1. Application of EU Competition Law under Financial Crisis Dr. jur. Chie SATO (LL.M) Research Fellow Hitotsubashi University 31 March 2010 Josui Kaikan International Conference on “Regulation crossing Borders” 2010/3/311Dr. Chie SATO

2. 1.Introduction (1)Financial Crisis Financial Crisis challenges current models of regulation and oversight in the financial sector. →What is the role of the state in economic life? (2)New policy for applying EU Competition Law? State Intervention vs. Competition Regulations, State Aid etc. 2010/3/312Dr. Chie SATO

3. 2. EU Competition Law (1)Rules applying to undertakings (i) Art. 101 Prohibition of anti-competitive activities *101(3) Exception (ii) Art.102 Prohibition of unilateral conduct of undertakings with market power +(iii) The Merger Regulation 2010/3/313Dr. Chie SATO

4. (2) Aids granted by states Art. 107 Prohibition of State aids *Art.107(2) & (3) Exception/Exemption →Possible measures for rescuing firms in difficulty? 2010/3/31Dr. Chie SATO4

5. (3) Advantage of EU Competition Law Commission’s jurisdiction over the anti- competitive activities taken by the private firms and the Member States (4) Principles of EU Competition Law 2010/3/315Dr. Chie SATO

6. (5) Possible Competition Policy under recent economic crisis (i)101(3) Exemption →Strict conditions under the Guidelines (OJ C 101, 27.4.2004, p.97) (ii)Lax competition policy →Disintegration of the EU single market (iii)State intervention →Major Commission’s/Member States’ response to the financial crisis 2010/3/316Dr. Chie SATO

7. 3. Measures taken by Commission (State aid) (0) Measures on the basis of Art.107(3)(c) “remedy a serious disturbance to the economy of a MS” (1)Banking Sector (i)State Aid Communication from the Commission- The application of State aid rules to measures taken in relation to financial institutions in the context of the current global financial crisis (2008/C 270/2) Communication from the Commission- The recapitalization of financial institutions in the current financial crisis: limitation of aid to the minimum necessary and safeguards against undue distortion of competition (2009/C 10/03) 2010/3/317Dr. Chie SATO

8. Communication from the Commission on the treatment of impaired assets in the Community Banking sector (2009/C 27/01) Commission Communication on the return to viability and the assessment of restructuring measures in the financial sector in the current crisis under the State aid rules (2009/C 195/04) (ii) New supervision system for financial sector (2) Real Economy Community Guidelines on State aid for rescuing and restructuring in difficulty (OJ C 244, 1.10.2004, p.2)*on the basis of Art.107(3)(b) + Communication from Commission- Temporary Community framework for State aid measures to support access to finance in the current financial and economic crisis (2009/C 83/01) 2010/3/318Dr. Chie SATO

9. (3) Distortion of Competition? State intervention > Competition? Clearly defined and limited in scope Limited in time Review at least every six months Behavioral rules for beneficiaries Appropriate follow-up in the form of structural adjustment measures Competition policy is a crucial component to recovery plan. 2010/3/31Dr. Chie SATO9

10. 4. Conclusion (1)Regulation + Competition for the Future (2) International cooperation e.g. ICN, OECD etc. 2010/3/3110Dr. Chie SATO