The Role of Competition Policy and Competition Enforcers in the EU Response to the Financial Crisis: Applying the State Aid Rules of the TFEU to Bank Bailouts in Order to Limit Distortions of Competition in the Financial Sector
Jonathan M. DeVito
affiliation not provided to SSRN
April 14, 2011
American Antitrust Institute Working Paper No. 11-01
Governments throughout the world responded to the financial crisis of 2008-2009 by granting massive bailouts to their largest and most interconnected banks. In most jurisdictions, financial stability took precedence over all other policy concerns, which meant that competition policy was relegated to the position of a distant spectator in the proceedings. This was not the case in the EU, however, where competition policy and competition enforcers played a lead role in shaping the European response to the crisis.
This paper evaluates the EU’s exercise of its State aid authority to prevent bailouts from distorting competition in the financial sector. In doing so, this paper explores (a) the importance of competition policy during a financial crisis, and (b) the ability of competition enforcers to coordinate with banking authorities in order to form an effective response. As lawmakers assess the outcomes of the crisis, and consider what might be done differently to prevent or respond to a future crisis, they should draw upon the most effective aspects of the EU model, and incorporate competition policy and competition officials in future crisis proceedings.
Number of Pages in PDF File: 28
Keywords: antitrust, competition, state aid, competition policy, EU, financial crisis, too big to fail
Date posted: April 16, 2011 ; Last revised: April 19, 2011
© 2016 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollobot1 in 0.218 seconds