decision-making processes of the two authorities may help to
sketch a possible coordination path. Indeed, the higher degree of accountability
provided for in the antitrust law acts as a commitment in the institutional bargaining
process between BI and AGCM. Such a process may finally result in the measures
16
eventually required for stability reasons being de facto subjected to a competition
scrutiny. Furthermore, pure anticompetitive mergers grounded only on stability reasons
could not be cleared by the antitrust authority, which is bound by the restrictive
interpretation of the failing firm doctrine adopted by the Commission. On the other side,
BI is obliged to minimize the anticompetitive impact of the measures imposed, then it
may be forced to adapt as much as possible the proposed remedies, within the available
set of conditions compatible with the stability objective.
The informational network art. 21 of the saving law tries to sketch will have a
particular relevance for the achievement of a cooperative setting, even if the different
degree of protection of information within the network may raise problematic issues.
With specific regard to the impact on the division of competences between antitrust and
banking authorities, it has to be positively noticed that the AGCM, unlike past art. 7
TUB, is now included within the financial regulators network, thus it has access to the
information held not only by the banking regulator, but to CONSOB, ISVAP and
COVIP databases too.
Besides these attempts to strengthen the coordination among the authorities
involved, the law 262/05 tries to build up a certain degree of uniformity with regard to
the institutional and procedural setting. Articles 23 and 24 provides a common juridical
framework for the exercise of financial supervision powers, either involving Bank of
Italy and the others authorities of the network (except the AGCM). The harmonization
of the administrative regime required major changes for BI, which already issued a new
regulation48 consistent with the new regime. A major change, f.i., has been the
generalization of the obligation to issue a statement of objections before the final
decision: such an obligation was indeed excluded for certain proceedings carried out by
BI.
Within this harmonized framework, however, a notable exception has been
anyway maintained: the role of the CICR has not been changed. Actually the CICR is
still at the top of the institutional setting of stability supervision in Italy. The nature of
this Committee is still under debate: on one side the law appoints the Committee with
some specific tasks (mainly of regulatory nature), on the other side there is a strong
relevance of political bodies within it (the major ministries dealing with economic
affairs), together with the mandatory presence of BI. Actually a similar body is not
provided for in other institutional settings involving the other independent authorities
dealing with financial matters. Actually the architecture of financial regulatory network
would require either a common high level political Committee, involved in the overall
financial regulation and implementing the coordination of the entire network, or a
complete independence of each single peak regulator from the government, together
with a credible coordinating mechanism. The actual framework, on the opposite,
suggests a different role of political power in the stability supervision compared with
other peaks of regulation. That would means, for instance, that regulatory changes
48
Regolamento 27 giugno 2006, “Regolamento recante l’individuazione dei termini e delle unità
organizzative responsabili dei procedimenti amministrativi di competenza della Banca d’Italia relativi
all’esercizio delle funzioni di vigilanza in materia bancaria e finanziaria, ai sensi degli articoli 2 e 4
della legge 7 agosto 1990, n. 241, e successive modificazioni”, in G.U. n. 159 dell’11 luglio 2006, Supp.
Ord. n. 162.
17
involving both BI and Consob regimes would require a different involvement of
political forces and that may represent a serious obstacle towards the coordination of the
authorities involved. The new governmental proposal may be even more inconsistent
with the harmonization of the system: the CICR is held at the top of the stability
institutional framework, but the Presidency (which is given to the Ministry of Economic
Affairs by the law) retains the power to ask the other major authorities involved in the
regulation to attend the Committee, without any voting power. Actually the change
would not modify the asymmetrical architecture of stability regulation, whereas at the
same time it can strengthen the political component of the CICR: the Treasury indeed
may strategically use its power, by inviting the other authorities in order to strengthen
its positions within the Committee. Without a change of the CICR competences
(extended on the whole financial regulation, thus not involving the sole stability side)
and of its mandatory composition, the ambivalent role of this body is not wiped away
and the road map to a real coordination among the different regulatory peaks will not be
completed. A possible alternative, which would reinforce the independence of
regulatory bodies, would require the elimination of such a body, in order to cut off the
possible influence of political power in financial regulation.
CONCLUSIONS
The allocation of competences provided for in law 262/05 suggests the way
towards a functional approach has been opened and it may represent an evolution of the
sector specific approach which characterized the financial sector up to now.
The evolution towards a function-based regulatory network for financial services
rather towards a single regulator may be considered an effect of past setting. Even after
the legislative breakthrough of the 1993 Banking Law, the setting of competences based
on a sector specific approach allowed BI to keep its leader role in banking regulation.
