European regulator informs Deutsche Bank, Rabobank about suspected EU antitrust rules breach
The European Commission has informed Deutsche Bank and Rabobank of its preliminary view that they breached EU antitrust rules by colluding to distort competition when trading Euro-denominated Sovereign, SSA (Supra-Sovereign, Foreign Sovereign, Sub-Sovereign/Agency), Covered and Government Guaranteed bonds.
The Commission has concerns that between 2005 and 2016 the two banks, through some of their traders, exchanged commercially sensitive information and coordinated their pricing and trading strategies when trading these bonds in the secondary market in the European Economic Area (‘EEA’). These exchanges would have taken place mainly through emails and online chatroom communications.
If the Commission’s preliminary view was confirmed, such behaviour would violate EU rules that prohibit anticompetitive business practices such as collusion on prices and other trading conditions (Article 101 of the Treaty on the Functioning of the European Union and Article 53 of the EEA Agreement).
The Commission initially agreed to explore the possibility of a settlement with the companies involved but later discontinued the talks due to lack of progress and decided to quickly revert to the normal antitrust procedure. The normal antitrust procedure will now run its course.
The sending of a Statement of Objections does not prejudge the outcome of an investigation.
A Statement of Objections is a formal step in Commission investigations into suspected violations of EU antitrust rules. The Commission informs the parties concerned in writing of the objections raised against them. The parties can then examine the documents in the Commission’s investigation file, reply in writing and request an oral hearing to present their comments on the case before representatives of the Commission and national competition authorities.
If, after the parties have exercised their rights of defence, the Commission concludes that there is sufficient evidence of an infringement, it can adopt a decision prohibiting the conduct and imposing a fine of up to 10% of a company’s annual worldwide turnover.
There is no legal deadline for the Commission to complete antitrust inquiries into anticompetitive conduct. The duration of an antitrust investigation depends on a number of factors, including the complexity of the case, the extent to which the undertakings concerned cooperate with the Commission and the exercise of the rights of defence.
This is the third investigation conducted by the Commission involving cartels affecting the market for bonds trading. In April 2021, the Commission fined three investment banks a total of €28 million for participating in a US Dollar-denominated SSA bonds trading cartel. In May 2021, the Commission found that seven investment banks participated in an EGB trading cartel and imposed fines totalling €371 million.