# C_2021418EN.01001901.xml

| 15.10.2021 | EN | Official Journal of the European Union | C 418/19 |
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15.10.2021

EN

Official Journal of the European Union

C 418/19

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Summary of Commission Decision

of 28 April 2021

relating to a proceeding under Article 101 of the TFEU and Article 53 of the EEA Agreement

(Case AT.40346 – SSA Bonds)

(notified under document C(2021) 2871)

(Only the English language text is authentic)

(Text with EEA relevance)

(2021/C 418/11)

On 28 April 2021, the Commission adopted a decision relating to a proceeding under Article 101 of the Treaty on the Functioning of the European Union (the ‘Treaty’) and Article 53 of the Agreement on the European Economic Area (the ‘EEA Agreement’). In accordance with the provisions of Article 30 of Council Regulation (EC) No 1/2003 (1)
  , the Commission herewith publishes the names of the parties and the main content of the decision, including any penalties imposed, having regard to the legitimate interest of undertakings in the protection of their business secrets. A non-confidential version of the decision is available on the Competition Directorate General website at the following address:

http://ec.europa.eu/competition/antitrust/cases/

1.   INTRODUCTION

| (1) | The addressees of the Decision participated in a single and continuous infringement of Article 101 of the Treaty and Article 53 of the EEA Agreement. The object of the infringement was the restriction and/or distortion of competition in the sector of Supra-sovereign, Sovereign and Agency bonds issued in US dollars (‘USD SSA Bonds’). |
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(1)

| (2) | SSA bonds form an umbrella category of different bonds that are traded over the counter, without any central exchange and include:






  — | Supra-sovereign bonds: issued by supranational institutions whose mandate extends across national borders, such as the European Investment Bank (‘EIB’) or the Inter-American Development Bank (‘IADB’); |
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(2)

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Supra-sovereign bonds: issued by supranational institutions whose mandate extends across national borders, such as the European Investment Bank (‘EIB’) or the Inter-American Development Bank (‘IADB’);

| — | Foreign Sovereign bonds: issued by central governments under a law different to their domestic law, and/or in currencies other than the government’s own domestic currency; |
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Foreign Sovereign bonds: issued by central governments under a law different to their domestic law, and/or in currencies other than the government’s own domestic currency;

| — | Agency (sub-sovereign) bonds: issued by government or government-related entities below the level of the national central government, such as provincial, regional or municipal governments (for example, the Länder of Germany or the provinces of Canada), or by institutions like government-owned banks, infrastructure development bodies, export financiers or social security facilities, generally subject to an implicit or explicit guarantee by the sovereign. |
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—

Agency (sub-sovereign) bonds: issued by government or government-related entities below the level of the national central government, such as provincial, regional or municipal governments (for example, the Länder of Germany or the provinces of Canada), or by institutions like government-owned banks, infrastructure development bodies, export financiers or social security facilities, generally subject to an implicit or explicit guarantee by the sovereign.

The conduct referred to in this Decision involves all three types of bond.

| (3) | SSA bonds typically tend to be issued on the primary market by means of syndication. The conduct described in this Decision does not relate to the primary market, however, but rather the subsequent trading on the secondary market of USD SSA Bonds. |
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(3)

| (4) | The Decision is addressed to (hereinafter ‘the addressees’):






  — | Bank of America Corporation and Merrill Lynch International (together referred to as ‘BAML’); |
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(4)

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Bank of America Corporation and Merrill Lynch International (together referred to as ‘BAML’);

| — | Crédit Agricole SA, Crédit Agricole Corporate and Investment Bank (together referred to as ‘Crédit Agricole’); |
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—

Crédit Agricole SA, Crédit Agricole Corporate and Investment Bank (together referred to as ‘Crédit Agricole’);

| — | Credit Suisse Group AG and Credit Suisse Securities (Europe) Limited (together referred to as ‘Credit Suisse’); and |
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Credit Suisse Group AG and Credit Suisse Securities (Europe) Limited (together referred to as ‘Credit Suisse’); and

| — | Deutsche Bank AG, DB Group Services (UK) Limited and Deutsche Securities Inc. (together referred to as ‘Deutsche Bank’). |
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Deutsche Bank AG, DB Group Services (UK) Limited and Deutsche Securities Inc. (together referred to as ‘Deutsche Bank’).

