NMa emphasizes the importance of competition in financial industry reforms

The Netherlands Competition Authority (NMa) is calling on policymakers to keep in mind the importance of maintaining healthy competition when they implement financial-industry reforms. Regulation and oversight should not unnecessarily create barriers to entry and to expansion with regard to the financial markets. In addition, the NMa is warning that government support is distorting the market, indications of which have reached the NMa. Support measures should therefore be rolled back as soon as possible. Furthermore, the NMa agrees with the argument to have the interests of the Dutch State in financial institutions be put at a greater distance from lawmakers. These are the main conclusions of the Vision Document on the Future of the Financial Industry, which has been released today by the NMa.

Stability and competition go hand in hand

Having healthy competition, apart from having stability, in financial markets continues to be of critical importance. It will benefit consumers through quality and price. When reforming the financial industry, there should be enough room left for new initiatives to be set up, and new entrants should not be faced with unnecessary barriers to entry. In a market that functions well, it is crucial that undertakings that do well are able to grow, and that undertakings that perform poorly (for example, because of taking too many risks or running inefficient business models) lose market share and eventually disappear. The NMa believes that the burden of a possible bankruptcy of a financial institution should fall upon the financiers and management, and as little as possible upon its customers.



Bailout package distorts the market

The bailout package for the financial institutions was a necessary evil given the circumstances. If they had collapsed, it would have severely crippled the economy, with devastating results. The NMa emphasizes that the bailout package is distorting the market and is leading to an unequal playing field. Any support measure should therefore last as short as possible and should be rolled back as soon as possible. The NMa and the European Commission are still receiving indications that the bailout package is distorting the market. In practice, it is very difficult to find out whether this is actually the case. It does show though that support should only be used as a last resort, and should be as limited as possible. The European Commission plays an important role in making sure that government support indeed is as limited as possible. The NMa argues that national competition authorities should be actively involved in the decision-making processes regarding State Aid. This way, as much relevant information as possible is included in the decision-making process when granting government support.


Management decisions of the financial institutions that have been given government support should be influenced by the government as little as possible. That is why the NMa recommends to have the interests of the Dutch State be transferred to a special entity that is less politically involved. This would prevent the Dutch Ministry of Finance, which is responsible for regulation of the financial industry, from having direct financial interests in variouos market participants.



Submit tip-offs

The NMa calls on market participants to contact the NMa when they are bothered by unclear rules and procedures when entering the market or when their carrying out their business operations. This will help the NMa continue to pursue its mission 'making markets work' in the financial industry as well.