Final Report of the Hearing Officer (1)

Case AT.40324 – European Government Bonds

(Text with EEA relevance)

(2021/C 418/07)

1. The draft decision finds an infringement of Article 101 TFEU and Article 53 EEA involving seven undertakings active in sovereign bonds issued in euro by EU Member States that are part of the euro area (European government bonds, or ‘EGB’). These undertakings concerned (also referred to as the ‘parties’) are: — Bank of America; — Natixis; — Nomura; — RBS/NatWest; — UBS; — UniCredit; and — WestLB/Portigon. (2)

2. The case started following an application for immunity from fines by RBS/NatWest on 29 July 2015. RBS/NatWest obtained conditional immunity on 27 January 2016. On 29 June and 30 September 2016 respectively, UBS and Natixis applied for reduced fines in accordance with the ‘Leniency Notice’. (3)

Statement of Objections

3. By decision of 31 January 2019, the Commission initiated proceedings pursuant to Article 2(1) of Regulation 773/2004 ( 4 ) and adopted a statement of objections (the ‘SO’). The SO was notified on 4 February 2019 to the legal entities representing the undertakings concerned ( 5 ) as well as one additional undertaking ( 6 )

Access to file

4. Access to the file in the form of an electronic storage medium was granted between 1 and 4 February 2019, and at the premises of the Directorate-General for Competition (‘DG Competition’) between 7 and 22 February 2019.

5. proxy to the value of sales On 2 May 2019, Nomura submitted a reasoned request to the Hearing Officer, in accordance with Article 7(1) of Decision 2011/695/EU, seeking further access to documents on the file containing data originating from several parties that could form the basis of, or influence, the envisaged calculation of ato the value of sales ( 7 ) as a starting point for determining possible fines in this case. Following the Hearing Officer’s intervention, the relevant information providers reduced the scope of their confidentiality claims in relation to the documents over which Nomura requested further access. DG Competition made available the revised non-confidential versions of the documents concerned to all parties, on 26 June 2019. Only two of the parties submitted comments in writing on the revised non-confidential documents that were provided to each of the parties as a result of Nomura’s request for additional access.

Extensions to deadline for reply to SO

6. DG Competition initially granted the parties a time limit of eight weeks for their written responses to the SO. Following several requests, DG Competition extended the applicable time limits for five of the parties ( 8 ) . No requests for further extensions were received by the Hearing Officer.

7. All parties responded to the SO within the (extended) time limits set by DG Competition.

Oral Hearing

8. All parties participated in an oral hearing that took place from 22 to 24 October 2019.

Fining Methodology Letter and Letter of Facts

9. proxy to the value of sales for each of them (the ‘Fining Methodology Letter’). DG Competition also provided additional information on the fining methodology to these parties by email, on 9 and 10 December 2020 On 6 ( 9 ) and 26 November 2020 ( 10 ) , Executive Vice-President Vestager, Commissioner for Competition, sent letters to the parties on which fines could be imposed ( 11 ) , providing further individual details on the fines methodology with particular attention to the individualised calculation and outcome of the envisagedto the value of sales for each of them (the ‘Fining Methodology Letter’). DG Competition also provided additional information on the fining methodology to these parties by email, on 9 and 10 December 2020 ( 12 )

10. On 12 November 2020, the parties also received a letter of facts (the ‘Letter of Facts’) enabling them to provide their views on factual additions and corrections concerning certain communications that had been presented in the SO (including its Annex). On the same date, the parties received (renewed) access to accessible versions of the underlying evidence contained in the Commission’s investigation file by e-mail ( 13 )

11. DG Competition initially granted the parties time limits of 20 working days to provide comments to each of the above two letters.

12. Following requests, DG Competition extended applicable time limits for comments on the Fining Methodology Letter and on the Letter of Facts ( 14 ) . No requests for further extensions were received by the Hearing Officer.

13. Four of the parties submitted their comments on the Fining Methodology Letter and five of the parties submitted their comments on the Letter of Facts, within the (extended) time limits set by DG Competition in December 2020 and January 2021 ( 15 ) . Four of the parties argued, among other things, that their rights of defence were undermined as the information communicated via the Letter of Facts – and according to two of them also the information communicated via the Fining Methodology Letter – should have been included in a supplementary statement of objections, affording them the opportunity to request an oral hearing.