2.   CASE DESCRIPTION

2.1.   Procedure

| (5) | The case was opened on the basis of an immunity application from Deutsche Bank on 4 August 2015. No other party applied for leniency. The European Commission (’Commission’) sent requests for information pursuant to Article 18(2) of Regulation (EC) No. 1/2003 on 4 December 2015 and 6 September 2016 to BAML, Crédit Agricole, Credit Suisse and other undertakings and on 21-24 November 2016 carried out announced inspections at the premises of BAML and Crédit Agricole |
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(5)

| (6) | By decision of 20 December 2018, the Commission initiated proceedings pursuant to Article 11(6) of Regulation (EC) No. 1/2003, against BAML, Crédit Agricole, Credit Suisse and Deutsche Bank and on 21 December 2018 the Commission issued a Statement of Objections addressed to the four banks. The parties were subsequently given access to the Commission’s case file. |
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(6)

| (7) | All addressees of the Statement of Objections made known in writing to the Commission their views on the objections raised against them. They also presented their views during an oral hearing that was held in Brussels on 10 and 11 July 2019. |
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(7)

| (8) | On 6 November 2020, the Commission sent a letter to all parties providing further details on the fines methodology with particular attention to the calculation of the proxy to the value of sales. One of the parties responded to the letter on 4 December 2020 and the remaining three parties submitted their observations on 8 January 2021. |
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(8)

| (9) | The Advisory Committee on Restrictive Practices and Dominant Positions was consulted and gave a positive opinion on 26 April 2021. The Hearing Officer issued his final report on 27 April 2021, and the Commission adopted the Decision on 28 April 2021. |
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(9)

2.2.   Description of the conduct

| (10) | The conduct related to trades of USD SSA Bonds on the secondary market. It directly affected the outcome of negotiations between the traders concerned and specific counterparties, as well as the conditions of trading on the USD SSA Bond market generally to the extent that the traders’ strategies were not targeted to specific customers but to the market as a whole. |
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(10)

| (11) | BAML, Crédit Agricole, Credit Suisse and Deutsche Bank, through the conduct of certain of their employees, exchanged sensitive commercial information that allowed them to coordinate their conduct, thereby gaining an advantage vis-à-vis customers and competing traders when trading USD SSA bonds on the secondary market with the overall aim to benefit their trading revenues. |
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(11)

| (12) | For analytical purposes, the cartel conduct can be presented in the following categories:






  (1) | Coordination on prices quoted to specific counterparties: parties agreed on the prices they would bid and/or offer to specific clients when they were (or potentially would be) in direct competition with each other for trades; |
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(12)

(1)

Coordination on prices quoted to specific counterparties: parties agreed on the prices they would bid and/or offer to specific clients when they were (or potentially would be) in direct competition with each other for trades;

| (2) | Coordination on prices shown to the market generally: parties agreed on the prices they would show for specific bonds to the market (which included customers, brokers and competing traders) generally at a given time, either on the broker screens or in response to incoming customer requests; |
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(2)

Coordination on prices shown to the market generally: parties agreed on the prices they would show for specific bonds to the market (which included customers, brokers and competing traders) generally at a given time, either on the broker screens or in response to incoming customer requests;

| (3) | Exchange of current or forward-looking commercially sensitive information on their trading activities and trade flows in the secondary market: parties freely discussed information gained from internal sources of each bank in relation to the real-time strategies and activities of specific clients, upcoming flows and syndications in a manner that went beyond what was necessary for the legitimate negotiation of specific USD SSA Bond trades; |
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(3)

Exchange of current or forward-looking commercially sensitive information on their trading activities and trade flows in the secondary market: parties freely discussed information gained from internal sources of each bank in relation to the real-time strategies and activities of specific clients, upcoming flows and syndications in a manner that went beyond what was necessary for the legitimate negotiation of specific USD SSA Bond trades;

| (4) | Exchange, confirmation and alignment of trading and pricing strategies: parties disclosed their recent prices or current pricing strategies for specific bonds and maturities in terms of spreads or prices throughout the trading day, allowing each other to adjust and align their strategies and protect each other; and |
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(4)