The fact that one of the authority involved is the Central Bank and it used to have a
strong planning role in banking, together with the different procedural constraints
strengthened the BI asymmetrical role within the financial regulators and its leadership.
On the other side the monetary function is not anymore an autonomous task of BI, then
the effect on the structure of the financial network due to this competence of BI is
lessened. However, being the role of banks still prevalent in the Italian financial
landscape, the single regulator was probably likely to be BI. Being this outcome
politically unfeasible, the reform adopted an imperfect functionalist approach. Imperfect
because some relevant growing sectors (investment funds and insurance) are still under
the supervision of sector specific authorities (COVIP and ISVAP), even if the law aims
at building a financial regulatory network between these bodies. Furthermore, the
transparency of banking activities is still supervised by the BI together with CONSOB.
With regard to supervisory and antitrust competences, however, the law pursued a
complete shift towards a pure functionalist approach.
The advantages stemming from this setting may be found in the possibility to
limit the discretion of the authorities involved. Within some extent some flexibility of
rules is needed to adapt general rules to specific cases, as the jurisprudence on the open
18
juridical clauses may show49. However such degree of discretion involves the practical
implementation of the technical aspects needed to pursue the target the authority is
appointed for (s.c. discrezionalità tecnica), but does not allow to weight off different
public interests (s.c discrezionalità amministrativa). The appointment of different public
bodies for the achievement of different public interests makes the conflict public.
However, the lack of clarity in defining the relative competences may wipe out the
advantages of the functionalist approach, raising serious coordinative problems50.
Secondly the system has to provide the tools to cope with this institutional conflict. That
may be addressed by formal means of coordination provided by the law or by informal
“cheap talks” within the authorities involved, as it happened with regard to the
definition of the scope of application of antitrust powers in merger review.
Actually the coordination game between independent authorities of the network
is affected both by the relative legislative definition of competences, the bundle of
parallel competences each authority has and the different procedural rules of their
administrative activity. If these aspects are not homogenously regulated and balanced,
there may be the concrete risk that an authority will come up as natural leader of the
network and it will be able to enforce a certain degree of discretion.
Some provisions of the new saving law may have positive effects in the building
process of a financial regulatory network, in order to substitute the strong interrelation
between supervisory and monetary powers once characterized the BI leader role on
supervision of financial markets. Both the new institutional framework of BI arranged
by art. 19 and the homogenization of procedural rules for normative and individual
administrative acts of financial regulatory bodies contained in art. 23-24 tend to limit
the asymmetrical position BI once enjoyed within the network, especially from a
procedural point of view51. It may be sustained that within the overall functions of the
Central Bank, a strong differentiation from an administrative point of view between the
regimes of monetary and supervisory competences is emerging52 and it endeavours an
important element in order to limit the natural leader role BI is pushed to carry out
within the financial regulatory network. This aspect represents the major breakthrough
with the past setting and may help to shift from the path dependence in the enforcement
of substantive antitrust rules. The creation of a regulatory network with a homogenous
administrative regime and a regulation of the information stream within the network
may represent the bulk for a coherent financial regulation, or at least a substitute of the
single financial regulator, which on the contrary emerged in other countries.
The Administrative Courts (especially the one of Lazio district and the Supreme
Administrative Court, which will be competent for the judicial review of all the
individual acts of the authorities included within the network, according to art. 24 of the
saving law) recently anticipated this homogenization of the administrative regime of BI
49
See Consiglio di Stato, VI, 2199/02, 5156/02, 926/04.
That may be indentified as redundancy, lacunae, inconsistency, that coordination aims to minimize, see
B. G. PETERS, Managing horizontal government: the politics of co-ordination, in Public administration,
1998, 296.
51
See G. MONTEDORO, Procedimento e processo nella riforma sul risparmio, Report of the intervention
at the Bar Congress held in Rome, 30th of March 2006, available at www.giustizia-amministrativa.it.
52
E.L. CAMILLI, Commento agli art. 19-22 della legge 262/05¸available at www.archivioceradi.it .
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vis à vis the other independent administrative authorities. First of all they applied the
special procedural rules provided for at art. 21bis law 1034/71 in challenging the
administrative acts of independent administrative authorities53. In addition it was
applied to BI acts the judicial review doctrine for the decision of independent
administrative authorities54. It is then foreseeable that the path towards homogenization
will not be hindered by the Courts.
