EU Competition Law and the Financial Services Sector

386 Pages·2013·3.003 MB·English

by  Andrea Lista

EU COMPETITION LAW AND THE
FINANCIAL SERVICES SECTOR
Competition law is a complex and constantly evolving area of law which affects every
aspect of the market economy, including the financial services sector. This book is a
comprehensive and practical guide to the application of the EU competition rules to
banking and insurance industries.
This book is divided into three parts: the first part sets the scene by i ntroducing
the underpinning principles of EU competition law, and their interaction with the
financial services sector. The second part explores the application of A rticles 101,
102, and 107 TFEU to the insurance industry. Emphasis is placed on recent changes
which have progressively eroded the block exemption regime that traditionally
benefited the insurance industry.
In the third part of the book, focus is on the application of the Articles of TFEU
to the banking industry, with specific reference to card payment systems, which give
rise to some of the most intricate antitrust issues in the financial services sector.
Relevant Commission decisions and European Court of Justice case law are discussed
and suggestions are made for an alternative regulatory framework through compara-
tive analysis of U.S. regulations.
This book will be an invaluable reference point for legal practitioners specialzing
in EU Competition law, as well as postgraduate students and academic researchers
working in competition law and the financial services sector.
Dr. Andrea Lista Dott. Giur. LLD (Italy), LLM (Soton), Practising A dvocate (Italy),
PhD (London), Legal Consultant. Andrea is an Associate Professor in C ommercial
Law at the Law School, University of Southampton. Andrea has notably worked as a
legal advisor to a multinational enterprise leading in underwater technology, and has
been a legal consultant to the European Parliament. He has lectured for several years
in various areas of commercial law (international trade law, competition law, internal
market law, and corporate law) in Southampton and London, and he is a very active
legal consultant.
Andrea has vast experience in EU law, corporate law, and international trade, has
published extensively in those areas, and he is a legal consultant to companies and
law firms. He is also a member of the Institute of Maritime Law and the Institute of
Insurance Law, Law School, University of Southampton.
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E U C O M P E T I T I O N L AW
A N D T H E F I N A N C I A L
S E RV I C E S S E C TO R
DR. ANDREA LISTA LLD (ITALY), LLM
(SOTON), PHD (LONDON)
Associate Professor in Commercial Law
University of Southampton
informa law
frorn Rautledge
First published 2013
by Informa Law from Routledge
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ISBN: 978-0-415-83053-9 (hbk)
ISBN: 978-0-203-69427-5 (ebk)
Typeset in Plantin
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TO ALEXANDER HJALMAR ROCCO DAVID
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PREFACE
Competition law is an extremely complex area of law that is in constant evolution,
and whose underpinning principles cross paths with economic and market theories.
Its pervasive effects embrace every aspect of the market economy including the finan-
cial services sector (banking and insurance industries).
The financial services sector with its sophisticated structures and interconnections
with other areas of the market is, in its own right, a very difficult sector to decode.
One reason for this is that, nowadays, banking and insurance undertakings perform
almost identical economic functions; both can be defined as financial intermediaries
that receive money from private individuals or companies in the form of deposits or
premiums, and lend money to customers wishing to borrow.
The importance of the role played by the financial services sector in the economy
cannot be overestimated: past and recent financial crises are a testament to the pivotal
role played by banks and insurers in society. Thus, especially in this sector of the
economy, competition should be carefully scrutinized with a view to create a level
playing field and limiting possible detrimental consequences for consumers.
Since the dawn of the European Union, insurance and banking undertakings claimed
to be subject to a special status vis-à-vis the application of EU competition law, as a
result of the q uasi social nature of the services they provide. Nevertheless, contrary to
such claims, both the Commission and the European Courts from the outset fervidly
affirmed the complete exposition of the financial services sector to the European anti-
trust regulatory framework, with some exceptions in the insurance sector.
As it will be readily appreciated, within the financial services industry, antitrust
concerns do arise in relation to mergers and acquisitions, possible abuses of domi-
nant position under Article 102 of the Treaty of Lisbon (Treaty on the Functioning of
the European Union, hereafter TFEU) and state aid (Article 107 TFEU). However,
