On 4 December 2013, the European Commission announced that it had fined eight international financial institutions over € 1.71 billion for breaching Article 101 TFEU by participating in cartels in the markets for financial derivatives covering the EEA between different periods ranging from September 2005 to 2010.
Interest rate derivatives are financial products which are commonly used by financial institutions or companies for managing the risk of interest rate fluctuations. Their value derives from a benchmark interest rate, such as the London Interbank Offered Rate (LIBOR) or the Euro Interbank Offered Rate (EURIBOR). These benchmarks represent an average of the quotes submitted on a daily basis by a number of banks who are members of a panel. The banks involved in the case are members of such panels. The LIBOR is used for ten currencies, including the Japanese Yen (JPY), whereas the EURIBOR is used for the euro.
The Commission decision concerns a cartel in Euro interest rate derivatives and cartels in Yen interest rate derivatives. Having regard to the Euro interest rate derivative cartel, the Commission found, following unannounced inspections in October 2011 (see VBB on Competition Law, Volume 2011, No. 10, available at www.vbb.com) and the opening of proceedings in March 2013, that traders of different banks discussed their daily bank rate submissions for the calculation of the EURIBOR, as well as trading and pricing strategies between September 2005 and May 2008.
In relation to this cartel, Barclays received full immunity under the Commission's 2006 Leniency Notice for having brought the infringement to the Commission's attention and for having provided valuable information to prove the infringement, and thereby avoided a fine of around € 690 million. Three other infringing banks received fine reductions under the Leniency Notice ranging from 5% to 50%, as well as a further 10% reduction for agreeing to settle the case with the Commission under the provisions of the Commission's Settlement Notice. As a result, the Commission imposed fines of € 465 million on Deutsche Bank, € 445 million on Société Générale and € 131 million on RBS to settle the allegations that they rigged the EURIBOR benchmark borrowing rates. The proceedings opened against three other banks, Crédit Agricole, HSBC and JP Morgan, will continue under the standard (non-settlement) cartel procedure.
As regards the Yen interest rate derivative cartels, the Commission found that five banks and one broker had engaged in seven distinct bilateral infringements lasting between one and ten months in the period from 2007 to 2010. The collusive conduct included discussions between traders on their JPY LIBOR submissions, as well as trading and pricing strategies.
In relation to these cartels, UBS received full immunity for revealing the existence of six of the infringements and thereby avoided a € 2.5 billion fine. Citigroup received full immunity in respect of another of the infringements thereby avoiding a fine of € 55 million. Other infringing banks received fine reductions under the Leniency Notice of between 25% and 40%, as well as a further 10% reduction for agreeing to settle the case with the Commission under the Settlement Notice. As a result, the Commission imposed total fines of € 260 million on RBS for three infringements, € 259 million on Deutsche Bank for two infringements, € 80 million on JP Morgan for one infringement, € 70 million on Citigroup for three infringements and € 247,000 on RP Martin, a broker, for facilitating the implementation of one of the infringements.
The record total amount of fines imposed by the Commission surpasses the previous record amount of € 1.47 billion imposed on producers of TV and computer monitor tubes in 2012.
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