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Application of EU Competition Law under Financial Crisis

International Conference on “Regulation crossing Borders”. Application of EU Competition Law under Financial Crisis. Dr. jur. Chie SATO (LL.M) Research Fellow Hitotsubashi University 31 March 2010 Josui Kaikan. Introduction Financial Crisis

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Application of EU Competition Law under Financial Crisis

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  1. International Conference on “Regulation crossing Borders” Application of EU Competition Law under Financial Crisis Dr. jur. Chie SATO (LL.M) Research Fellow Hitotsubashi University 31 March 2010 Josui Kaikan Dr. Chie SATO

  2. Introduction • Financial Crisis Financial Crisis challenges current models of regulation and oversight in the financial sector. →What is the role of the state in economic life? (2)New policy for applying EU Competition Law? State Intervention vs. Competition Regulations, State Aid etc. Dr. Chie SATO

  3. 2. EU Competition Law (1)Rules applying to undertakings (i) Art. 101 Prohibition of anti-competitive activities *101(3) Exception (ii) Art.102 Prohibition of unilateral conduct of undertakings with market power +(iii) The Merger Regulation Dr. Chie SATO

  4. (2) Aids granted by states Art. 107 Prohibition of State aids *Art.107(2) & (3) Exception/Exemption 　→Possible measures for rescuing firms in difficulty? Dr. Chie SATO

  5. (3) Advantage of EU Competition Law Commission’s jurisdiction over the anti-competitive activities taken by the private firms and the Member States (4) Principles of EU Competition Law Dr. Chie SATO

  6. (5) Possible Competition Policy under recent economic crisis • 101(3) Exemption →Strict conditions under the Guidelines (OJ C 101, 27.4.2004, p.97) (ii)Lax competition policy →Disintegration of the EU single market (iii)State intervention →Major Commission’s/Member States’ response to the financial crisis Dr. Chie SATO

  7. 3. Measures taken by Commission (State aid) (0) Measures on the basis of Art.107(3)(c) “remedy a serious disturbance to the economy of a MS” • Banking Sector • State Aid Communication from the Commission- The application of State aid rules to measures taken in relation to financial institutions in the context of the current global financial crisis (2008/C 270/2) Communication from the Commission- The recapitalization of financial institutions in the current financial crisis: limitation of aid to the minimum necessary and safeguards against undue distortion of competition (2009/C 10/03) Dr. Chie SATO

  8. Communication from the Commission on the treatment of impaired assets in the Community Banking sector (2009/C 27/01) Commission Communication on the return to viability and the assessment of restructuring measures in the financial sector in the current crisis under the State aid rules (2009/C 195/04) (ii) New supervision system for financial sector (2) Real Economy Community Guidelines on State aid for rescuing and restructuring in difficulty (OJ C 244, 1.10.2004, p.2)*on the basis of Art.107(3)(b) + Communication from Commission- Temporary Community framework for State aid measures to support access to finance in the current financial and economic crisis (2009/C 83/01) Dr. Chie SATO

  9. (3) Distortion of Competition? State intervention > Competition? •Clearly defined and limited in scope •Limited in time •Review at least every six months •Behavioral rules for beneficiaries •Appropriate follow-up in the form of structural adjustment measures Competition policy is a crucial component to recovery plan. Dr. Chie SATO

  10. 4. Conclusion • Regulation + Competition for the Future (2) International cooperation e.g. ICN, OECD etc. Dr. Chie SATO

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