14. As regards the information communicated via the Letter of Facts, which some of the parties considered to have constituted changes to the (legal assessment in the) SO, the draft decision argues that the Letter of Facts has not added new objections ( 16 ) or otherwise changed the intrinsic nature of the infringement as described in the SO. In particular, the Letter of Facts has not substantially modified the categories or types of communications described in the SO or their legal qualification as together forming part of an overall plan pursuing a common anti-competitive aim and thereby constituting one single and continuous infringement. Rather, the corrections communicated to the parties through the Letter of Facts can be considered equivalent to the dropping of certain evidence, in combination with enabling the parties to be heard on the addition of such facts and/or new facts that were not yet mentioned in the SO ( 17 ) as evidence in support of specific (other) categories or types of communications described in the SO. If anything, it would appear less cumbersome for the parties to exercise their right to be heard on evidence presented in the Letter of Facts that was already brought to their attention at the time of the SO, and with which they had thus already been able to familiarise themselves ( 18 ) , than on documents or evidence that had not yet been mentioned in the SO.

15. Campine judgment of the General Court As regards the information communicated via the Fining Methodology Letter, as argued in the draft decision, thejudgment of the General Court ( 19 ) supports the view that, at the stage of the SO, the Commission was not required to take a final decision on the final method for determining the amount of the fines that it intended to apply and that further clarifications on the fining methodology could be provided by letter rather than in the form of a supplementary statement of objections.

16. In light of the explanations in the draft decision and the considerations above on the parties’ responses to both the Fining Methodology Letter and the Letter of Facts, as well as the fact that there is no fundamental right to be heard orally as long as views can effectively be made known in writing ( 20 ) , and given that Article 12 of Regulation 773/2004 only provides for the right to an oral hearing following a statement of objections, it follows that a second oral hearing was not legally required.

Other procedural issues raised by Bank of America

17. On 15 April 2021, Bank of America addressed a complaint to the Hearing Officer. It submitted that DG Competition had informed Bank of America at an informal meeting on 16 March 2021 that the Commission would no longer rely on a certain element of the alleged infringing conduct on the part of Bank of America. Bank of America argued that if the Commission intended to proceed with the case against it on this basis, such case would be ‘profoundly different to that set out in the SO’ and that it required an opportunity for Bank of America to make written and oral representations on those ‘revised allegations’. Bank of America requested that the Hearing Officer issue certain directions to DG Competition in this respect.

18. On 16 April 2021, the Hearing Officer responded to Bank of America, explaining that its request that the Hearing Officer direct DG Competition to take certain actions did not fall within any of the provisions of Decision 2011/695/EU that grant the Hearing Officer decisional powers and that the Hearing Officer was thus not empowered to adopt the decisions Bank of America requested. Subsequently, Bank of America reiterated essentially the same arguments in further contacts with DG Competition ( 21 ) . In substance, the Hearing Officer considers that the position of Bank of America that the change in assessment communicated by DG Competition breached its right to be heard is unfounded. The fact that the draft decision entails a reduction of the scope of Bank of America’s individual liability for the single and continuous infringement as preliminarily set out in the SO, and further to Bank of America’s arguments in its reply to the SO, does not amount to a breach of the right to be heard.

The Draft Decision

19. Compared to the SO, (i) one of the addressees of the SO has not been retained as an addressee of the draft decision due to lack of sufficient evidence; and (ii) the overall duration of the single and continuous infringement has been shortened by two months and four days in the draft decision (whereas, at the same time, the infringement periods for individual undertakings involved have been shortened accordingly, by up to five months and 16 days).

20. Pursuant to Article 16 of Decision 2011/695/EU, the Hearing Officer has examined whether the draft decision deals only with objections in respect of which the parties have been afforded the opportunity of making known their views, and has come to a positive conclusion.

21. In view of the above, the Hearing Officer considers that the effective exercise of the procedural rights of the parties to the proceedings in this case has been respected.

Brussels, 20 May 2021. Dorothe DALHEIMER

(1) Pursuant to Article 16 of Decision 2011/695/EU of the President of the European Commission of 13 October 2011 on the function and terms of reference of the hearing officer in certain competition proceedings (OJ L 275, 20.10.2011, p. 29) (‘Decision 2011/695/EU’).

(2) Grouped by undertaking, the relevant legal entities are: Bank of America, National Association and Bank of America Corporation (together, interchangeably with the corresponding undertaking, ‘Bank of America’); Natixis S.A. (‘Natixis’); Nomura International plc and Nomura Holdings, Inc. (together, interchangeably with the corresponding undertaking, ‘Nomura’); The Royal Bank of Scotland Group plc, NatWest Markets Plc and NatWest Markets N.V. (together, interchangeably with the corresponding undertaking, ‘RBS/NatWest’); UBS Group AG and UBS AG (together, interchangeably with the corresponding undertaking, ‘UBS’); UniCredit S.p.A. and UniCredit Bank AG (together, interchangeably with the corresponding undertaking, ‘UniCredit’); as well as Portigon AG (previously WestLB AG, ‘WestLB/Portigon’).

