Short Reads

General Court partially annuls the European Commission's ICAP decision (in the YIRD case)

General Court partially annuls the European Commission's ICAP decision

General Court partially annuls the European Commission's ICAP decision (in the YIRD case)

01.12.2017 EU law

On 10 November 2017, the General Court (GC) partially annulled the European Commission's 2015 decision to fine UK-based broker ICAP close to EUR 15 million for "facilitating" various infringements relating to Yen interest rate derivatives (YIRDs). The GC's judgment provides a useful overview of the current state of EU case law on (i) "by object" infringements; (ii) the role of facilitators in cartel cases; (iii) "complex single and continuous infringements"; (iv) the presumption of innocence; and (v) the Commission's duty to state reasons when setting the level of a fine.

Background

By way of background, the Commission's YIRD investigation resulted in a "hybrid" scenario in which all parties, except for ICAP, chose to settle. In December 2013, the Commission adopted a settlement decision which resulted in fines for 8 financial institutions for their involvement in 7 bilateral cartels. The cartels consisted of discussions between the banks' traders aimed at influencing the Japanese Yen (JPY) LIBOR and Euroyen TIBOR reference interest rates. These reference rates, in turn, were reflected in the pricing of Japanese Yen interest rate derivatives. No appeals were lodged against the settlement decision.

After ICAP notified the Commission of its intention to discontinue the settlement procedure, the Commission continued its investigation under the "regular" procedure. Subsequently, on 4 February 2015, the Commission adopted a decision holding ICAP liable for playing a facilitating role in 6 of the bilateral cartels mentioned above. In particular, the Commission claimed that ICAP disseminated misleading information and attempted to influence the panel of banks that set the JPY reference interest rates.

By object infringements and liability of cartel facilitators

On appeal, the GC dismissed ICAP's pleas concerning the "by object" nature of the infringement and the relevant standard of proof for establishing its liability as a facilitator. The GC held that each infringement contained evidence of coordination between the banks and exchanges of forward-looking confidential information that could affect pricing. In accordance with existing case law, the GC held that the Commission was entitled to qualify the infringements as by object restrictions.

The GC reiterated that companies that are not active on the market(s) affected by the infringement can be held liable as facilitators. To that effect, the GC held that the Commission should demonstrate whether the company intended to contribute to the common objectives of the participants and was or should have been aware of the actual or planned conduct put into effect by the other undertakings. For most of the infringements concerned, the GC found that the Commission had adduced enough evidence to prove ICAP's awareness of the cartels. For one infringement (the UBS/RBS 2008 infringement), however, the GC held that the underlying evidence was inconclusive. The GC annulled the Commission's decision insofar as ICAP was held liable for facilitating that cartel.

Duration, presumption of innocence and fine calculation

The GC also upheld ICAP's pleas relating to the duration of its participation in three other cartels. After reviewing the documentary evidence in detail, the GC found that the Commission was unable to hold ICAP liable for the entire duration of each of those cartels. In this case, the GC held that since JPY LIBOR rates are set on a daily basis "the effects of manipulating those rates are limited in time and that the manipulation needs to be repeated in order for those effects to continue". Therefore, the Commission could not "assume" that ICAP was continuously involved for the full duration of each cartel without proof that ICAP participated by adopting "positive measures" on a daily basis or "at least sufficiently limited in time". 

In addition, the GC found that the Commission infringed the presumption of ICAP's innocence by taking a position on ICAP's involvement in the 2013 settlement decision, i.e. before the Commission concluded its investigation into ICAP under the regular procedure in 2015. This finding, however, could not lead to annulment of the settlement decision since ICAP was not an addressee of that decision. At the same time, the GC essentially held that its review of ICAP's other pleas was sufficient to address the possible impact of a lack of impartiality in the contested decision.

With respect to the fine, the GC held that the Commission's decision provided insufficient detail on the methodology it had applied to determine the level of the fine. In particular, according to the GC, the decision did "not provide the minimum information which might have made it possible to understand and ascertain the relevance and weighting of the factors taken into consideration by the Commission in the determination of the basic amount of the fines". On that basis, the GC annulled the fine imposed on ICAP.

