Reed Smith Client Alerts

On 10 July 2019, ICAP was successful in its appeal against the EU Commission’s €14.96 million fine for facilitating banks in influencing the LIBOR/TIBOR rates. A complicated and unusual case from the start, the European Court of Justice clarified the level of detail required in a decision when issuing a fine for a breach of competition law. Nonetheless, the ICAP saga has serious consequences for companies acting in a facilitator capacity, although interdealer brokers may find some protection from the phase-out of LIBOR to SONIA. This alert reviews this recent decision and the consequences of competition law fines on companies that do not directly take part in cartels but merely facilitate them.

Authors: Marjorie C. Holmes Vaibhav Adlakha Emily Daniels

Background: ICAP’s link to cartel

ICAP acts as an interdealer broker, distributing quotes and data on interbank exchange rates and facilitating trades between banks. The cartel participants used this data and quotes to influence the LIBOR and TIBOR rates. On this basis, the Commission found that ICAP facilitated the cartel, leading to a breach of Article 101 TFEU.

For a company to be liable for an Article 101 breach, the Commission needs to show that there was an agreement or practice which had the object or effect of affecting competition in the EU and that there was an intention to do so. ‘Intention’ can also be demonstrated through ‘passive’ participation, for example by attending meetings without objecting to or reporting anti-competitive conduct. It is therefore not just directed at those parties directly involved in the cartel or the affected market but also at facilitators, who may be indirectly involved.

The Commission indicated that certain facilitators are presumed to know of an illegal cartel’s existence if they are economically active in that market and have professional expertise. The Commission believes that such facilitators should reasonably foresee that their involvement could facilitate an illegal cartel in such instances.1 Although a data provider may well be contributing without directly benefitting or even realising its involvement, the Commission nonetheless considers that the facilitator would be indirectly benefitting through the business relationship with the cartel participants.2

A second interdealer broker, RP Martin, was also accused of facilitating the cartel. RP Martin settled with the Commission for €247,000 for a one-time infringement. However, ICAP chose to appeal and initially lost. The Commission subsequently issued ICAP with a fine for six separate infringements based on the same activity but encompassing different periods and cartel participants, using complex calculations to reflect the “gravity, duration, and nature of ICAP’s involvement” for each, with little elaboration on what this entailed.