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The economic crisis & DG COMP ’ s response

This event highlights the European Commission's response to the economic crisis, including the principles and flexibility of DG COMP in approving measures and providing guidance on state aid rules. It also discusses the impact of the crisis on the real economy and the need for stronger financial sector supervision.

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The economic crisis & DG COMP ’ s response

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  1. State Aid Days Brno 16-17 April 2009 The economic crisis & DG COMP’s response Humbert Drabbe Director DG Competition, European Commission

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

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

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

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

  6. DG COMP principled response:October-December 2008 • 13 October – Commission guidance on how MS can support financial institutions • 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 affectsthe real economy • 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 • 17 December – Temporary Framework for state aid rules • Essential part of Economic Recovery Plan  • Objective is to facilitate companies’ access to credits • 30 December – first real economy state aid measures approved

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

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

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

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

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