BIBLIOGRAPHY : DERENNE Jacques, MEROLA Massimo et RIVAS José (dir.), Bruylant, 2013, 652 p.

Competition Law in Times of Economic Crisis: in Need of Adjustment?, Jacques DERENNE, Massimo MEROLA et José RIVAS (dir.)

Massimo Merola, Jacques Derenne, José Rivas

In November 2012, the 8th Conference of the Global Competition Law Centre (GCLC) dealt with the question of the economic crisis within the European Union in the framework of competition law. The content of this highly rated conference was summarized in this book. The directors of this contribution are some of the most renowned experts in this field. They made use of both their academic and professional experiences.

The foreword of this book is written by Ben Smulders, director at the Legal Service of the European Commission. He stresses the quality of this book, arguing that it brings “creative and critical thinking” to the current economic crisis. Moreover, according to him, this book allows “the European Commission to improve its output, to adapt to the constantly changing environment in which it operates and to remain as much as possible business relevant.

The book is divided into five parts. The first and second parts concern antitrust law and merger control in times of economic crisis. The third and fourth parts focus on State aid, more specifically on its enforcement in the financial sector and in the real economy in times of economic crisis. The fifth part points out the nexus between competition, industrial and trade policies.

The first part, which concerns antitrust law in times of economic crisis, is very instructive and complete. José Rivas presents the views of the GCLC, Kris Dekeyzer the views of the EU enforcement officers and Donald C. Klawiter the views from the USA. First, José Rivas gives an overview of the anticompetitive agreements in times of crisis by analyzing article 101 TFUE (restrictions, exemptions), national precedents (such as the BIDS [Ireland], the Greek fishing farms, the Spanish olive oil storage and the Dutch shrimp cases) and procedural issues. Second, José Rivas analyzes unilateral behavior in times of crisis with the enforcement of competition rules on unilateral conduct in the EU with the EU Commission and national competition authorities’ recent practices. Also, he compares unilateral conduct to State aid, anticompetitive agreements and mergers. Third, he redefines EU antitrust fining policy in times of crisis. He stresses the current fining practice and proposes alternative tracks for a fining policy by taking into account profits when calculating fines, the use of alternative sanctions and the reflection of damage compensation. Fourth, he asks whether a sector focus is needed in a recession by looking at collusive behavior and exclusionary behavior. He questions whether the financial crisis affects the current sector focus by analyzing the financial sector (LIBOR/EURIBOR, credit default swaps, S&P/Reuters, online payments, multilateral interchange fees and recommendations), information and telecommunication technologies, pharmaceutical sector, energy, food, and other basic industry sectors. Kris Dekeyzer in turn looks at the notion of “crisis cartels” and the underlying economic problem. Also, he assesses industrial restructuring agreements under Article 101 TFEU with the efficiency gains. He also underlines that the consumers must receive a fair share of the resulting benefits. Finally, Donald C. Klawiter recalls the incentive to collude in an economic downturn and he underlines the U.S.  reaction to crisis cartels. He stresses that preserving and enhancing competition is the highest enforcement priority.

The second part, which concerns merger control in times of economic crisis, is coordinated and introduced by Robbert Snelders. To begin with, the merger enforcement challenges during economic crisis are addressed by Hans Zenger, who looks at the standard of review in merger control in times of economic crisis by pointing out the antitrust laxity as a response to economic crisis and by analyzing the case Lloyds TSB v. HBOS (2008). Then, he stresses the outcome of review in merger control by reflecting on the impact of economic crisis on market realities and he looks at the case Olympic v. Aegean Airlines (2011). After he turns to the question of mergers in declining industries with the interaction of pre-crisis decline, post-crisis mergers and the cases UPM/Myllykoski and Rhein Papier (2011). Then, Enrique González-Díaz shares interesting thoughts on merger defenses in times of crisis. He presents the current regulatory framework of the efficiency defense and the Commission practice. Additionally, he raises the question of whether it is time to take efficiency defenses more seriously. Furthermore, Eric Barbier de La Serre analyzes the national merger enforcement during the crisis and he affirms that there are a few instances of legislative and political intervention (for instance, the legislative intervention to protect the financial system and certain sectors). Also he argues that there are no signs of increased flexibility on the substance beyond the failing firm defense. According to him, more pragmatism is necessary for remedies and procedure.

