Introduction

The global recession illustrates that assumptions of market efficiency are misplaced where systemic uncertainty roams the marketplace. As Devlin argues, ‘it reveals that macroeconomic fluctuations cannot be controlled by monetary policy alone’. This chapter will therefore address whether competition policy has or should have a different role in periods of crisis. It will examine in detail the application of competition legislation on crisis cartels, mergers and state aid. The aim of the chapter is to present how competition enforcement should be applied on these issues in periods of crisis.

As John Fingleton, the chairman of the OFT, argues, the crisis brought its own challenges in the temptation to form cartels or to engage in other forms of permissible or non-permissible horizontal competition. In addition, more failing-firm defence arguments in mergers were likely, and the view that loss of competitive rivalry was not significant in the existing economic conditions was advanced.

In the past, economic recessions have often been followed by efforts to change the legal framework of competition, in order to preserve people's faith in the free-market system.