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REGULATION AND COMPETITION POLICY - page 33 / 37

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of whether a certain, implicit or explicit, “banking exception” in competition policy will remain is therefore still open.

Two other reasons explain the attention of antitrust authorities to the sector. The first is that financial institutions tend to enter into collaborative agreements (this is the case for example, in credit cards or clearing and settlement systems). The second is that, as we have seen, many financial markets remain segmented in Europe and competition is perceived to be weak. Although clearly competition policy should aim at improving consumer welfare rather than forcing integration per se, it has a crucial role in keeping markets open. The lifting of artificial impediments to cross border mergers will permit to have large, well diversified institutions without having excessive market power in any market. This is the area where regulatory changes should concentrate most, and where competition policy has and should be used to prevent artificial and unjustified barriers to financial integration based on a misuse of supervisory powers. In this respect, it is also questionable that in an integrated financial market and monetary area prudential matters stay in national hands, particularly for EU-wide institutions (see Vives, 2001b). This undermines the rationale for the prudential exception to protect a legitimate national interest. However, care should be taken since cross-border mergers may be a substitute for direct entry and could end up with large institutions meeting in different European markets raising tacit collusion concerns because of this multi-market contact.

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