The European Central Bank is wrong and Fininvest he’s right. This is the conclusion reached by the Attorney General of Court of Justice of the EU, Campos Sanchez-Bordona, in the dispute concerning the acquisition of a qualified shareholding by Biscione in Banca Mediolanum. According to the lawyer, the appeals presented by Fininvest and Berlusconi must be accepted and, as a consequence, the ECB’s decision of 25 October 2016 – which had denied this acquisition – must be annulled in its entirety. Sanchez-Bordona’s conclusions indicate a possible legal solution to the case and do not bind the Court, which decides autonomously.
The ECB-Fininvest affair
In 2015 the financial holding company Mediolanum was incorporated by its subsidiary, Mediolanum Bank. Taking into account its shareholding in the share capital of Mediolanum, Fininvest, majority owned by Silvio Berlusconi, had become the owner of a shareholding in the capital of the Bank founded by Ennio Doris. In concrete terms, this merger by incorporation operation consisted of an exchange of shares with which Fininvest legally acquired shares of this credit institution. Shortly before, in 2014, the Bank of Italy had decided, on the one hand, to order the suspension of the voting rights of the applicants in Mediolanum and the sale of their shareholdings exceeding 9.99% and, on the other hand, to reject their request for authorization relating to the holding of a qualified shareholding in this entity, for the reason that Berlusconi no longer satisfied the requirement of good repute (applicable to holders of qualified shareholdings) following the conviction for tax fraud in 2013.
This decision of the Bank of Italy was subsequently annulled by the ruling of the Council of State of 3 March 2016. The Bank of Italy and the ECB initiated a new procedure to evaluate the acquisition of a qualified shareholding of the appellants in Banca Mediolanum following which the second, following a proposal from the first, adopted a decision refusing to authorize the acquisition of a qualifying shareholding in the bank. In December 2016, Fininvest and Berlusconi proposed before the Court a annulment appeal against the ECB decision, but in May 2022 the Court completely rejected the annulment appeal, condemning Fininvest and Berlusconi and confirming the ECB decision. Then Fininvest and Berlusconi’s heirs, who took over his procedural position following his death in 2023, presented an appeal against the Court’s ruling presenting various grounds of appeal.
Today with his conclusions today, Advocate General Campos Sánchez-Bordona suggests that the appeal presented by the two appellants can be accepted and, consequently, that the ECB’s decision must be annulled in its entirety. According to the Attorney General the Tribunal committed a series of errors of law in assessing the effects of the control exercised by the appellants over Banca Mediolanum, among others with regard to the conditions that legitimize the ECB to impose the authorization requirement for the acquisition or increase of qualified shareholdings in credit institutions. In particular, Fininvest and Berlusconi’s shareholding in Banca Mediolanum has always been a qualified shareholding of 30.16%. Since there was no increase in this shareholding after the entry into force of single banking supervision, ECB authorization was not necessary, as it was a “historic” qualifying shareholding.
The words of the Attorney General
The Court found that Berlusconi and Fininvest owned a qualifying shareholding in Banca Mediolanum, which allowed them to jointly control Mediolanum and Banca Mediolanum before the reverse merger, on the basis of this premise (i.e., recognized control of Fininvest on Banca Mediolanum before the merger). But, argues the Attorney General, “he made a mistake in assessing the consequences of a fact that it had itself ascertained: if the control preceded the merger, the ECB should not have started an authorization procedure for the acquisition of a qualifying shareholding“. This qualified participation already existed before the single banking supervision rules came into force.
Furthermore, the Advocate General accepts the appellants’ complaint that the Court has equated the notion of “acquisition of a qualified shareholding“to that of”modification of the legal structure of a shareholding“. Indeed, the modification of the legal structure of a participation “it is a notion that does not appear in European law to assess whether there is an acquisition or increase of a qualifying holding“. Instead, what is relevant to evaluate the acquisition or increase “it is the number of shareholdings acquired (or increased), but not their legal structure“. In the specific case, Fininvest has always held a qualified stake in Mediolanum and, consequently, in Banca Mediolanum. The merger by reverse incorporation of Mediolanum into Banca Mediolanum “constituted an internal reorganization of the legal structure of the business group, but did not change the level or intensity of Fininvest’s (and indirectly Berlusconi’s) control over this financial entity“.
The same reasoning applies in the part in which the Court considered that the direct or indirect nature of a shareholding is a relevant element whether there has been an acquisition of the qualifying shareholding. According to the Advocate General, the decisive factor is not whether the acquisition of the qualified shareholding is direct or indirect, but rather that there is acquisition, in one of the two forms, and that through it a certain level of control or influence over the credit institution.
Finally, according to the Advocate General, the appellants’ last ground of appeal can be accepted, as they consider that the Court committed an error of law in deeming inadmissible the two new grounds for annulment raised before it, relating to the illegitimacy of the acts preparations adopted by the Bank of Italy.
