ACLE 2009 Financial Markets Oversight An evaluation of competition enforcement in the Dutch financial markets Geert van der Klis, Pier Posthuma de Boer & Frans Muller March 6, 2009

6 March Introduction Financial/economic crisis State intervention Competition enforcement’s role Our contribution Evaluation of historic competition enforcement in relation to banks, insurers and capital markets General rules of thumb for competition enforcement on Dutch financial markets Competition enforcement in Dutch financial markets after the financial crisis

6 March Banking sector Market definition Retail Corporate/Wholesale General market characteristics Fragmented markets High level of cooperation Various levels of transparency Entry barriers

6 March Fortis/ABN and LLOYDS/HBOS Fortis/ABN Most important concentration of banks in the Netherlands – in depth investigation Competition issues in Corporate Banking market oRemedies – HBU Lloyds/HBOS Competition Issues No referral to Competition Commission (UK) Public interest – stability UK financial sector

6 March State Aid EC involvement EC Guidance on Guarantees Re-capitalisation Bad banks / Toxic asset relief Dutch Aid Measures Guarantee scheme (LeasePlan, NIBC) ING (re-capitalisation, asset relief)

6 March Insurance sector Market Definition General distinction between –life insurance –non-life insurance –re-insurance General market characteristics Geographic scope generally limited to the Netherlands High level of cooperation between competitors Significant consolidation Factors of competition –Price & quality –Size and quality of distribution networks –Conglomerate effects –Other

6 March Insurance sector Merger Control Relevant markets (very fragmented) –Health insurance, indemnity insurance, life insurance, pension schemes, asset management General competitive analysis –Unilateral effects, coordinated effects, conglomerate effects Behavioural issues European Commission Regulation 358/2003 – the “Group Exemption” Commission sector inquiry Business Insurance Solidarity Protocol (2002) – Dutch Healthcare Insurers Model Compliance Regulation (2004/2007)

6 March Capital Markets Focus on undertakings active in the market for ‘infra- structural’ services Stock Exchanges –Listing services and (share) trading services Clearing Houses –Clearing and central counterparty services General market characteristics High level of internationalisation Limited size of undertakings (lack of merger control) Significant consolidation (through both horizontal and vertical integration) Factors of competition –Location of undertaking’s activities –Technical innovation (efficiency) –Costs –Additional (post-trading) services

6 March Capital Markets Concentration Control (mainly in the UK due to market share merger control thresholds) Stock Exchanges –NYSE/Euronext General market consolidation Lack of significant switching High barriers of entry –(Euronext/Deutsche Borse)/LSE Vertical effects Clearing Houses –LCH/Clearnet Lack of significant switching Relatively high barriers of entry Vertical effects

6 March Competition Enforcement after the Financial Crisis Fragmented enforcement policy The Government sometimes creates a market and sets conditions thereon International developments Intensified cooperation between international authorities Future EU financial regulation Position ABN in the Netherlands as state owned bank Relevance of Competition Law intervention if market failure is not competition related

6 March Geert van der Klis, Pier Posthuma de Boer & Frans Muller Clifford Chance LLP