Brussels has completed its analysis of Italy’s decision to block the merger of two Milanese banks, but Ursula von der Leyen has yet to take action.

BRUSSELS — The European Commission appears to be slow-walking a decision to take action against Italy over its controversial use of national security powers to stall a banking merger between UniCredit, the Milan-based bank, and its crosstown rival BPM.

Officials at the competition and financial services directorates handed in their assessment of the case weeks ago to President Ursula von der Leyen’s Cabinet, but have yet to hear back, five people familiar with the matter told POLITICO. The assessment is not in favor of Rome, said one of the people, granted anonymity to discuss a private matter.

Commission insiders speculate that the delay has to do with broader political bargaining at the highest level between Brussels and Rome. According to another of the people, von der Leyen is taking care not to annoy Giorgia Meloni because she needs the Italian premier’s support to shore up the increasingly shaky political coalition that backed her for a second term last year.

Earlier this year, Italy decided that UniCredit’s €10 billion takeover of BPM was a threat to national security. Under the government’s rules on screening foreign direct investments — known as its “golden power” — Rome imposed conditions on April 18 that effectively prevented UniCredit from completing the deal.

The Commission opened a so-called EU Pilot procedure — carried out by its financial services directorate — to determine whether the use of national security measures in a bank merger is in line with EU banking regulations and single-market freedoms. The process can ultimately lead to an infringement procedure — as happened when the Spanish government obstructed BBVA’s acquisition of Catalan bank Banco Sabadell.

The Commission’s competition directorate gave a conditional green light to the deal on June 19. A month later it warned Italy that by applying the golden power to a domestic deal, Italy may have violated merger rules as well as other provisions of EU law.

The Commission is currently assessing Italy’s replies in both investigations, a spokesperson for the EU executive said.

The golden power equips Italy with wide-ranging screening tools to curb bids on national champions by foreign investors that are deemed risks to national security, such as those from China.

The use of the tool to derail a domestic merger appeared to flout the EU’s push for greater banking consolidation across Europe — which it sees as necessary for the continent’s financial sector and for the economy more broadly — to compete with U.S. rivals. The largest American bank, JP Morgan, has a market capitalization more than four times that of its nearest European counterpart, Santander.

Banking and Financial Services Commissioner Maria Luís Albuquerque has repeatedly spoken out in favor of banking consolidation across the bloc.

The competition and financial services teams had their assessment of the case ready shortly after Italy submitted its last round of responses to the Commission in August, said one of the people who spoke to POLITICO. But von der Leyen’s Cabinet, which ultimately has to sign off on a decision, has taken no action so far, they added.

According to Italian media reports, Italy has been trying to buy more time and stave off an infringement procedure by suggesting it could amend its golden power legislation. Financial daily Milano Finanza reported on Tuesday that the Commission has set Nov. 13 for a decision.

An Italian official with knowledge of the file said the Commission could very well be slow-walking action against Italy given that Unicredit’s withdrawal from the deal is by now irreversible. That would allow time to review whether Italy’s golden power is in line with EU competition rules without the pressure of a live deal.

“A medium-term, out-of-the-spotlight agreement on golden power could be the best outcome,” this official explained.

Reuters, citing sources familiar with the matter, reported last week that Italy could be willing to amend its golden power to address the Commission’s concerns over how it was used in the Unicredit-BPM case.

All matters pertaining to the golden power are steered from von der Leyen’s office, said another Commission official who is not directly involved in the matter and was also granted anonymity to speak candidly. It is usually quite simple to perform a technical analysis of such files, but “politics always trumps it,” they added.

Spokespeople for Meloni and Italy’s economy ministry declined to comment.

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