HSBC's Euribor cartel fine overturned

On 24 September 2019, the General Court ("GC") annulled a €33.6 million fine imposed on HSBC by the European Commission ("Commission") for its involvement in the Euro Interest Rate Derivatives ("EIRDs") cartel. 

Barclays, Deutsche Bank, Société Générale and RBS settled with the Commission in December 2013 in return for €1.71 billion in fines.  The Commission proceeded with its investigation against HSBC, Crédit Agricole and JP Morgan and imposed fines totalling a further €485 million in December 2016. HSBC appealed the infringement decision and fine imposed.

The GC's judgment considers the Commission's obligation to state reasons for its decisions.  The GC held that:

• as the Commission decided to apply the methodology in its 2006 Fining Guidelines (in which 'value of sales' play a central role) even though it had noted that EIRDs do not generate sales in the usual sense, it was essential that the statement of reasons should enable HSBC to verify the proxy chosen, in order to challenge its validity and for the GC to review its legality. The decision did not sufficiently explain the Commission's reasons, which led the GC to annul the fine;
• whilst the Commission had shown that HSBC was aware that other banks took part in the manipulation that HSBC itself was involved in, it had not shown that HSBC was aware of the wider "overall plan" between the other banks such that it could not be held liable for all forms of offending conduct as part of a single and continuous infringement; and
• the Commission was not entitled to find that the object of certain discussions about trading positions was to restrict competition, although discussions about mid-point prices were infringements "by object".

Although HSBC was successful in some of its arguments, the GC ultimately upheld the infringement finding.  The Commission might be expected to re-impose the fine on HSBC, this time supported by more robust reasoning.

With thanks to Laura Carter of Ashurst for her contribution