Exchange, confirmation and alignment of trading and pricing strategies: parties disclosed their recent prices or current pricing strategies for specific bonds and maturities in terms of spreads or prices throughout the trading day, allowing each other to adjust and align their strategies and protect each other; and

| (5) | Coordination of trading activity: parties agreed to refrain from bidding or offering, or to remove (or ‘kill’) a bid or offer from the market (typically from a broker screen) when they might come into competition with or otherwise interfere with one another, for a particular time window on account of another trader’s announced position or trading activity. They also agreed to split trades between each other and amalgamate or reduce their respective positions to meet a specific customer’s demands (as disclosed between them). |
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(5)

Coordination of trading activity: parties agreed to refrain from bidding or offering, or to remove (or ‘kill’) a bid or offer from the market (typically from a broker screen) when they might come into competition with or otherwise interfere with one another, for a particular time window on account of another trader’s announced position or trading activity. They also agreed to split trades between each other and amalgamate or reduce their respective positions to meet a specific customer’s demands (as disclosed between them).

| (13) | The different categories of conduct described for analytical purposes were interrelated and often overlapping. Coordination on prices or trading activity, for example, would inevitably be accompanied by an exchange of specific information on respective pricing or trading intentions. At least one trader from each party participated in some or all of these categories during the overall duration of the cartel, which ran from at least 19 January 2010 until 24 March 2015. |
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(13)

| (14) | The collusive activity occurred through multilateral persistent chatrooms supplemented (and then replaced, following restrictions on the use of multilateral chatrooms by the parties) by frequent bilateral contacts. |
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(14)

2.3.   Individual involvement in the conduct

| (15) | During the overall duration of the infringement, each party participated in the infringement during the following periods:
  BAML first participated from 19 January 2010 until 23 October 2012 and then again from 22 July 2014 until 27 January 2015;
  Crédit Agricole participated from 10 January 2013 until 24 March 2015;
  Credit Suisse participated from 21 June 2010 until 24 March 2015;
  Deutsche Bank participated from 19 January 2010 until 28 March 2014. |
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(15)

BAML first participated from 19 January 2010 until 23 October 2012 and then again from 22 July 2014 until 27 January 2015;

Crédit Agricole participated from 10 January 2013 until 24 March 2015;

Credit Suisse participated from 21 June 2010 until 24 March 2015;

Deutsche Bank participated from 19 January 2010 until 28 March 2014.

| (16) | The Decision establishes that BAML, Crédit Agricole, Credit Suisse and Deutsche Bank participated in a single and continuous infringement of Article 101 of the Treaty and Article 53 of the EEA Agreement. The factual circumstances on the file such as the product concerned, the mechanism for the conduct, the undertakings involved, the pattern of contacts, the intention to contribute to an overall plan with the aim of benefitting their revenues, the awareness of the traders of the communications between them and the continuous nature of the infringement show that the collusive contacts between the parties were linked and complementary in nature and contributed to a single objective. |
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(16)

2.4.   Geographic scope

| (17) | The geographic scope of the infringement covered at least the whole EEA. |
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(17)

2.5.   Remedies

| (18) | The Decision applies the 2006 Guidelines on Fines. (2) The Decision imposes fines on the entities of BAML, Crédit Agricole and Credit Suisse listed in point (4) above. |
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(18)

2.5.1.   Basic amount of the fine

| (19) | The basic amount of the fine to be imposed on the undertakings concerned is to be set by reference to the value of sales, the duration and geographic scope of the cartel and the fact that the infringement, in involving price coordination, is by its very nature amongst the most harmful restrictions of competition. |
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(19)

| (20) | Financial products such as USD SSA Bonds do not generate sales in the usual sense as they are both bought and sold by the dealers and revenues are derived from the difference between the purchase price and the sale price of each bond acquired and then sold by the traders. It is therefore appropriate in this case to calculate a proxy for the value of sales as the starting point for determining the basic amount of the fines. |
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(20)

| (21) | It is consistent Commission practice in cartel cases in the financial sector not to determine the proxy for the value of sales by reference to the ‘net trading income’ or ‘net profit from financial operations’. These methods reflect trading profits netted against trading losses (which can vary significantly between undertakings and are not necessarily proportionate to trading volumes and values) and are comparable to a measurement of profit from trading actitivities rather than constituting an appropriate proxy for the value of sales under the Guidelines on Fines. Instead, it is appropriate to use the notional volume and value of the USD SSA bonds that the parties traded during their individual period of involvement in the cartel as the starting point for the specific proxy for the value of sales in this case. |
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(21)

