Volume 9 - Issue 2
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Competition Law Review - Volume 9 Issue 2
Editorial - Competition Law and Policy in Times of Crisis and Economic Change
Since late 2007 and to this day, a broad ranging crisis has swept through a growing number of economic sectors. After an initial impasse the EU Commission and other European agencies have adopted an increasingly proactive stance in dealing with its effects, whether in the banking market or in other industries. But what has this meant for the current and foreseen directions of competition enforcement? This paper will address these questions by concentrating on three themes: first, it will consider which of its “traditional” antitrust tools the Commission has deployed to tackle the challenges of the crisis. Second, it will analyse the role of state aid law as a crisis busting tool and third, it will examine the question of whether EU merger control has been effective in dealing with the fallout from industrial restructuring, caused by the crisis. It will be concluded that despite remaining an important component of the Commission’s agenda and especially of its response to the economic crisis, EU competition policy seems to have shifted away from many “established beliefs” and tools, thus opening further questions and creating numerous challenges for the years to come.
This article examines the role of antitrust in the causes and consequences of the crisis. If market turmoil and financial upheaval can shatter the groundwork of competitive markets that antitrust seeks to protect, the shockwaves are sure to be felt in the intellectual foundations of competition policy. Section 2 considers whether antitrust contributed to the financial crisis and briefly describes the pre-crisis role of competition policy on both sides of the Atlantic with regard to the transformations that the banking sector underwent in recent decades. Section 3 analyses the crisis response on the antitrust front. Of particular importance are the two areas where the bailouts tend to collide with antitrust: mergers and, in the European context, State aid. Section 4 then looks at the challenges that economic crises have placed on antitrust enforcers. It is submitted that as the crisis deepens and recovery fails to take hold, the risks to antitrust are far more dangerous and less visible today. Although overall, antitrust enforcement does not seem to be seriously weakened in the US and at the EU level, there are troubling signs that as the current sovereign debt crisis deepens, at least some Member States may want to put a lid on antitrust. A global economic slowdown will tend to make it easier for those claiming a less aggressive antitrust policy is necessary to foster growth. Section 5 concludes that the financial crisis may increase the bias toward accepting ever-larger bank mergers. After all, if an orderly takeover is needed, to whom will central banks look to? The recent crisis showed who the usual suspects are.
In the last five years of unprecedented financial and economic crisis, State aid control has gone through an incredible momentum in the EU as reflected by the huge amount of State support measures that were taken in order to avoid a systemic failure of the European economy. The article shows the measures taken in the last five years, the reasons for applying a special legal basis, Art 107(3)(b) TFEU, to grant such aids, and the criteria developed by the Commission to face them. To that extent, it is argued that the establishment of a crisis-related regime for aids to financial institutions has proved to be an effective instrument to calm down a systemic crisis for the banking sector and to grant cash flows to ailing firms also with specific regard to Programme Countries. The article shows that the financial sector requires a special treatment, that State aids granted shall primarily offset distortions of competition, and that a great number of remedies have been included to compensate the granting of aids. It is argued that the establishment of a new regulatory framework to supervise banks in the EU and the refinement of procedural rules in the financial sector would be highly beneficial to refine State aid rules for the financial sector in near future.
According to the ICN Report on the Objectives of Unilateral Conduct Laws, the Turkish Competition Authority (TCA) claims that the objectives of Turkish competition law are to enhance consumer welfare and maximize efficiency. This coincides with the European Commission’s recent statements under the so-called modernisation of European Union competition law. This article seeks to challenge the TCA’s argument concerning the objectives of Turkish competition law on the grounds that this assertion is neither is line with European Union Courts’ case law nor with the broader legal and economic framework for competition at the national level in Turkey. It draws attention to two country-specific dynamics that have significantly shaped the implementation of competition rules in Turkey. First, the long-standing political dialogue between the European Union and Turkey, from the Association Agreement of 1963 all the way to the establishment of a Customs Union (CU) and eventually Turkey’s EU candidacy in 1999, which requires the alignment of Turkish competition law regime with the EU acquis communautaire. Second, the financial downturn of 1998 triggered by the Customs Union regime, followed by another economic catastrophe in 2001. In the light of these peculiar circumstances, the paper draws upon a contextual approach and, in line with this methodology, examines various national legal tools including relevant provisions of the Turkish Constitution, the preamble of primary legislation on Turkish competition law, relevant case-law and soft-law instruments. The conclusion points out that the objectives of Turkish competition law cannot be narrowed down and defined as ‘enhancing consumer welfare and efficiency’. It also posits, the internal legal, institutional, and socio-economic dynamics of an individual jurisdiction play an important role on the implementation and interpretation of substantive laws and, therefore, ‘model’ laws need to be acclimatized to national economic circumstances and the broader legal framework of donor jurisdictions.
• ©2003-2011 Angus MacCulloch & Andrew Matthews •