Article 101 TFEU and the regulation of forms of cooperation arguably represent one
of the paramount and most intricate aspects of the application of the EU competi-
tion rules to the financial services sector, and it shall therefore occupy a preponder-
ant space in this book. This is because the insurance and banking industries histori-
cally have been characterized by intense forms of horizontal cooperation between
undertakings deemed necessary for the correct functioning of the financial services
industry.
In the context of the recent wave of financial crises whose negative effects have
reverberated across the internal market, issues of state aid in the banking sector have
in the past few years become one of the pivotal aspects of the application of EU
competition law to the financial services sector.
vii
PREFACE
As the very first comprehensive title on this controversial area, this book has been
conceived in order to represent a point of reference for academics, practitioners, and
students who have to contend with EU Competition law and the financial services
sector. The book is divided into two parts: the first part explores the application of
Articles 101, 102, and 107 TFEU to the insurance industry. Emphasis is placed
on recent changes that have progressively eroded the block exemption regime that
traditionally benefited the insurance industry.
In the second part of the book, focus is on the application of the three afore-
mentioned articles of TFEU to the banking industry, with specific reference to card
payment systems, which give rise to some of the most intricate antitrust issues in the
financial services sector.
It is beyond conventional sincerity that I should like to express my gratitude to a
numerous and heterogeneous cluster of people to whom I am greatly indebted.
First of all, I am seriously (and dangerously) indebted to Ms. Johanna H jalmarsson,
Senior Research Fellow at the Law School, University of Southampton, for all her
patience, invaluable intellectual and moral support, and for all the discussions that
ignited new thoughts to be enshrined in this book.
Second, I am extremely grateful and forever in debt to Professor Takis Tridimas
of Queen Mary College, University of London, a man of unreachable intellect and
talent from whom much I have learnt.
Third, many thanks go to Professor Rosa Greaves, University of Glasgow, and to
Dr. Ioannis Lianos of UCL for their invaluable suggestions and kindness that helped
me to mould this book in a more coherent way.
I am also very grateful to Rebecca Brennan, Alexia Sutton of Taylor & Francis for
their kindness and professionalism, and to Charles Emmanuel of diacriTech for his
help in battling against the odd errant footnote.
Special thanks go to Nicola Whyke and Fiona Briden of Taylor & Francis, who
respectively followed this book at the beginning and at the end of its process of
fruition, for the rare blend of patience and courtesy they used to keep me on
schedule.
My memories, love, and a special mention are for Professor Gerrit Betlem of the
Law School, University of Southampton, who very sadly is no longer with us, and
whose great intellect, talent, friendship, and kindness I shall never forget.
Last, but by no means least, my eternal gratitude goes to my father Admiral Rocco
Lista, my mother Mimma Lista, and my brother Dr. Ing. Antonello Lista. I have no
words to express my gratitude to them; without them and their support, I simply
would not be the person that I am today.
The law is stated as of 29 October 2012. The usual disclaimer applies.
DR. ANDREA LISTA
SOUTHAMPTON, 29 OCTOBER 2012
viii
CONTENTS
Preface vii
List of Tables and Figures xv
Table of Cases xvii
EU and U.S. Secondary Legislation xxi
PART 1 SETTING THE SCENE 1
1. THE MEANING OF EU COMPETITION LAW 3
1.1 The meaning of EU competition law—the general picture 3
1.2 Article 101 of the TFEU and the control of collusive behaviors 4
1.2.1 A nti competitive agreements under Article 101: horizontal agreements 7
1.3 Article 102 TFEU: abuses of dominant position by one or more undertakings:
meaning and issues 9
1.4 State aid 11
2. THE APPLICATION OF EU COMPETITION LAW TO THE
FINANCIAL SERVICES SECTOR: GENERAL ISSUES 15
2.1 Banking and insurance services: two faces of the same coin? 15
2.2 Competition law and the fi nancial services sector 17
2.3 Features of banking and insurance arrangements: the importance of
competition law 19
PART 2 INSURANCE 21
3. SETTING THE SCENE: THE APPLICATION OF ARTICLE
101 TO THE INSURANCE SECTOR: THE EARLY STAGES
AND THE FIRST BLOCK EXEMPTION REGULATION 23
3.1 Introduction 23
3.2 The evolution of the internal market for the insurance industry 24
3.3 The application of competition law to the insurance industry: general issues
and background 26
3.4 EU competition policy in the insurance sector: the early years 28
3.5 The fi rst block exemption regulation: council regulation 3932/92 30
3.5.1 C ooperation with respect to the establishment of common risk premium
tariffs 31
3.5.2 Standard policy conditions 32
3.5.3 Common coverage of certain types of risk 33
3.5.4 Security devices 34
ix