Things really are starting to hot up: The European Commission said Wednesday it is investigating the reasons why Italy’s central bank intervened in foreign takeover bids for Italian banks.

The European Union’s head office said it had received a letter from the Bank of Italy explaining its actions in the recent takeover bids by the Netherlands’ ABN Amro NV for Banca Antonveneta SpA and Spain’s Banco Bilbao Vizcaya SA Argentaria for Banca Nazionale del Lavoro SpA.

The Bank of Italy monitors the country’s banking sector and has the power to veto all mergers and acquisitions. However, EU open market rules mean banks from other member nations should be allowed to operate in the Italian market under the same conditions as Italian rivals.

The Bank of Italy Governor Antonio Fazio has rejected criticism that he favors domestic players over foreign banks, insisting last week that regulatory decisions are “neutral with regard to the nationality of the players involved.”