The third part is coordinated by Jacques Derenne and it focuses on the enforcement of State aid in the financial sector. First, Damien Gérard gives an overview of the management of the financial crisis in Europe and stresses the role of EU State aid law enforcement. He starts from the premise that the financial crisis is a market failure and that State aid is a remedy. State aid enforcement can be considered as a coordination tool. He advises to salvage EU State aid rules to the benefit of certainty and stability. Finally, he underlines that State aid enforcement and the crisis are not totally intertwined. Second, Hans Gilliams looks at the notion of aid in the financial crisis, more specifically the market economy investor principle test, the advantage resulting from modification of terms of previously granted aid, the beneficiary of aid measures, the extension of deposit guarantee schemes, the imputability to the State of liquidity lines granted by national central banks and the implication of State resources. Third, Andreas von Bonin and Ulrich Soltész concentrate on the compatibility assessment, namely the return to long-term viability as the primary goal of banking restructuring with the Banking Restructuring Communication of 23 July 2009, the role assumed by DG COMP as a watchdog in the financial crisis and the assessment of long term viability by DG COMP in practice. Then Andreas van Bonin looks at rescue measures and restructuring measures. He also analyzes the opening of in-depth investigations opposed to fast track from the point of view of procedural differences. Additionally, he talks about structuring and duration of procedures (portfolio evaluation and viability assessment). Finally, he points out the role of the ECB as the central European banking supervisor. Fourth, François-Charles Laprévote underlines the role of judicial review (States, beneficiary and third parties) while Ulrich Soltész and Andreas von Bonin look at the future procedural challenges with the monitoring and reopening of proceedings (e.g. in case of new aid) and abuse decisions. Andreas von Bonin also examines the procedural specificities in the financial sector and analyzes in-depth assessment of business models, portfolios and long-term monitoring. Fifth, economic issues are analyzed by James Kavanagh and Lorenzo Coppi, who look at the economic characteristics of the State aid enforcement in the financial sector. They stress the three peculiarities of Article 107(3)(b) aid to the financial sector. They point out the relationship between State aid control and financial stability as well as the interaction between State aid policy, competition policy and regulation. Sixth, Edurne Navarro Varona and Luis Moscoso investigate social cost of restructuring with limits and adequate control by the Commission. Seventh, Leonardo Armati and François-Charles Laprévote assess the question from the point of view of internal market by looking at the interaction between new financial regulatory measures and State aid in the financial crisis. They point out the pre-crisis and crisis situations with fragmented regulatory landscape in opposition to exclusive competence of the Commission on State aid clearance. They propose to move towards a more harmonized regulatory and supervision landscape by taking into account the EU initiatives and potential impact on State aid control (the Commission proposal for a “banking union”). They also address the sovereign issue with European Stabilisation Actions since May 2010 and interactions with State aid with the “feedback loop” between the banking and the sovereign crisis and its impact on State aid control, the EU and euro-area actions in the sovereign crisis and possible interaction with State aid process.

