The Spanish Competition Authority Fines Four Banks for Fixing Derivative Prices

What happened?

On 13 February 2018, the Spanish Competition Authority, the National Commission for Markets and Competition (CNMC), fined four banks, Caixabank, Banco Santander, BBVA and Banco Sabadell, a total of € 91 million for colluding on the price of interest-rate derivatives, used to hedge risks related to syndicated loans for project finance. 

The CNMC launched the investigation against the banks in April 2016 following a complaint received from a customer of the four banks. During its investigation, the CNMC also obtained access to documents provided by a number of other customers in relation to derivative transactions entered into in the period under investigation.

Why does this matter?

The CNMC’s decision represents the first infringement decision by an EU competition authority in connection with a product related to syndicated lending, which is itself a focus of competition authorities elsewhere in the EU. In 2016, the UK Financial Conduct Authority sent ‘on notice’ letters to a number of banks, identifying potential infringements related to disclosures or exchanges of competitively sensitive information relating to the terms and conditions of syndicated loans. Furthermore, last year the EU Commission announced a market study, which will focus on information exchanges during the loan origination stage, as well as the cooperation between syndicate members once a syndicate has been formed.

The case is also noteworthy as it originated from a complaint of a customer. This is to be contrasted with the way in which the vast majority of cases begin, i.e. the parties involved in the cartel approach the authorities as part of a duty to self-report potential violations or seeking leniency. 

Although the decision is not yet final, it could attract attention of other competition authorities who may challenge similar practices. 

What happens next?

The four banks are set to appeal the decision.  

How can Cadwalader help? 

Cadwalader’s antitrust team is one of only a few in Europe to focus on the financial services sector. We are specialists in offering ‘end-to-end’ advice on compliance, investigations and related litigation in this sector.

If you would like to discuss the issues arising in this alert, or how we can help you more generally, please contact Tom Bainbridge.



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