| (22) | The Commission will normally take the sales made by the undertaking during the last full business year of its participation. However in view of the varying size of the USD SSA Bond market, the high volatility over the infringement period, and the differing time periods in which the different addressees were involved, the Commission considers it more appropriate to base the annualised sales proxy on the value of sales actually made by the undertakings during the months corresponding to their respective participation in the infringement. |
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(22)

| (23) | These annualised notional amounts traded reflect the economic importance of the infringement and the relative weight of each undertaking in the infringement, irrespective of the period of individual participation, but may lead to disproportionate fines if the particularities of the financial industry and the USD SSA bond industry in particular are not taken into account. As the revenue on transactions of USD SSA Bonds in the secondary market is reflected in the difference between the purchase price and the sale price of each bond, known as the ‘bid-ask spread’, the Commission therefore discounts the above mentioned annualised notional amounts of USD SSA bonds traded on the secondary market by a factor based on the the applicable bid-ask spreads, |
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(23)

| (24) | The Commission considers that it is appropriate to set the proportion of the value of sales to be taken into account for calculating the basic amount of the fine at 16% and the percentage to be applied for the purposes of calculating the additional amount is 16% of the proxy for the value of sales. |
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(24)

2.5.2.   Adjustment to the basic amount: aggravating or mitigating circumstances

| (25) | There are no aggravating or mitigating circumstances. |
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(25)

2.5.3.   Specific amount for deterrence

| (26) | In determining the amount of the fines, the Commission pays particular attention to the need to ensure that fines have a sufficiently deterrent effect and has discretion to apply a deterrence multiplier provided that it does not discriminate among parties to the case. In particular, the Commission may increase the fines to be imposed on undertakings which have a particularly large turnover beyond the sales of goods or services to which the infringement relates. On this basis, and taking into account their turnovers in the last business year preceding the Decision, the Commission considers it appropriate to apply a multiplier of 1.3 to the fines to be imposed on BAML, and a multiplier of 1.2 to the fines to be imposed on Crédit Agricole. |
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(26)

2.5.4.   Application of the 10% turnover limit

| (27) | Article 23(2) of Regulation (EC) No 1/2003 provides that the fine imposed on each undertaking for each infringement shall not exceed 10% of its total turnover relating to the business year preceding the date of the Commission decision. |
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(27)

| (28) | In this case, none of the fines exceed 10% of an undertaking’s total turnover relating to the business year preceding the date of this Decision. |
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(28)

2.5.5.   Application of the Leniency Notice

| (29) | The Commission considers that Deutsche Bank is entitled to immunity from any fines that would otherwise have been imposed on it for its involvement in the infringement that is the subject of this Decision. |
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(29)

3.   CONCLUSION

| (30) | The fines imposed pursuant to Article 23(2) of Regulation (EC) No 1/2003 are as follows:






  (a) | Deutsche Bank AG, DB Group Services (UK) Limited and Deutsche Securities Inc., jointly and severally liable: EUR 0; |
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(30)

(a)

Deutsche Bank AG, DB Group Services (UK) Limited and Deutsche Securities Inc., jointly and severally liable: EUR 0;

| (b) | Bank of America Corporation and Merrill Lynch International, jointly and severally liable: EUR 12 642 000; |
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(b)

Bank of America Corporation and Merrill Lynch International, jointly and severally liable: EUR 12 642 000;

| (c) | Crédit Agricole SA and Crédit Agricole Corporate and Investment Bank, jointly and severally liable: EUR 3 993 000; |
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(c)

Crédit Agricole SA and Crédit Agricole Corporate and Investment Bank, jointly and severally liable: EUR 3 993 000;

| (d) | Credit Suisse Group AG and Credit Suisse Securities (Europe) Limited, jointly and severally liable: EUR 11 859 000. |
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(d)

Credit Suisse Group AG and Credit Suisse Securities (Europe) Limited, jointly and severally liable: EUR 11 859 000.

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(1)  Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty, OJ L 1 of 4.1.2003, p. 1, amended by Council Regulation (EC) No 411/2004, OJ L 68 of 6.3.2004, p. 1.

(2)  Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003, OJ C 210 of 1.9.2006, p. 2.

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