The fourth part is coordinated by Massimo Merola and it concerns State aid policy in the real economy in times of economic crisis. First, Bernard van de Walle de Ghelcke and Simon Pilsbury look at the relationship between State aid rules and competitiveness while recalling the Europe 2020 Strategy and the European Union industrial policy initiatives to enhance competitiveness and the role of the State aid rules in view of strengthening growth and competitiveness, the basic objectives of the State aid rules and limitations deriving thereof, the EU State aid Modernisation and the link with common commercial policy, trade rules and reciprocity. Second, Marc Pittie and Guillaume Fabre describe the real economy temporary framework and assess the impact and phasing out of the latter. Third, José Luis Buendía Sierra, María Muñoz de Juan and Matthijs Visser study the public intervention in the economy in times of crisis and the MEIP and private creditor principle in traditional EU practice and case law, whereas Isabel Taylor and Luisa Affuso look at State guarantees in times of crisis and compare “normal rules” with “exceptional policy response.” Fourth, Gianni Lo Schiavo gives an overview of the rules for recovering unlawful aids (legislation and case law) and he assesses the effects of the financial crisis on it (Commission practice and case law) and concludes that there is a substantial status quo; finally, he proposes some alternatives. Fifth, Eric Morgan de Rivery and Barbara Veronese are interested in rescue and restructuring guidelines and give some preliminary thoughts, raising the question of whether there is a need to redefine the definition of a firm in financial difficulty. After, they propose three different options: keeping, broadening or narrowing the definition. They also question whether the distinction between rescue and restructuring aid should be maintained and they propose a renewed criterion: long-term viability of the undertaking. Sixth, Alix Müller-Rappard and Matthijs Visser look at compensatory measures in restructuring aid cases during the financial crisis. They compare the Commission’s use of its power to impose compensatory measures under the Guidelines before and under the financial crisis. Seventh, Isabel Taylor and Luisa Affuso write about the new R&R Guidelines and give an overview of the requirements that should be fulfilled and the Commission practice on the matter. Eighth, Philipp Werner and Matthijs Visser analyze the problem of distortion of competition and assess the latter prior to the crisis and the Commission practice during the crisis. Ninth, Thomas Jestaedt looks at the Treaty provisions and current R&R Guidelines and the standard economic balancing test of the Commission. He remarks the non-applicability of that test under the current guidelines and he would like to introduce a general balancing test in R&R Guidelines in order to improve the economic underpinnings of the requirement of compensatory measures. Tenth, Massimo Merola, Luigi Cappelletti and Barbara Veronese deal with the “one time, last time” principle in times of crisis prior to the crisis and during the latter. They recall the normative background (the R&R Guidelines of 1994, 1999 and 2004, and the Deggendorf doctrine). They question the future for the “one time, last time” principle in the revised R&R Guidelines for non-financial institutions.

The fifth part points out the nexus between competition, industrial and trade policies. It has been coordinated and introduced by Jacques Bourgeois and Nicoleta Tuominen. They highlight the policy and legal sides on the question. They put competition law in a historic perspective with other economic policies in order to address the deep economic and monetary crisis. They are convinced that enforcement of competition law has become clearer after the economic crisis. The EU needs markets that work well in order to face global challenges and competition law is an essential tool for that. Then, Nicolas Petit and Norman Neyrinck question the understanding of the nexus between industrial policy, trade policy and competition law enforcement. Also, Yves Melin asks himself whether competition policy and trade defense policy are two different worlds in times of economic crisis. Finally, Marco Bronckers look at the Euro preference in EU trade and competition law.

To sum up, this contribution highlights that the current economic crisis could be considered as an opportunity to carry out reforms in the enforcement of competition rules. It does not mean that the principles upon which competition law is founded should be amended; yet the rules of procedure may be more flexible for instance. Reforms have to be undertaken by the Commission, since the EU has to become more competitive at a global scale and to ensure growth and innovation. Moreover, Member States must be committed and able to implement the necessary structural reforms in order to increase their competiveness up to a level allowing their trade and industry to grow again. Furthermore, State aid rules may be used as tools in order to improve the economic situation of the EU. Finally, competition policy should be conducted in conjunction with other policies such as trade and industry in order to respond to the highly complex problems that may arise in the context of the current economic crisis.

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David Leys, Competition Law in Times of Economic Crisis: in Need of Adjustment?, Jacques DERENNE, Massimo MEROLA et José RIVAS (dir.), February 2014, Concurrences Review N° 1-2014, Art. N° 62406, pp. 261-262

Editor Bruylant

Date 1 October 2013

Number of pages 650

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