EC extends 18-month antitrust investigation

Yen and euro interbank rates looked into.

New Statesman
Joaquín Almunia, the EU’s competition commissioner. Credit: Getty Images.

The European Commission (EC) has extended its 18-month antitrust investigation into yen and euro interbank rates to include Swiss franc-denominated swaps.

With this extension, banks and broker-dealers involved in the Libor scam may face regulatory threat to settle with the commission.

The EC can impose a maximum penalty equivalent to 10 per cent of a company’s global turnover for each case it is found to be involved with, according to the Financial Times (FT). In addition, a bank found involved in all three rate-fixing cases may face fines of up to 30 per cent of total revenues.

In his speech today in Paris, the EU’s competition commissioner Joaquín Almunia’s will warn that appropriate actions will be taken against financial institutions that are holding out against antitrust authorities.

Although, Brussels is unofficially finding ways for settlements, but some firms are not showing interest to open discussions as they consider being baseless allegations of offence, reported the FT citing people involved in the investigation.

At least 12 banks and interdealer brokers are under the commission’s three separate investigations, according to regulatory findings and FT investigations.

Barclays, UBS were fined for rigging interbank lending benchmarks by the financial regulators in the US and UK in the recent times. Meanwhile, the Royal Bank of Scotland (RBS) has paid $612m to settle with US and UK authorities by admitting manipulation of yen, US dollar and Swiss franc Libor rates.

The commission, which will not settle individual cases like antitrust regulators in the US, has so far not identified any banks or interdealer brokers in its current antitrust investigations. However, the commission has history of fining facilitators of cartels in the past.

UBS paid a record $1.5bn fine in December 2012, and Barclays paid $450m in June to settle US and UK investigations. Moreover, criminal investigations by the US the US Department of Justice and UK’s Serious Fraud Office are ongoing.