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European Commission


Brussels, 21 October 2014

Statement by Vice President Joaquín Almunia on 2 cartel decisions concerning Swiss Franc Related Derivatives

Today the European Commission has found and sanctioned two distinct cartels in the financial sector. In these two decisions, we have imposed total fines of about 94 million euros on four major international banks who violated EU antitrust rules. In both cases, these banks agreed to settle these cases with the Commission, as foreseen in our procedures.

These two decisions relate to the sector of interest rate derivatives in the Swiss Franc currency. These financial products allow companies to hedge the risk of interest rate fluctuations, as a kind of insurance mechanism.

We have uncovered two separate infringements of EU competition rules in this sector:

- The first one involves collusive practices by two banks, RBS and JP Morgan, in relation to the Swiss Franc LIBOR, a benchmark interest rate. The two banks colluded between March 2008 and July 2009 to try to influence this benchmark, in order to distort the normal course of the pricing of the derivatives indexed on it. This decision follows our two previous decisions related to EURIBOR and Yen LIBOR last December. It shows once again the Commission's determination to penalise this type of conduct, which is a clear violation of EU antitrust rules.

- Our second decision is about a cartel between four leading market makers in Swiss Franc interest rate derivatives, namely RBS, UBS, JP Morgan and Credit Suisse. In this case, unlike in previous cartels in the sector, the banks did not collude to influence a benchmark. Rather, they directly agreed to collectively fix a pricing element which should have been determined by market forces alone. This is the kind of typical price-fixing cartel which is also found in other sectors. Indeed, between May and September 2007, the four banks agreed on the so-called "bid-ask" spread, which is the difference between the price at which a bank is willing to sell and to buy a given product. They agreed to quote wider, fixed spreads to all third parties on certain categories of derivatives, while maintaining narrower spreads between themselves. One of their objectives was to prevent other players from competing on the same terms in this market.

Both decisions are based on a settlement with the banks, who recognised their involvement and in exchange received a reduction of 10% of their respective fines. This allowed the Commission to conclude the investigations through a quicker procedure.

The fines are based, in particular, on the value of sales of the relevant products and the duration of the infringements.

RBS also received full immunity for revealing the existence of these agreements to the Commission and both UBS and JP Morgan received reductions in their fines because of their cooperation with the investigation, as they brought valuable evidence to us.

Acting against financial cartels is one of our top priorities, given the importance of a healthy, transparent, well-functioning financial sector for the entire economy. All market players in this sector must be aware that no violation of antitrust rules will be tolerated.

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