Brussels, 2 June 2004
Final decision in Clearstream
In a decision adopted
today, the Commission finds that Clearstream Banking AG and its parent company
Clearstream International SA (“Clearstream”) infringed competition
rules by refusing to supply cross-border securities clearing and settlement
services and by applying discriminatory prices. The Commission’s
investigation revealed that Clearstream refused to supply Euroclear Bank SA
(“Euroclear Bank”) with certain clearing and settlement services and
applied discriminatory prices to the detriment of this customer.
Competition Commissioner Mario Monti said: « Today’s decision
makes clear that the competition rules are being applied in the financial
industry. I am convinced that fair competition on the merits will make European
financial markets more efficient. Smooth cross-border trade in securities
requires functioning co-operation in clearing and settling of trades. This is in
the interest of creating an integrated single capital market that will promote
“We are aware that a discussion is being held amongst regulators, banks
and securities depositories on which regulatory and business models should be
adopted in the future. Today’s decision does not favour one particular
model, it is not directed against Deutsche Börse’s business model or
any other. The Commission will continue to monitor whether all significant
providers of securities trading, clearing and settlement services observe the
competition rules,” the Commissioner continued.
The Commission’s enquiry into this case identified two types of abuse:
refusal to supply and discriminatory pricing.
Refusal to supply. Clearstream refused to supply to Euroclear Bank
clearing and settlement services for registered
shares issued under German
law. While competition law recognises the freedom of companies to freely choose
their trading partners, companies in a dominant position have a special
responsibility. In the present case, Clearstream’s behaviour qualified as
refusal to supply because:
- Clearstream Banking AG is the only final custodian of German securities kept
in collective safe custody, which is the only significant form of custody today
for securities traded. New entry into this activity is unrealistic for the
foreseeable future. Therefore, Clearstream Banking AG is an unavoidable trading
- Euroclear Bank could not duplicate the services that it was requesting; and
- Clearstream’s behaviour had the effect of impairing Euroclear
Bank’s ability to provide efficient cross-border clearing and settlement
services to clients in the single market.
Euroclear Bank eventually
obtained the clearing and settlement services from Clearstream Banking AG in
November 2001 - more than two years after it requested those services. During
the entire period Clearstream Banking AG denied Eurclear Bank clearing and
settlement for services registered shares. The dilatory behaviour of Clearstream
vis-à-vis Euroclear Bank contrasts with the usual delay of a maximum four
months within which other comparable customers were supplied with clearing and
Price discrimination. Between January 1997 and January 2002,
Clearstream, for equivalent clearing and settlement services, charged a higher
per transaction price to Euroclear Bank than to other securities depositories
outside Germany. The Commission examined in detail the content of the services
and the costs of providing them in order to establish whether the price
difference could be justified and concluded that it was not.
The infringements have ceased
While the infingements have meanwhile come to an end, the Commission adopted
today’s decision in order to clarify the legal situation. The decision
should provide the necessary clarity to Clearstream and to other companies
active in clearing and settlement. The decision comes at a moment when
cross-border trade in securities is becoming more important within the EU.
The Commission decided not to impose a fine. Among other factors, the
Commission took into account that there is no Community case law or
jurisprudence dealing with the competition analysis of clearing and settlement.
In addition, there has been a wide-ranging debate on clearing and settlement
within different institutions and fora in order to better define the role of the
different protagonists in the industry.
Securities clearing and settlement are necessary steps for a securities trade
to be completed.
Clearing is the process by which the contractual obligations of the
buyer and the seller are established.
Settlement is the transfer of securities from the seller to the buyer
and the transfer of funds from the buyer to the seller.
The procedure that led to the adoption of the decision originated in a
Commission enquiry aimed at examining if EU competition law is properly applied
in the clearing and settlement sector, in particular as regards access and
Clearstream Banking AG is Germany’s only Wertpapiersammelbank
Depository). The Commission
considered that during the reference period concerned, 1997 through 2001,
Clearstream held a dominant position for providing cross-border clearing and
settlement services to intermediaries situated in other Member States. The
investigation therefore focused on a specific cross-border market and the
decision does not set out findings that go beyond that relevant market.
Note to editors
- The European Commission enforces EU competition rules on restrictive
business practices and abuses of monopoly power when cross-border trade within
the European Union and competition are affected.
- The Commission has the power to force changes in company behaviour
and to impose financial penalties for antitrust violations of up to 10% of a
company’s annual world-wide turnover.
- Commission decisions can be appealed to the European Court of First
Instance in Luxembourg.
 The most widely
internationally-traded German shares (blue chip shares such as Daimler Chrysler,
Siemens, Allianz, Deutsche Post, Deutsche Telekom, Deutsche Bank, Lufthansa and
others) are registered shares, as opposed to bearer shares.
 Central Securities
Depositories hold securities and enable securities transactions to be processed
through book entry. In its home country, the Central Securities Depository
provides processing services for trades of those securities that it holds in
final custody. It can also offer processing services as an intermediary in
cross-border clearing and settlement, where the primary deposit of securities is
in another country.