Furthermore, the comprehensive effect of the reform may sketch a new role for
the AGCM within the network. Indeed, among the authorities of the network, the
antitrust authority is the sole that does not endeavour any rule-making power and has a
general competence (i.e. not limited to financial markets), which in some extent makes
it at a weaker position, vis à vis the sector regulators. On the other side, as seen with
specific regard of merger remedies, the AGCM is bound by its legislative statute to a
single public interest, the safeguard of the competitive process, which more or less
explicitly is addressed by the sector (or objective) specific regulations too55. The
fulfilment in positive terms of the competition target by the sector regulatory agencies,
however, may be problematic, since the sector specific regulator has a tendency to look
after its objectives, whereas at the same time assessing the competitive effects of the
sector regulations may be difficult, due to the limits of the judicial review, especially for
general normative acts. Eventually the AGCM may act as a “watchdog” on the
competitive impact of sector (or objective) regulations and decisions. Its advises in the
consultation process of art. 23 of the saving law will have a special relevance, due to the
fact that the antitrust advocacy function is eventually backed by the power to disregard
non justified anticompetitive regulations, according to the CIF judgment56.
On the other side some shortcomings of the law may hinder the correct
functioning of the network. Notwithstanding the clear separation of competences
operated by the law (BI does not either have an advisory power for the application of
art. 2 and 3 of law 287/90), some overlaps remain with regard to the application of their
respective set of rules on mergers.
Firstly, it can be noticed that the “implied” power of BI to authorize
anticompetitive mergers, on the basis of their positive effects on stability, probably
vanished. The effects of this provision on the overall style of stability supervision may
be significant, since they help to shift the core of supervisory activity from the structural
control to the prudential supervision. There will be still some problems at stake, as the
definition of a common procedure for the firm willing to apply for art. 19 TUB
authorization.
Actually the wording of the law is ambiguous: it would extend the antitrust
preventive scrutiny far beyond its scope on non financial sectors and that may be a
matter of conflict between the two authorities, both with regard to the procedure to be
followed and the relative value of their powers. Despite the economic thought pointed
out the consistency of stability objective with antitrust policy, the allocation of
53
Consiglio di Stato, Sez. VI, 5 settembre 2005 n. 4521, par. 2.
TAR Lazio, Sez. VI, 19 luglio 2005, n. 6157.
55
See art. 5 TUB, art. 5 D. Lgs 58/1998 (Securities act), art. 3 D. Lgs. 209/2005 (Insurance code),
56
Consorizio Industriale Fiammiferi v. AGCM, dec. 9th of September 2003, case 198/01.
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regulatory competences for antitrust and stability purposes is a problematic issue that
may increase the competition among the two pillars of the network, BI and AGCM.
This competition might be beneficial, if the law arranged a dispute settling mechanism,
as other systems do. Otherwise, the joint authorization for non concentrative operations
may increase the regulatory burden, i.e. barriers to entry, for investors in banking sector.
The extent of this burden will depend on the degree of coordination and cooperative
attitude the two institutions, AGCM and BI, will agree on. Within the actual legislative
framework it is proposed a possible evolutionary path of the relationships between the
two authorities, which adheres to the “watchdog” function of AGCM.
With regard to the possible obstacles this evolutionary path may encounter, it
may be useful a glance on the incentives to coordinate of the two authorities. A possible
indirect instrument to enforce iterative coordination between the two authorities may be
represented by the role of judicial review of the joint authorization decision. The
assessment of the lawful use of power in the joint decision may follow two different
methods. By separately assessing the two parts of the final decision, the judge may limit
its role to the review of each single assessment, with the usual scope to verify the
consistency of the single reasoning of each authority. Differently if the judicial review
will be appointed on the overall consistency of the decision; in this case the
proportionality principle, which nowadays is named as one of the guide principle of
administrative activity57, will allow to a deeper scrutiny on the outcome of the
coordination between the two authorities, especially with regard to the conditional
measures imposed58. The risk that inconsistency of the decision may result to the
annulment may provide BI and AGCM the incentive to coordinate within the
authorization process. Within this system, the lack of clarity of the rules will shift to the
judiciary the burden of practically defining the relationships within the network. This is
an improper task the judiciary may be asked to carry out, that would imply high
transaction costs for the market and would show a pathology of the system. Actually the
resolution of the conflict between public interest objectives should be left to the
Government, which is liable both in front of the electoral body and of the Community
institutions.
57
Art. 1 par. 1, law 241/90 on the administrative procedural rules. Art. 23 law 262/05 on the
proportionality of regulatory measures.
58
On the proportionality assessment of merger remedies, see supra, Enel/Infostrada case.
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