ICAP fined for facilitating Yen Libor cartel
On 4 February 2015, the European Commission fined interdealer broker ICAP EUR 14.9m for its role in facilitating a cartel amongst banks trading interest-rate derivatives linked to Yen Libor.
In December 2013, five banks (UBS, RBS, Deutsche Bank, Citigroup and J.P.Morgan) and RP Martin (an interdealer broker) settled with the Commission and were collectively fined EUR 670m for their participation in a cartel relating to Yen interest-rate derivatives (YIRD). The Commission found that over the period 2007 to 2010, each of the parties had participated in one or more of seven separate infringements relating to Yen Libor, lasting from one to ten months. The anticompetitive conduct consisted of discussions between traders at the participating banks regarding their Yen Libor submissions, as well as the exchange of commercially sensitive information on trading positions or future Yen Libor submissions. UBS escaped a fine of EUR 2.5bn as the whistleblower (see our Newsletter of December 2013).
ICAP did not participate in the settlement and the Commission continued its investigation against it. The Commission found that ICAP facilitated six of the seven YIRD infringements, in particular by:
- disseminating misleading information to certain Yen Libor panel banks presented as 'predictions' or 'expectations' of where the Yen Libor rates would be set (so-called "run throughs"), with the aim of influencing panel banks not participating in the infringements to submit Yen Libor rates at a certain level;
- using its contacts with several Yen Libor panel banks not participating in the infringements to influence their Yen Libor submissions; and
- serving as a communications channel between traders at two of the participating banks, thereby enabling the anticompetitive practices between them.
The Commission's decision is interesting for a number of reasons. First, it confirms the Commission's existing practice of fining companies involved in a cartel as a facilitator/organiser. Swiss company AC Treuhand has twice been fined for such facilitating activities, in respect of cartels for organic peroxides and heat stabilisers (see our Newsletter of December 2009). Those fines were both confirmed by the General Court, although the heat stabilisers judgment (see our Newsletter of March 2009) is currently on appeal to the Court of Justice. Unlike AC Treuhand, ICAP did not merely act as a "secretariat" to the cartel, but was an actor on the market concerned by the cartel: even though ICAP did not itself trade YIRD, as an interdealer broker it set up trades between the banks. This did not lead the Commission to depart from its previous decisions and it found that ICAP had nonetheless acted as a facilitator.
Secondly, the Commission normally calculates the fine against an infringer by reference to its turnover in the relevant market. However, in the absence of relevant turnover, the Commission followed its approach in earlier decisions and relied on its discretionary power to set the fine as a lump sum to "reflect the gravity, duration and nature of ICAP's involvement as a facilitator as well as the need to ensure that the fine has a sufficiently deterrent effect".
Lastly, ICAP lodged a complaint with the European Union Ombudsman, in respect of the Commission having first announced the settlement in December 2013 while continuing with its investigation against ICAP, and then issuing its infringement decision 14 months later. ICAP argued that this gave rise to concerns about due process and bias in the Commission's investigation. On 25 February 2015 the Ombudsman announced that she will not be opening an investigation into this complaint. The EU Ombudsman previously opened a case (on 31 July 2014) in a similar complaint by Credit Agricole in the EIRD investigation, which is ongoing.
Please click on the links below for the other articles in the March 2015 competition newsletter:
Key Contacts
We bring together lawyers of the highest calibre with the technical knowledge, industry experience and regional know-how to provide the incisive advice our clients need.
Keep up to date
Sign up to receive the latest legal developments, insights and news from Ashurst. By signing up, you agree to receive commercial messages from us. You may unsubscribe at any time.
Sign upThe information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
Readers should take legal advice before applying it to specific issues or transactions.