Wed Oct 1st, 2008 at 05:43:19 AM EST
Via today's salon comes the following piece.
EUObserver: Commission has 'no reason' to question Fortis deal (29.09.2008)
The European Commission said on Monday it had been consulted during the negotiations and had so far no reason to believe the deal was in breach of EU competition rules.
"Up until now the national authorities in Belgium, the Netherlands and Luxembourg have been listening to what the commission has been saying, so we have no reason to think that what they are going to notify the commission of is not going to be acceptable to the commission in terms of state aid rules," Jonathan Todd, a spokesperson for the institution told a press briefing in Brussels.
He said the transaction itself was in compliance with the rules, as the purchase did not exceed the going market rate. He also expressed confidence that any "accompanying measures" that may be taken alongside the purchase, of which the commission will be notified "will be compatible with the rules on competition, in particular the rules on state aid."
If you check the Salon thread, you'll see that the consensus of all the commenters seems to be that this looks like a breach of 'State Aid Rules' as they would be applied in other industries. In fact, taking a cue from the discussions of the Paulson bailout, if the situation is one of insolvency and not illiquidity, the Commission's argument that the purchase did not exceed the going market rate
cannot possibly be right. And in any case it was not a purchase of 50% of the shares, it was an equity injection.
But if (as was argued on that thread) "Banks are the lynchpin of the economy" and that's why the Commission sees no reason to intervene on competition grounds, this signals something very important about the Commission's value system:
The stability of the financial system trumps perfect competition in a single market
And if perfect competition is not the unquestionable top priority of the Commission, other national (and European) economic goals should be taken into account when non-financial businesses crucial to local economies fail and would need to be rescued.
Also, when a Commission policy clearly is built around market competition as a goal rather than (as it should be) a policy to attain other goals, it needs to be called into question more forcefully on these grounds.