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General Antitrust

Managing the Financial Crisis in Europe: The Role of EU State Aid Law Enforcement

Damien M.B. Gerard, M. Merola, J. Derenne and J. Rivas (eds.), Competition Law at Times of Economic Crisis - In Need for Adjustment?, Bruylant, Brussels, 2013, p. 231.

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Since five years now, the financial crisis dominates the EU agenda. What started as the tail of the US subprime crisis turned into a “systemic” issue with the freezing of the wholesale funding market subsequent to Lehman Brothers’ filing for Chapter 11 protection on September 15, 2008 (at 1.45 am). Overnight, governments across Europe were forced to devise urgent rescue measures to restore market liquidity and enable banks to meet their refinancing needs in order to prevent a financial meltdown. The role the EU would play in managing the crisis seemed uncertain at first, in the absence of the necessary institutional framework and budgetary means at EU level. Four years later, however, the European Commission (“Commission”) – and in particular its Directorate-General for Competition (“DG COMP”) – is widely praised for the role it has played in that regard. And the EU State aid rules revealed to be key to that effect.

The present contribution reviews how the enforcement of the EU State aid rules by DG COMP contributed to cope with the financial crisis. After a short introduction to the causes of the crisis, rooted in the specificities of the banking sector, and to the various remedial measures designed by national governments (1), it outlines successively how State aid rules have been relied upon as a coordination tool (2) and a regulatory fix (3). It then moves on to consider the deeper impact of State aid enforcement in the crisis context on the reform of the regulatory framework for financial services, on the one hand, and on the general State aid law enforcement framework, on the other hand (4).

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