A View from Constantine Cannon’s London Office

By Yulia Tosheva and James Ashe-Taylor

The European Commission (“EC”) has fined London-based ICAP, the world’s largest broker of interest-rate swaps, for facilitating bank cartels in the market for Yen-denominated interest rate derivatives.

The EC already imposed heavy fines of 669 million euros on UBS, the Royal Bank of Scotland, Deutsche Bank, Citigroup and the British broker, RP Martin, in December 2013, after they admitted their involvement in several cartels that manipulated the Yen Libor benchmark.  The cartels involved traders’ discussions on Japanese Yen Libor submissions and exchange of commercially sensitive information on trading positions and future Japanese Yen Libor submissions.  As part of the same investigation, the EC opened proceedings against ICAP, which refused to admit guilt and did not join the financial institutions in paying fines to settle the case.

The EC’s investigation concluded that ICAP facilitated six out of the seven Japanese Yen cartels, in particular by disseminating misleading information about expected Japanese Yen Libor rates, serving as a communications channel between traders and using its contacts at various banks in an attempt to influence their Yen Libor submissions.

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A View from Constantine Cannon’s London Office

By Yulia Tosheva and James Ashe-Taylor

The European Commission has announced that the European Parliament and the European Council have reached a long-awaited political agreement on the Commission’s proposal for a Regulation on Interchange Fees for Card-based Payment Transactions.

The Regulation will introduce maximum fees for four-party card schemes’ consumer debit and credit cards, prevent card schemes from forcing retailers to accept all types of cards regardless of their fees, and establish transparency rules for all transactions. The Commission has already ruled that interchange fees set by MasterCard are in violation of EU antitrust laws and, after a seven-year court battle, MasterCard lost its final appeal before the European Court of Justice in September 2014.

Interchange fees represent about 70% of the approximately 13 billion euros a year retailers pay banks to handle payment card transactions. The Regulation is expected to have a profound impact on the card industry as a whole but its effect is likely to be particularly felt in markets such as Germany, where average credit card rates stand at 1.8%, and Poland, where average debit card charges are 1.6%.

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A View from Constantine Cannon’s London Office

By Ana Rojo Prada and Richard Pike

The European Commission has announced that it has imposed fines totaling 19.48 million euros on five European envelope producers for coordinating prices and allocating customers through an anticompetitive cartel.

The Commission imposed fines on the five companies – Bong (of Sweden), GPV and Hamelin (both of France), Mayer-Kuvert (of Germany) and Tompla (of Spain) – after they agreed to a settlement that required them to acknowledge their participation in the envelope cartel and their liability for violating European Union antitrust rules.

The Commission found that from October 2003 to April 2008 the cartel allocated customers and coordinated prices for standard/catalogue and special printed envelopes.  The companies’ high-level executives met at multilateral and bilateral meetings at which they arranged for their companies to exchange commercially sensitive information and to coordinate prices that they offered to major European customers.

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A View from Constantine Cannon’s London Office

By Yulia Tosheva and James Ashe-Taylor

The European Commission has signalled that it is not dialing down its scrutiny of the telecommunications sector by imposing fines totalling 70 million euros on Slovak Telekom and its parent company, Deutsche Telekom.

On October 15, 2014, the Commission imposed a fine of 38,838,000 euros on Slovak Telekom and Deutsche Telekom for pursuing an abusive strategy designed to exclude competitors from the Slovak market for broadband services for more than five years. Deutsche Telekom was held to be jointly and severally liable for the amount of the fine as it had exercised decisive influence over Slovak Telekom during the period of the infringements.

Deutsche Telekom also received an additional fine of 31,070,000 euros for its recidivist behaviour, based on its record of having been fined by the Commission in 2003 for a margin squeeze in the German broadband market.

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A View from Constantine Cannon’s London Office

By Ana Rojo Prada and James Ashe-Taylor

The European Commission has settled two cartel investigations and sanctioned four major banks in the Swiss Franc-related derivatives market, imposing total fines of approximately 94 million euros, for violations of European Union antitrust rules.

Interest rate derivatives (including swaps, futures and options) are financial products used by banks or companies as insurance mechanisms to manage the risk of interest rate fluctuations.

The first cartel investigation settlement involved collusive behaviour between the Royal Bank of Scotland (RBS) and JPMorgan between March 2008 and July 2009.  The cartel sought to influence the Swiss Franc Libor benchmark interest rate as a means of distorting the pricing of the derivatives indexed on it.  The cartel engaged in discussions concerning one of the bank’s future Swiss Franc Libor rate submissions and exchanged information on trading positions and intended prices.

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