INTRODUCTION
Three sub-sectors are typically used to analyze the financial sector: specifically, capital markets, insurance, and banking. This workout, which benefits the identification of the three main categories of financial organizations and the analytical even with the expanding demand for the financial services they supply. For the purpose of reviewing the interpenetration of such locations, the financial sector is subject to the application of competition laws.
INSIGHT INTO THE CONCEPT
As recent events have once again shown us, it is hard to emphasize how important the banking industry is. The financial crisis that began in 2007, first in the US with the subprime mortgage sector and quickly spreading to Europe, where its effects were exacerbated by real estate bubbles and excessive debt levels in some Member States, leading somehow to a vicious circle of banking crises and sovereign debt crises that have threatened the existence itself of the Euro area, once again demonstrated the financial sector’s importance to the economy. In fact, the 2007–2009 financial crisis has continued in some ways into the present as a subsequent economic downturn. In the EU, a crisis in the markets for sovereign debt is interwoven with a crisis, featuring, in the EU, a banking sector crisis linked with a crisis in the sovereign debt markets, and, in the US, poor growth at least initially, followed by persistently high unemployment as GDP picked up.
DEEP ANALYSIS OF TYE CONCEPT
Although exploring the reasons of the financial crisis would go beyond the scope of this paper, one is noteworthy because it is directly relevant to our subject: selective application of competition laws coupled with poor and insufficient regulation and supervision of the financial industry. This is mostly a result of an inadequate understanding of the dangers faced by financial firms. It is not surprising that the European Commission is currently focusing on preventing a repeat of the financial crisis, even though the most dramatic phases of the banking crisis appear to be passed and the necessity for corrective intervention, particularly in the form of State aid, is swiftly waning. The aim includes establishing a new regulatory framework.
However, strengthening or at the very least reconsidering antitrust enforcement is a crucial stage in the preventative process. The reason for the increasing emphasis on antitrust enforcement in the financial services industry is the connection between the financial crisis and antitrust violations in the financial sector. If one is sincerely committed – as the Commission seems to be – to bringing about a major transformation in the way the financial industry has operated thus far, antitrust enforcement is a much needed supplement to the new regulatory framework. One may justifiably wonder whether it is all a matter of more zealous antitrust enforcement given that the circumstances leading up to the 2007 financial crisis included antitrust violations and a lack of competition in the financial industry. As an alternative, it may be argued that the issue is not just one of quantity but also of quality because the current legal system might not be adequate to solve all of the issues the financial sector is raising. The need for improved coordination between the financial sector’s regulation and supervision and the implementation of competition laws that apply to it serves as a prime example. This essay will make the case for the second choice.
CONCLUSION
The three financial sub-sectors have a rather uneven history with competition law. Competition law has generated excellent results in the field of insurance, which have been combined into the many versions of the block exemption Regulation, however it was insufficient to address problems in the banking industry that required the intervention of regulation on its own. Regarding capital markets, competition law appears to still be in its infancy, but one would hazard a guess that it has the potential to develop into a significant contributor to the stability of the financial sector.