Managing the Financial Crisis in Europe: Why Competition Law is Part of the Solution, Not of the Problem

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Damien Gerard, Dec 15, 2008

EU Competition Commissioner Kroes likes to use catchphrases to encapsulate policy statements. Since early October, one of her favorite lines is that competition law, and State aid law in particular, is part of the solution to the financial crisis, not part of the problem. Understand: competition rules do not stand in the way of a solution to the crisis, they are part of that solution. She used it for the first time on October 2 when announcing the approval of a Euro 35 billion aid package laid down by Germany to rescue Hypo Real Estate Holding AG, a German bank holding that became troubled as a result of its involvement in the national and international mortgage business and its short-term refinancing strategy. She repeated it on October 6 in an address to the Economic and Monetary Affairs Committee of the European Parliament outlining her enforcement priorities in the framework of the financial crisis. She resorted to it again on December 2 to defend her record in front of the 27 EU Economics and Finance Ministers, some of them clearly upset at the Commission’s active involvement in the design of general financial recovery plans and individual rescue measures. Indeed, within the European Union, economic and financial policy remains first and foremost a competence belonging to each of the 27 Member States; there is nothing like an EU Treasury, a centralized EU economic policy instit…

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