Commission offers discount on fines to banks for competition infringements

Press conference by Joaquín Almunia, Vice President of the EC in charge of Competition on cartel decisions. Almunia shows with both his hands how he fought the beasts of cartel. (EC Audiovisual Services, 4/12/2013).

Press conference by Joaquín Almunia, Vice President of the EC in charge of Competition on cartel decisions. Almunia shows with both his hands how he fought the beasts of cartel. (EC Audiovisual Services, 4/12/2013).

Today, the European Commission fined 8 major banks a total of € 1.7 billion for participating in cartels rigging interest rate benchmarks in markets for financial derivatives covering the European Economic Area (EEA). According to the Commission, four of these firms participated in a cartel relating to interest rate derivatives denominated in euro, and six of them participated in one or more bilateral cartels relating to interest rate derivatives denominated in Japanese yen.

The Commission opened the proceedings in February 2013, that is three full years after those banks colluded to set interest rates to their benefit. It is true that those fines are the largest ever imposed by the Commission on competition infringements. It is also true however, that the EU executive arm didn’t explore the full extent of the benefits those banks pocketed nor did it refer the case to the penal justice in the EU countries where those infringements took place.

Pocketing the benefits

Concerning the extent of the benefits, the relevant Press release clarifies that in order to calculate the fines “the Commission took into account the banks’ value of sales for the products concerned within the European Economic Area”. Everybody knows however, that those benchmarks are used as the base for loans, derivatives, futures, options and a God knows what other financial products. The banks fined are major firms worldwide (Barclays, Deutsche Bank, RBS and Société Générale, UBS, Citigroup, JPMorgan and the broker RP Martin).

All those major banking institutions though, do not restrict their activities in the EEA. They have extended presence all over the world. Interestingly enough, the Commission didn’t base the calculation of the fines on their worldwide activities which depended on those manipulated benchmarks. Obviously the fines could have been much higher than €1.7bn.

Calculating the fines

However, in another similar case, the Commission has threatened thirteen western giant investment banking groups and two support bodies with fines of up to 10% of their worldwide turnover. The case was that those banks have created a trust, setting prices in the over the counter trade of Credit Default Swaps and Derivatives, a multi trillion business. The investment banks were the following: Bank of America-Merrill Lynch, Barclays, Bear Stearns (now part of JP Morgan), BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley, UBS and the Royal Bank of Scotland as well as Markit, a financial information firm and the International Swaps and Derivatives Associations (ISDA).

Of course in that case it was only a threat. Who knows how the Commission may calculate the fines when that affair will finalise. In any case, some hours ago Joaquín Almunia, the responsible Commission Vice-President in charge of competition policy, said: “What is shocking about the LIBOR and EURIBOR scandals is not only the manipulation of benchmarks, which is being tackled by financial regulators worldwide, but also the collusion between banks who are supposed to be competing with each other. Today’s decision sends a clear message that the Commission is determined to fight and sanction these cartels in the financial sector…”

Today’s decisions are the eighth and ninth settlement decisions since the introduction of the settlement procedure for cartels in June 2008. Almunia boasts that they are the swiftest cartel settlements decided by the Commission. Under a cartel settlement, companies that have participated in a cartel acknowledge their participation in the infringement and their liability for it. After that, their fines may be reduced even to 0 (zero) as it was that case for Barclays and UBS today.

the sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Number of migrants now growing faster than world population, new UN figures show

More refugees being helped by family, work and study permits, finds OECD and UNHCR study

Team Europe partners with Equity Bank to support Kenyan business and agriculture amid COVID-19

Crowdfunding: what it is and what it may become

EU threatens Japan to suspend FTA negotiations if…

COVID 19 and the consequences in the fight against HIV

Will the EU reconsider Frontex’s role in light of accusations about violations of migrants’ human rights?

EU readies for eventual annulment of the Turkish agreement on immigrants-refugees

More solidarity and interaction between generations needed to challenge age stereotypes and ingrained ageism

As India’s lockdown ends, a mental health crisis is just beginning

EU approves €100 million for the post-earthquake reconstruction in Albania

Oh, well, you are wrong, Google responds to the European Commission

Taj Mahal closes as European Union considers non-essential travel ban – Today’s COVID-19 updates

The MH17 tragedy to put a tombstone on Ukrainian civil war

Commission launches two projects to support cooperation and innovation in Romanian regions and cities

A chemistry professor explains: why soap is so good at killing COVID-19

There’s a new global technology race. It needs better trade rules

To hope or doubt? The state of women’s progress in the world

Peacekeeping: A ‘great opportunity’ to develop professionally and personally

UN chief welcomes DR Congo President’s promise to stand down

Republic of Korea President proposes DMZ as future ‘peace and cooperation district’ on Peninsula

Burnout is a pandemic. Why don’t we talk more about it?

Friday’s Daily Brief: UN chief in China, counter-terrorism, updates from Bangladesh, Mali and Mozambique

State aid: Commission approves €10 billion Spanish fund to provide debt and capital support to companies affected by the coronavirus outbreak

FROM THE FIELD: Children in warzones denied right to education

Companies must focus on resiliency, profitability and sustainability

The climate and COVID-19: a convergence of crises

The EU moulds a new compromise for growth and financial sustainability

Security Council must ‘come together’ to address the plight of children trapped in armed conflict, says UN envoy

Workplace risks: Final vote on protection from carcinogens, including diesel fumes

Recovery and Resilience Facility: Croatia and Lithuania submit official recovery and resilience plans

Vaccines: from miracle to possible danger

Four lessons for a successful switch to value-based healthcare

We must stop choking the ocean with plastic waste. Here’s how

The 4 biggest challenges to our higher education model – and what to do about them

Reform of road use charges to spur cleaner transport and ensure fairness

Technology can hinder good mental health at work. Here’s how it can help

The scheming of Boris: win an election after a no-deal Brexit

World’s human rights watchdog spotlights Afghanistan, Yemen and 12 others: Here’s the scoop

Why it’s time to take central banks’ digital currencies seriously

A Sting Exclusive: “Technology for all, development for all: the role of ITU”, written by the Secretary General of the United Nations Agency

How India is harnessing technology to lead the Fourth Industrial Revolution

EU’s guidelines on net neutrality see the light although grey areas do remain

Digital Assembly 2021: Leading Europe’s Digital Decade

What wealth managers can learn from family dynamics

Vĕra Jourová, European Commissioner in charge of Justice

The New EU-US “Shield” for data privacy is full of holes

EU survey confirms citizens’ call for EU to have more powers to tackle pandemic

Failure to register newborns leaves millions ‘invisible’ warns UN Children’s Fund

MWC 2016 LIVE: Stripe gives payments leg-up to startups in emerging markets

What lessons to draw from the destruction of Syria

Biblioburro: The amazing donkey libraries of Colombia

The India–U.S. trade dispute and India’s evolving geopolitical role

Syria: UN health agency highlights ‘critical health threats’ facing Idlib civilians

Crisis hit countries cut down public spending on education

One is not born, but rather becomes, a woman

Pakistan: a long road ahead

Century challenge: inclusion of immigrants in the health system

Coronavirus: MEPs call for solidarity among EU member states

Breaking barriers between youth in the new tech era: is there an easy way through?

A Europe that Protects: Commission calls for decisive action on security priorities

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s