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the European framework, one wonders also whether, given the level of integration of financial markets and the supranational effects of mergers examined by the Commission, the stability exception should rather be implemented by some kind of supranational authority. This issue is related to the current debate of whether a European banking regulator is needed (see, e.g., Vives, 2001b), also in light of the attempt of some Member States to use the stability exception to put obstacles to financial integration.

6. The application of competition policy to the banking sector in the European

Union Given the market structure of the banking sector, mergers and cartels have played so far a much greater role in the application of competition policy in Europe. Concerning the former, we distinguish between cases leading to competitive considerations and cross- border cases in which factors other than competitive considerations played an important role.

6.1. Mergers The banking industry has experienced an important process of consolidation in the last two decades. The number and the size of mergers and acquisitions (M&As) have increased substantially in most European countries. This process has taken place mostly at the domestic level, increasing substantially the levels of concentration in most countries such as Belgium, France, Greece, Portugal, Spain, and the UK (see Table 1 and Figure 1).7

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It is worth emphasizing that the appropriate concentration measures in banking as a multiproduct industry are in relation to the relevant product and geographic market. Aggregate measures provide an imperfect indication of the concentration in the relevant market.

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