BackgroundThe LIBOR (London Interbank Offered Rate) scandal was uncovered in 2008 and found that some banks and financial institutions had been submitting false interest rates (by inflating or deflating their rates) to profit or give the impression they were more profitable than they actually were.

In 2013, the Commission imposed fines of over €669,719,000 on UBS, RBS, Deutsche Bank, Citigroup, JP Morgan and RP Martin for participating in cartels relating to YEN interest rates derivatives. These cartels were separate arrangements of between one and ten months relating to price fixing of LIBOR submissions and the exchange of commercially sensitive information. The above companies all admitted their participation in the cartels and settled with the Commission, receiving the above fine.

Icap Group, who were found by the Commission to have led six of the seven cartels discovered, did not admit their involvement and defended the case the Commission brought against them. In 2015, Icap Group were fined €14,960,000 by the Commission for its participation in the cartels. Icap then appealed this Commission decision to the General Court.

General Court Decision

In November, the General Court annulled the decision of the Commission, in part. The General Court agreed that the Commission did not err in law and was correct to find that the alleged infringements committed by Icap Group were anti-competitive.

The General Court, however, found that the Commission had not sufficiently proven Icap’s participation in a cartel with RBS and UBS, and therefore this part of the decision was annulled. The General Court also found that evidence the Commission gathered in relation to Icap’s participation in further cartels did not prove participation for the period alleged. Therefore, the General Court annulled the findings that Icap participated in these cartels, after specific dates.

The General Court also found that the Commission had not respected Icap’s presumption of innocence, during the settlement procedure, and found that, as Icap did not settle the case as the other participants did, they were considered guilty by the Commission. However, this error by the Commission did not affect the legality of the decision against Icap.

Finally, the Commission were held to have failed adequately to explain its methodology in calculating the fine imposed on Icap, and therefore this was annulled due to insufficient reasoning.

What happens now?

The Commission will now have to re-examine its decision and fine in light of the General Court decision. The LIBOR scandal led to numerous actions against banks and financial institutions and billions of euros in fines! Many institutions have since appealed the fines imposed on them; however this is the first time the General Court has annulled one of these decisions, although only in part.

Icap have still been found in breach of competition law by participating in various cartels aimed at manipulating the LIBOR rates. The Commission will have to re-evaluate various factors such as the duration of such infringements and the level of fine imposed, but it is likely we will still see a large penalty imposed on Icap for its behaviour.