1 The economic crisis & DG COMP ’ s response Humbert Drabbe Director State Aid Days Brno April 2009 DG Competition, European Commission

2 Financial crisis - beginnings n August 2007 n First cases of banks in difficulty (UK, D, DK)

3 Financial crisis – crisis precipitated n September 2008 n Stability of financial institutions at risk; credit flows to the wider economy squeezed n Member States start to put together general financial sector rescue schemes

4 Our principles in responding n Important to stand firm on principles: relaxing the rules would help dismantle the Single Market and hinder recovery n But equally important to be flexible on process

5 DG COMP – crisis organisation: Flexibility in process n Teams working round the clock to approve measures n Daily meetings to coordinate action n Involving other DGs (Markt, Enterprise, EcFin, LS, SecGen) n Recruitment of financial services specialists

6 DG COMP principled response: October-December 2008 n 13 October – Commission guidance on how MS can support financial institutions n 5 December – Commission guidance on recapitalisation of banks – Rescue and restructuring principles – Article 87(3)(b) – Distinguishing between fundamentally sound and distressed banks

7 End 2008: Crisis affects the real economy n 26 November – Commission Economic Recovery Plan – “Crisis as an opportunity” - towards a low carbon economy and clean technologies – 1.5% GDP stimulus – Speed up investment in energy efficiency

8 Response to the real economy crisis n 17 December – Temporary Framework for state aid rules n Essential part of Economic Recovery Plan n Objective is to facilitate companies’ access to credits n 30 December – first real economy state aid measures approved

9 January-February 2009 – no let up n Numerous bank schemes and individual rescue packages approved n Commission guidance on impaired assets n Amendments to the temporary framework n Cars communication builds on recovery plan and clarifies rules

10 Wider context: 4 March communication n Need for a stronger supervision of the European financial sector n Calls on Member States to restore financial stability, based on impaired assets paper n Calls on Member States to expedite the implementation of their national recovery plans

11 What will come next n Further banking and real economy cases approved n First asset relief measures under review n First wave of restructuring cases to expected soon

12 Conclusions n Level playing field must be maintained n Discriminatory or protectionist national measures must be prevented n This will – Ensure swifter recovery – Avoid protectionist backlashes in Europe and around the globe