(3) Commission Notice on Immunity from fines and reduction of fines in cartel cases (OJ C 298, 8.12.2006, p. 17).

(4) Commission Regulation (EC) No 773/2004 of 7 April 2004 relating to the conduct of proceedings by the Commission pursuant to Articles 81 and 82 of the EC Treaty (OJ L 123, 27.4.2004, p. 18).

(5) See footnote 2 above.

(6) The SO clarified that no fine can be imposed on Bank of America and Natixis, since their conduct as described in the SO falls outside the limitation period of Article 25(1)(b) and (2) of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules laid down in Articles 81 and 82 of the Treaty (OJ L 1, 4.1.2003, p. 1). Recital 11 of Regulation No 1/2003 foresees that the Commission should be able to adopt decisions pursuant to Article 7(1) of Regulation No 1/2003 finding that an infringement has been committed in the past even if it does not impose a fine.

(7) In the SO, it was indicated that although the Commission ‘intends to apply the methodology set out in the Guidelines on fines’, since EGB do not generate any sales in the usual sense, the Commission would apply a specific proxy for the value of sales based on annualised notional amounts of EGB traded, discounted by a certain adjustment factor, as a starting point for the determination of fines.

(8) The extended deadlines for responses to the SO ranged between 23 April and 15 May 2019.

(9) As regards Nomura, RBS/NatWest, UBS, UniCredit and one other undertaking.

(10) As regards WestLB/Portigon.

(11) See footnote 6 above.

(12) This further communication was triggered by Nomura’s request to DG Competition on 2 December 2020 for further details on the fining methodology.

(13) All documents except one had been made accessible before in the context of the access to the file that was granted after the adoption of the SO.

(14) On 24 November 2020, two of the parties had made separate submissions to DG Competition as well, addressing their procedural rights in relation to both the Fining Methodology Letter and the Letter of Facts.

(15) These comments were also transmitted to the cabinet of the Commissioner responsible for competition, to DG Competition’s hierarchy, to the other Commission services following the case, including the Hearing Officer, and to the competent authorities of the Member States ahead of the meeting of the Advisory Committee.

(16) Judgment of the General Court of 24 May 2012, MasterCard and Others v Commission, T-111/08, EU:T:2012:260, paragraphs 266. See also Judgment of the General Court of 9 September 2015, Panasonic v Commission, T-82/13, EU:T:2015:612, paragraph 50.

(17) Judgment of the General Court of 5 October 2020, HeidelbergCement AG and Schwenk Zement KG v Commission, T-380/17, EU:T:2020:471, paragraph 636.

(18) The draft decision also mentions that most of the corrections communicated to the parties via the Letter of Facts had already been identified by the parties themselves.

(19) Judgment of 7 November 2019, Campine and Campine Recycling v Commission, T-240/17, EU:T:219:778, paragraphs 355-360.

(20) See Judgments of the European Court of Human Rights of 23 November 2006 in Jussila v Finland (Application no. 73053/01), paragraphs 40 to 49; of 19 April 2007 in Vilho Eskelinen & Ors v Finland (Application no. 63235/00), paragraphs 72 to 75; and of 23 October 2018 in Produkcija Plus storitveno podjetje d.o.o. v Slovenia (Application no. 47072/15), paragraph 54; and Decision of the European Court of Human Rights of 13 March 2012 in Bouygues Telecom v France (Application no. 2324/08), paragraphs 69 to 71; as well as Orders in Troszczynski v Parliament, C-462/18 P, EU:C:2019:239, paragraphs 52 to 55, in Gollnisch v Parliament, C-330/18 P, EU:C:2019:240, paragraphs 60 and 61, and Judgment in Syrian Lebanese Commercial Bank v Council, T-174/12 and T-80/13, EU:T:2014:52, paragraph 147; and Opinion of Advocate General Wahl in SKW Stahl-Metallurgie v Commission, C-154/14 P, EU:C:2015:543, paragraphs 49 and 58; Judgment in Lucchini v Commission, T-185/18, EU:T:2019:298, paragraph 49; and Judgment in HeidelbergCement and Schwenk Zement v Commission, T-380/17, EU:T:2020:471, paragraph 634.

(21) On 5 May 2021, another informal call between Bank of America and DG Competition took place, followed by a letter by Bank of America to DG Competition on 7 May 2021, of which the Hearing Officer received a copy, in which Bank of America raised the issue again.