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EU Commission fines banks over cartels

The European Commission this week fined eight international financial institutions a total of €1,712,468,000 for participating in two illegal cartels in markets for financial derivatives covering the European Economic Area (EEA).

The first cartel related to interest rate derivatives denominated in the euro currency (EIRD), in which four institutions were apparently involved. The second cartel related to interest rate derivatives denominated in Japanese yen (YIRD). In this case, says the Commission, six financial institutions participated in one or more bilateral YIRD cartels.

Such collusion between competitors is prohibited by Article 101 of the Treaty on the Functioning of the European Union and Article 53 of the EEA Agreement.

These are the first two Commission decisions concerning cartels in the financial sector since the start of the financial crisis in 2008, and highlight the types of behaviour that banks should avoid if they wish to comply with EU competition rules.

They are also the eighth and ninth settlement decisions since the introduction of the settlement procedure for cartels in June 2008. This procedure requires that companies that have participated in a cartel acknowledge their participation in the infringement and their liability for it.

It is based on the Antitrust Regulation and allows the Commission to apply a simplified procedure and thereby reduce the length of the investigation – in fact the two most recent decisions are among the most swiftly decided cartel settlements so far.

“Today's decision sends a clear message that the Commission is determined to fight and sanction these cartels in the financial sector,” said Joaquín Almunia from the Commission. “Healthy competition and transparency are crucial for financial markets to work properly, at the service of the real economy rather than the interests of a few."

Contact Jonathan Fisher QC

For specialist advice on issues of corporate, regulatory or financial crime, contact Jonathan Fisher QC on +44 (0)20 7427 463 or click here to make an electronic enquiry.

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