On October 21, 2014, the European Commission fined JPMorgan, UBS, and Credit Suisse over 94 million euros (about $120 million) for participation in two distinct cartels involving the Swiss franc. In both of these cases, the banks agreed to settle with the Commission.
In the first antitrust case involving an illegal bilateral cartel, JPMorgan Chase was fined over 61.6 million euros by the Commission for collaborating with the Royal Bank of Scotland to manipulate the Swiss franc Libor benchmark interest rate. Between March 2008 and July 2009, the two international banks attempted to distort the pricing of interest rate derivatives indexed on the benchmark. Regulators accused JPMorgan and RBS of exchanging information concerning intended prices and trading positions, and of discussing future Swiss franc Libor rate submissions.
JPMorgan benefitted from a 40% reduction in its fine for cooperating with the investigationunder the European Commission’s 2006 Leniency Notice, in addition to a 10% fine reduction for agreeing to settle the case. RBS avoided a 110 million euro fine for its participation, thanks to a grant of immunity under the 2006 Leniency Notice for notifying the Commission of the cartel’s existence.
In the second case, the Commission found that JPMorgan, UBS, Credit Suisse, and RBS operated a cartel on bid-ask spreads of Swiss franc interest rate derivatives. Between May and September 2007, these four banks agreed to quote to third party clients wider, fixed bid-ask spreads on certain short-term Swiss franc interest rate derivatives. By maintaining narrower spreads for trades amongst themselves, the banks sought to lower their own transaction costs while preventing third parties from trading on the same terms.
The Commission fined JPMorgan, UBS, and Credit Suisse over 32.3 million euros for their involvement. UBS paid the largest fine at over 12.6 million euros, while JPMorgan and Credit Suisse paid fines of over 10.5 million and 9.1 million euros, respectively. While each of these banks received a 10% reduction in fines for agreeing to settle the case, UBS benefitted from an additional 30% reduction and JPMorgan benefitted from an additional 25% reduction for cooperating with the investigation. Once again, RBS was granted immunity for revealing the existence of the cartel to the Commission and avoided a 5 million euro fine.
Since the settlement procedure for cartels was introduced in June 2008, there have been sixteen settlement decisions made by the Commission. These decisions demonstrate the Commission’s determination to penalize cartel behavior in violation of EU antitrust rules. In support of anti-cartel enforcement, the Commission’s Vice President, Joaquín Almunia, asserted that “[c]artels in the financial sector, whatever form they take, will not be tolerated.”
European Commission Fines Four Major Banks for Cartel Behavior (PDF)