The Balancing Point

THE MIX OF APPROACHES THAT EMERGES FROM A COMPARATIVE READING OF THE BANKING SUPERVISION SYSTEM AND THE APPLICATION OF COMPETITION LAW CAN BE THE STARTING POINT FOR IDENTIFYING A GENERAL STANDARD IN EU LEGISLATION ON CAPITAL MARKETS, BANKRUPTCY AND INSOLVENCY

by by Mariateresa Maggiolino, Filippo Annunziata, Associate Professors, Department of Law, Bocconi University

A comparative reading of the EU banking supervision system, and the EU framework for the enforcement of competition law is not only possible, but also fruitful for a better understanding of each of the two systems. It also helps fill the gaps left open and unresolved by legislative texts. The analysis may also provide useful insights on more general aspects concerning key institutional and policy issues in the governance of the European economy.

Albeit in their diversity, the EU systems for the governance of competition and of prudential supervision over credit show a certain degree of similarity. Both are organized on the basis of an articulate structure that combines elements of centralization and decentralization, that sees the co-existence of an EU Institution (the EC vis-à-vis the ECB) and of National Authorities. Both systems identify a criterion that clearly triggers the operation of the centralized level, essentially based on (broadly) quantitative measures. This logically singles out a relevant “threshold” below which a certain topic or issue shifts, moreso or completely, into the hands of National institutions. Hence, the analysis of the two systems shows that the preferred structure for the governance of important economic topics in the EU might indeed move in a direction which results in a combination of centralization and decentralization, organized around a threshold of direct EU relevance, with institutions and authorities operating at both levels in a coordinated way.

The comparison also shows that EU competition enforcement and EU prudential supervision serve different goals and respond to different approaches in terms of policy: competition law is indeed closer to a system of adjudication, and operates on an intermittent, case-by-case basis. Financial supervision is, instead, much more flexible and articulated in pursuing its goals, and is performed on a continuous, ongoing basis. This difference in approach is ultimately logical, as it reflects the inherently different nature of the two policies. However – in one of the most innovative results of our research – we  find that  there are signs of osmosis: the need to ensure strict adherence to the Rule of Law in the context of EU Banking Law, together with the increasing attention to issues of accountability of EU Supervisors, and the already significant cases brought to the attention of EU Courts in those contexts includes, within the SSM, elements that might in part lead it to incorporate at least some core features typical of adjudication. On the other side, the antitrust framework is showing the inoculation of regulatory elements that blend its traditionally adjudicatory nature, providing a more articulated texture than what used to be in its origins. In the light of the above, the comparison between competition control and banking prudential supervision provides useful insights on what might be a general standard of EU economic governance. in this respect: as for centralization vis-à-vis decentralization, the balancing point results in a blending of elements.

We believe that this coordinated structure and mix of policy approaches, which beyond technicalities and specificities can be seen in both areas of EU economic governance, is per se significant. It does provide a model that might be tested in other areas of EU policies, including, for instance, capital markets legislation, bankruptcy and insolvency, and several others. Therefore, we strongly believe that the dialogue between scholars and institutions belonging to these two fields, which we intended to inaugurate with our paper, should continue.