Banking Competition in Europe: Antitrust Authorities at Work in the Wake of the Financial Crisis 33 World Competition 2010

About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline

33 World Competition 615 (2010)
Banking Competition in Europe: Antitrust Authorities at Work in the Wake of the Financial Crisis

handle is hein.kluwer/wcl0055 and id is 625 raw text is: Banking Competition in Europe: Antitrust
Authorities at Work in the Wake of the
Financial Crisis
Elena CARLETTI, Giancarlo SPAGNOLO, Stefano CAIAZZA, and Caterina GIANNETTI*
In die financial intennediation industry, conpetition issues interact with those concerned with stability, as
the current crisis unfortunately reminded us. This paper discusses and summarizes recent inquiries into retail
banking undertaken by the European Coninission and various National Conipetition Authorities,
conmnenting on the nethodologies and perspectives that these institutions have used to analyse competition
in a sector that ivas, for a long tine, considered 'special'. While the identified conipetitive problems and
solutions closely natch those highiighted by academic research, too little attention still appears to begiven to
risk considerations, whichi ivould alloiv conipetition authorities to counter the likely forthconiing attacks that
will again be ained at isolating the financial industry fron appropriate conmpetitive checks.
1. INTRODUCTION
Many people are asking themselves what will happen to competition policy in the face of
the worst global financial and economic downturn since the Great Depression. It is well
known that competition policy has often been sacrificed in the past during major emer-
gencies, like crises and wars, for the sake of 'other national priorities'.
In regular industries, competition policy had reached such high academic and social
status before the crisis, debate on innovation notwithstanding, that we believe the effects of
the crisis on antitrust enforcement will be contained.2 Different is the case of the financial
intermediation industry, one of the most heavily regulated sectors in the economy because
of the important public goods it provides, its particular exposure to moral hazard problems,
* Elena CARLETTI, Professor of Economics at European University Institute and Wharton Financial Institutions
Center. E-mail: <carletti@eui.eu>. Giancarlo SPAGNOLO, Professor of Economics at University of Tor Vergata, Stock-
holn Institute ofTransition Economics (SITE) - Stockholm School of Economics, Einaudi Institute for Economics and
Finance (EIEF) and Centre for Economic Policy Research (CEPR). E-mail: <giancarlo.spagnolo@uniroma2.it>. Stefano
CAIAZZA, Researcher in Economics at the University of Tor Vergata. E-mail: <caiazza@economia.uniromsa2.it>.
Caterina GIANNETTi, Researcher in Economics at Graduate School in Human Behaviour and Social Change (GSBC)
Jena, E-mail: <caterina.giannetti@uni-jena.de>.
See, e.g., the speeches held at the GCR symposium: 'Antitrust in Economic Crisis: A Global Perspective' held in
October 2008, available at <www.globalcompetitionpolicy.org/?id=55&action=903> and at the Organisation for
Economic Co-operation and Development (OECD) roundtable on 'Competition and Financial Markets', held in
February 2009.
2 See J. Fingleton, Competition Policy in Trouble Times (2009). Speech given at the annual Charles River Associate
Conference 2008, Office of Fair Trading, for a more pessimistic view, envisaging a crucial role for competition authorities
in counteracting atteipts - with the excuse of the crisis - to obtain unwarranted protection from competition, subsidies,
or clearing from anticompetitive mergers that would likely delay, rather than speed up, the economic recovery.
Carletti Elena, Giancarlo Spagnolo, Stefano Caiazza, & Caterina Giannetti. 'Banking Competition in
Europe: Antitrust Authorities at Work in the Wake of the Financial Crisis'. World Competition 33,
no. 4 (2010): 615-642.
@ 2010 Kluwer Law International BV, The Netherlands