The European Commission has approved under the EU Merger Regulation the acquisition of German financial institution Hypo Real Estate AG by Germany's state-owned Financial Market Stabilisation Fund. This is the first time in the current financial crisis that a bank nationalisation has been notified to the Commission under the EU Merger Regulation. The Financial Market Stabilisation Fund was created in October 2008, via a legislative package of the Federal Republic of Germany, to act as a vehicle for state interventions to respond to the implications of the financial crisis and to stabilise the financial system in Germany. Hypo Real Estate AG is a Germany-based financial institution mainly active in commercial real estate financing, public sector financing as well as capital markets and asset management.
The Commission had to assess the proposed transaction under the Merger Regulation, because the legal provisions of Germany's Financial Market Stabilisation Act does not ensure that the Hypo Real Estate AG is operated as a separate commercial entity with independent decision-making powers from other statecontrolled undertakings post-transaction, in particular, the Kreditanstalt für Wiederaufbau. Both Hypo Real Estate AG and Kreditanstalt für Wiederaufbau fall within the control of the Federal Ministry of Finance posttransaction and both meet the turnover thresholds under the EU Merger Regulation. On this basis, and without it being necessary to analyse the position of other state-controlled undertakings, the Commission concluded that the transaction fell within the Commission's jurisdiction. The Commission concluded that the proposed transaction does not raise any competition concerns and that, having assessed horizontal overlaps between Hypo Real Estate AG and Kreditanstalt für Wiederaufbau the proposed transaction would only have a negligible impact on competition. The Commission has therefore unconditionally approved the proposed transaction.