ARTICLES: BANKING CRISIS- STATE AID - ARTICLE 87-3-B CE - SERIOUS DISTURBANCE OF ECONOMY - AD HOC NOTICES - UNFAIR ADVANTAGE - REPAYMENT - URGENT RESCUE - LIQUIDITY PROBLEMS - AID PACKAGES- AID PACKAGES

State aids in times of financial crisis: Back to Art. 87-3-b EC

In response to the severity of the banking crisis of 2008, certain European Union Member States discussed the relevance of continuing to apply Community legislation on State aid. Ultimately, the European Commission stressed the usefulness of such regulation in the avoidance of damaging distortions to competition. The use of exemptions as set forth in article 87-3-b CE on the grounds of “a serious disturbance to the economy” have allowed the Commission’s systems of control to be adapted to meet the challenges of an economic crisis the depth of which has not been seen since the signing of the Treaty of Rome. The various national State aid programs were approved in light of ad hoc notices by the Commission, often after having been modified so as to avoid any unfair advantage being awarded to national banks and industries. The Commission and the national governments also discussed the rate of return to be used in the repayment of State aid. This process was also used in the case of troubled banks needing urgent rescue due to liquidity problems. This ensured the harmonization of the aid packages implemented by the individual Member States. The efficiency of these unprecedented measures will be judged not only in terms of economic recovery, but also in terms of the Commission’s discipline in the supervision of the implementation of the aid packages. This monitoring is only possible with close cooperation between the Commission, the national courts and the Member States who now find themselves with increased reporting obligations. This process is supervised by the Community judge charged with the final analysis of the compatibility of the aid packages with the principles of the Common Market.

*This article is an automatic translation of the original article, provided here for your convenience. Read the original article. 1. Never since the Treaty of Rome has Europe been faced with such a crisis, first financial, then economic, and now social. Who could have imagined that the foundations of the global financial system would be shaken to such an extent as to jeopardise the world, and therefore the European, economy? By leading the public authorities to intervene massively to support sectors in difficulty, the crisis contained the danger that the Member States of the European Union would disregard the internal market and the rules of competition. This threat has nonetheless been averted, even if the return to protectionist reflexes remains a factor in the weakening of what,

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Authors

  • Kramer Levin Naftalis & Frankel (Paris)
  • Orrick, Herrington & Sutcliffe (Paris)

Quotation

Noëlle Lenoir, Marie-Laure Combet, State aids in times of financial crisis: Back to Art. 87-3-b EC, May 2009, Concurrences N° 2-2009, Art. N° 25837, www.concurrences.com

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