UK LIBOR Claim for Antitrust Damages – Banks Apply to Strike Out

What happened?

In what is understood to be the first LIBOR-related antitrust case in the UK (FDIC v Barclays and others), defendants have applied in the High Court in London to have the claims against them struck out. 

The claimant, the Federal Deposit Insurance Corporation (“FDIC”), is seeking to recover LIBOR manipulation-related losses on behalf of 39 US banks that collapsed in the aftermath of the financial crisis. 

As in similar actions in the US, it is alleged that the defendants colluded on their LIBOR submissions between August 2007 and at least December 2009, and that those submissions were artificially low. The defendants are also alleged to have made false representations to others regarding the accuracy and reliability of their LIBOR submissions and the benchmark itself. The FDIC claims that, as a result, the now-closed banks lost out on higher prices and rates on loan products and interest rate securities they held or issued during the period.

It is understood that the defendants are challenging jurisdiction as well as the substance of the FDIC’s claim. Notably, as regards the antitrust claim, the defendants deny that their LIBOR submissions involved any agreement or concerted practice, and at most amounted to parallel unilateral conduct. Any agreement or concerted practice would, they say, not have had the object or effect of restricting competition.

Why does this matter?

This case is understood to be the first LIBOR-related private claim for antitrust damages to have been brought in the UK. To date, LIBOR-related private actions have been largely founded on allegations of misconduct other than anti-competitive collusion, such as misstatement and/or misrepresentation (e.g. Property Alliance Group v RBS; Stuart Barrie Wall v RBS; and Guardian Care Homes v Barclays). 

In addition, the claim has been brought on a ‘stand-alone’ basis, which means that the claimant cannot rely on a pre-existing decision by an antitrust authority as proof of an infringement in this case. However, the FDIC points to other financial regulatory findings of LIBOR-related misconduct in support of its case.

Financial services firms will watch with interest whether the FDIC can establish proof of an antitrust infringement through the disclosure process, and how much evidential value the court attributes to misconduct findings of financial regulators. 

What happens next? 

The FDIC will be given an opportunity to respond to the defendants’ application to strike out the claim before the application hearing, which is likely to take place towards the end of 2018. 

How can Cadwalader help? 

Cadwalader’s antitrust team is one of only a few to focus on the financial services sector. Located in key jurisdictions in the United States (New York, Washington DC) and Europe (London, Brussels), we are specialists in offering ‘end-to-end’ advice on investigations and subsequent 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 Vincent Brophy and Tom Bainbridge.

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