Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Banks receive statement of objections from European Commission in euro interest rate derivatives case, (May 20, 2014)

By Linda O’Brien, J.D., LL.M.

The European Commission (EC) has reached the preliminary conclusion that three international banks may have colluded to influence the pricing of interest rate derivatives denominated in the euro currency. The EC announced today that it is sending its statement of objections (SOs) to Crédit Agricole, HSBC, and JPMorgan Chase. The SOs is a further key step in its investigations into cartels in the financial sector.

In October 2011, the Commission had carried out unannounced inspections at the premises of several banks. Following the inspections, eight international financial institutions were fined € 1.7 billion in December 2013. Four banks—Barclays, Deutsche Bank, Royal Bank of Scotland and Société Générale—were found to have participated in a cartel for interest rate derivatives denominated in the euro currency. The financial products were based on the EURIBOR (euro interbank offered rate) benchmark.

The EC continued its investigation into Crédit Agricole, HSBC, and JPMorgan Chase and has now concluded that these three banks may have participated in the cartel as well. The three banks have the opportunity to the filing.

Interest rate derivatives, such as swaps, futures, options or forward rate agreements, are financial products which are used by banks and play an important role to allow financial institutions and companies to manage the risks linked to the fluctuations of interest rates.

Financial markets such as these require transparency and healthy competition. These ingredients are essential to restoring trust in the financial sector, which is a precondition for a successful and sustained recovery of the European economy, according to the EC announcement.

Companies: Crédit Agricole; HSBC; JPMorgan Chase

News: Antitrust