Implications

This judgment shows that the EU courts will continue to scrutinize the Commission's assessment of the facts and law in detail, while placing particular importance on the parties' (procedural) rights of defence. In so-called "hybrid cases" in particular, the GC highlights that settlement decisions should not pre-judge the outcome of the Commission's investigation into non-settling parties.

On the other hand, the ICAP judgment confirms that a third party can be held liable for playing a facilitating role in cartels, even if it was not active on the market concerned by the infringement [see our November 2015 Newsletter for an article on the AC-Treuhand case]. The GC also confirmed that conduct can be classified as a "by object" infringement, even if it does not relate directly to prices. Moreover, where the conduct is classified as a complex single and continuous (or repeated) infringement, the Commission is not required to prove that each constituent category of conduct qualifies as a "by object" restriction.

This article was published in the Competition Law Newsletter of December 2017. Other articles in this newsletter:

  1. Court of Justice rules on the application of competition law to agricultural producer organisations
  2. Court of Justice dismisses appeal of British Airways in Air Cargo case
  3. National courts may declare that a practice infringes competition law after it was the subject of a commitment decision

Team

Related news

10.07.2018 EU law
Hof van Justitie EU oordeelt over reikwijdte 'beroepsgeheim' financiële toezichthouders voor bedrijfsgegevens

Articles - In een arrest van 19 juni 2018 oordeelt de Grote kamer van het Hof van Justitie EU over de reikwijdte van het 'beroepsgeheim' van financiële toezichthouders voor bedrijfsgegevens. Het hof oordeelt dat de informatie die zich in het toezichtsdossier bevindt niet onvoorwaardelijk vertrouwelijk van aard is en bijgevolg onder het beroepsgeheim van de toezichthouder valt. Gegevens die mogelijk commerciële geheimen zijn geweest, worden in beginsel geacht niet meer actueel en dus niet langer geheim te zijn, wanneer die gegevens ten minste vijf jaar oud zijn.

Read more

02.07.2018 EU law
General Court delivers judgments on the scope of dawn raid decisions

Short Reads - On 20 June 2018, the General Court rendered its judgment in two connected appeals submitted by České dráhy, the Czech Railways Operator, challenging two dawn raid decisions by the European Commission. Based on arguments concerning the scope of the investigation, the Court annulled in part the first dawn raid decision and fully upheld the second dawn raid decision.

Read more

29.06.2018 EU law
Un dossier de soumission imparfait peut-il être rectifié par le paiement d’une amende ?

Articles - Dans l’arrêt du 28 février 2018, la Cour de justice donne son avis sur la possibilité pour un soumissionnaire de rectifier, pendant la phase de sélection et moyennant paiement d’une amende, son dossier de soumission imparfait par un ajout et/ou commentaire. La Cour précise que cette mesure n’est, en principe, valable que si la nature de l’irrégularité constatée permet une rectification ultérieure et que le montant de l’amende est proportionnel à l’importance de l’irrégularité constatée. 

Read more

29.06.2018 EU law
Kan een gebrekkige inschrijving worden rechtgezet tegen betaling van een boete?

Articles - Het Hof van Justitie verduidelijkt in een arrest van 28 februari 2018 dat een regeling waarbij een inschrijver in de selectiefase verzocht wordt om tegen betaling van een boete diens gebrekkige inschrijving via een aanvulling en / of toelichting recht te zetten in beginsel aanvaardbaar is – voor zover (i) de aard van de vastgestelde onregelmatigheid een a posteriori rechtzetting toelaat en (ii) de omvang van de geldboete evenredig is met de zwaarwichtigheid van de vastgestelde onregelmatigheid.

Read more

Our website uses cookies: third party analytics cookies to best adapt our website to your needs & cookies to enable social media functionalities. For more information on the use of cookies, please check our Privacy and Cookie Policy. Please note that you can change your cookie opt-ins at any time via your browser settings.

Privacy – en cookieverklaring