The European Commission has opened a formal infringement procedure against Spain, accusing Madrid of breaching EU banking and single-market rules by hindering BBVA’s €13 billion hostile takeover of domestic rival Banco Sabadell. Brussels argues that two Spanish laws adopted in 2014 and 2015 give the Economy Ministry wide discretion to veto bank mergers and allowed the government to escalate the deal from the antitrust authority to the Council of Ministers, which then imposed a three-year moratorium on fully integrating the two lenders. The Commission says those powers encroach on the exclusive supervisory role of the European Central Bank and unjustifiably restrict the freedom of establishment and movement of capital within the bloc. Spain has two months to reply to the letter of formal notice. If its response fails to satisfy the Commission, the case could advance to a reasoned opinion and ultimately to the EU Court of Justice, where financial penalties are possible. Economy Minister Carlos Cuerpo said Madrid would cooperate with Brussels to clarify the legal differences, while BBVA’s offer for Sabadell continues unaffected by the procedure.