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ACLE 2009 Financial Markets Oversight

ACLE 2009 Financial Markets Oversight. An evaluation of competition enforcement in the Dutch financial markets Geert van der Klis, Pier Posthuma de Boer & Frans Muller March 6, 2009. Introduction. Financial/economic crisis State intervention Competition enforcement’s role Our contribution

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ACLE 2009 Financial Markets Oversight

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  1. ACLE 2009 Financial Markets Oversight An evaluation of competition enforcement in the Dutch financial markets Geert van der Klis, Pier Posthuma de Boer & Frans Muller March 6, 2009

  2. Introduction • Financial/economic crisis • State intervention • Competition enforcement’s role • Our contribution • Evaluation of historic competition enforcement in relation to banks, insurers and capital markets • General rules of thumb for competition enforcement on Dutch financial markets • Competition enforcement in Dutch financial markets after the financial crisis 6 March 2009

  3. Banking sector • Market definition • Retail • Corporate/Wholesale • General market characteristics • Fragmented markets • High level of cooperation • Various levels of transparency • Entry barriers 6 March 2009

  4. Fortis/ABN and LLOYDS/HBOS • Fortis/ABN • Most important concentration of banks in the Netherlands – in depth investigation • Competition issues in Corporate Banking market • Remedies – HBU • Lloyds/HBOS • Competition Issues • No referral to Competition Commission (UK) • Public interest – stability UK financial sector 6 March 2009

  5. State Aid • EC involvement • EC Guidance on • Guarantees • Re-capitalisation • Bad banks / Toxic asset relief • Dutch Aid Measures • Guarantee scheme (LeasePlan, NIBC) • ING (re-capitalisation, asset relief) 6 March 2009

  6. Insurance sector • Market Definition • General distinction between • life insurance • non-life insurance • re-insurance • General market characteristics • Geographic scope generally limited to the Netherlands • High level of cooperation between competitors • Significant consolidation • Factors of competition • Price & quality • Size and quality of distribution networks • Conglomerate effects • Other 6 March 2009

  7. Insurance sector • Merger Control • Relevant markets (very fragmented) • Health insurance, indemnity insurance, life insurance, pension schemes, asset management • General competitive analysis • Unilateral effects, coordinated effects, conglomerate effects • Behavioural issues • European Commission Regulation 358/2003 – the “Group Exemption” • Commission sector inquiry Business Insurance • Solidarity Protocol (2002) – Dutch Healthcare Insurers • Model Compliance Regulation (2004/2007) 6 March 2009

  8. Capital Markets • Focus on undertakings active in the market for ‘infra-structural’ services • Stock Exchanges • Listing services and (share) trading services • Clearing Houses • Clearing and central counterparty services • General market characteristics • High level of internationalisation • Limited size of undertakings (lack of merger control) • Significant consolidation (through both horizontal and vertical integration) • Factors of competition • Location of undertaking’s activities • Technical innovation (efficiency) • Costs • Additional (post-trading) services 6 March 2009

  9. Capital Markets • Concentration Control (mainly in the UK due to market share merger control thresholds) • Stock Exchanges • NYSE/Euronext • General market consolidation • Lack of significant switching • High barriers of entry • (Euronext/Deutsche Borse)/LSE • Vertical effects • Clearing Houses • LCH/Clearnet • Lack of significant switching • Relatively high barriers of entry • Vertical effects 6 March 2009

  10. Competition Enforcement after the Financial Crisis • Fragmented enforcement policy • The Government sometimes creates a market and sets conditions thereon • International developments • Intensified cooperation between international authorities • Future EU financial regulation • Position ABN in the Netherlands as state owned bank • Relevance of Competition Law intervention if market failure is not competition related 6 March 2009

  11. Geert van der Klis, Pier Posthuma de Boer & Frans Muller Clifford Chance LLP 6 March 2009

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