The Financial Crisis and Competition Policy: Some Economics

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John Vickers, Dec 15, 2008

It is a familiar pattern that when the going gets tough, some of the not-so-tough seek exemptions from competition law. But might they have a point, especially when they are banks in an unprecedented financial crisis? This note reviews some of the basic economics of the crisis before concluding that October’s systemic bank rescue package is not unduly competition-threatening, whereas the waiver of merger policy for the Lloyds TSB acquisition of HBOS was probably a policy mistake.

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