Summary of Commission Decision of 4 December 2013 (Case AT.39861 — Yen Interest Rate Derivatives) (notified under document C(2013) 8602)
Date: 2013-12-04
Institutions: European Commission
Subjects: Japan, bank, exchange of information, exchange rate, foreign currency, interest, restriction on competition, sanction (EU), trade information








C_2016348EN.01001401.xml










23.9.2016   


EN


Official Journal of the European Union


C 348/14





Summary of Commission Decision
of 4 December 2013
(Case AT.39861 — Yen Interest Rate Derivatives)
(notified under document C(2013) 8602)
(Only the English text is authentic)
(2016/C 348/10)

On 4 December 2013, 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 creating 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.

1.   INTRODUCTION









(1)


The Decision relates to seven bilateral infringements. The addressees of this Decision participated in one or more separate infringements of Article 101 of the Treaty and Article 53 of the EEA Agreement.












(2)


The object of each of the infringements was the restriction and/or distortion of competition in relation to Japanese Yen Interest Rate Derivatives (hereinafter referred to as ‘Yen Interest Rate Derivatives’ or ‘YIRDs’), referenced to the Japanese Yen LIBOR (hereinafter referred to as ‘JPY LIBOR’), and in the case of one of the infringements, also YIRDs referenced to the Euroyen TIBOR.












(3)


The JPY LIBOR and Euroyen TIBOR are important reference interest rates for many financial instruments denominated in Japanese Yen. The JPY LIBOR is set by the British Bankers Association (BBA) and the Euroyen TIBOR is set by the Japanese Bankers Association (JBA). The rates are set daily for different tenors (loan maturities) on the basis of submissions from banks that are members of the JPY LIBOR and Euroyen TIBOR panels. These banks are asked to submit each business day, before a certain time, estimates of interest rates at which they believe they could borrow unsecured funds in a reasonable market size on the London interbank money market (in the case of JPY LIBOR) or estimates of what they believe to be prevailing market rates for transactions between prime banks on the Japan offshore market (in the case of Euroyen TIBOR) for various tenors. The BBA and JBA then calculate, on the basis of an average of these submissions, while excluding the 4 (in the BBA's case) and 2 (in the JBA's case) highest and lowest submissions, the daily JPY LIBOR and Euroyen TIBOR rates for each tenor. The resulting rates are immediately published and available to the public each business day.












(4)


JPY LIBOR and Euroyen TIBOR rates are, inter alia, reflected in the pricing of YIRDs, which are globally traded financial products used by corporations, financial institutions, hedge funds, and other undertakings to manage their interest rate risk exposure (hedging, for both borrowers and investors) or for speculation purposes.












(5)


The most common YIRDs are: (i) forward rate agreements, (ii) interest rate swaps, (iii) interest rate options, and, (iv) interest rate futures. YIRDs may be traded over the counter or, in the case of interest rate futures, exchange traded.












(6)


This Decision is addressed to (hereinafter ‘the addressees’):






—


UBS AG and UBS Securities Japan Co., Ltd (hereinafter collectively ‘UBS’).










—


The Royal Bank of Scotland Group plc and The Royal Bank of Scotland plc (hereinafter collectively ‘RBS’);










—


Deutsche Bank Aktiengesellschaft (hereinafter ‘Deutsche Bank’ or ‘DB’);










—


Citigroup Inc. and Citigroup Global Markets Japan Inc. (hereinafter collectively ‘Citigroup’ or ‘Citi’);










—


JPMorgan Chase & Co. and JPMorgan Chase Bank, National Association and J.P. Morgan Europe Limited (hereinafter collectively ‘JPMorgan’ or ‘JPM’);










—


R.P. Martin Holdings Ltd and Martin Brokers (UK) Ltd (hereinafter collectively ‘RP Martin’).








2.   CASE DESCRIPTION

2.1.   Procedure









(7)


The case was opened on the basis of an immunity application by UBS on 17 December 2010. On 20 April 2011, the Commission sent requests for information to a number of undertakings active in the YIRD sector. On […], Citigroup submitted an application for immunity and or leniency. On […], Deutsche Bank applied for a reduction of fines. On […], RP Martin applied for a reduction of fines. On […], RBS applied for a reduction of fines.












(8)


On 12 February 2013, the Commission initiated proceedings pursuant to Article 11(6) of Regulation (EC) No 1/2003 against UBS, RBS, Deutsche Bank, Citigroup, JPMorgan, RP Martin and on 29 October 2013 against ICAP.












(9)


Settlement meetings with the addressees of the present decision took place and subsequently the settling parties submitted to the Commission their formal requests to settle pursuant to Article 10a(2) of Regulation (EC) No 773/2004 (2), solely for the purpose of reaching a settlement with the Commission in the present proceeding and without prejudice to any other proceedings (the ‘settlement submissions’).












(10)


On 29 October 2013, the Commission adopted a Statement of Objections addressed to UBS, RBS, Deutsche Bank, Citigroup, JPMorgan and RP Martin, all of which confirmed that it reflected the contents of their settlement submissions and that they remained committed to following the settlement procedure. The Advisory Committee on Restrictive Practices and Dominant Positions issued a favourable opinion on 29 November 2013 and the Commission adopted the Decision on 4 December 2013.




2.2.   Addressees and duration









(11)


In this case, the Commission has identified the following seven bilateral infringements distinct and separate from one another and the duration of the undertakings' involvement in each of the infringements is as follows:






(a)


‘UBS/JPM 2007 infringement’ between UBS and JPMorgan;






—


UBS: 19 January 2007 – 21 February 2007










—


JPMorgan: 19 January 2007 – 21 February 2007














(b)


‘UBS/RBS 2007 infringement’ between UBS and RBS, […];






—


UBS: 8 February 2007 – 1 November 2007










—


RBS: 8 February 2007 – 1 November 2007














(c)


‘UBS/RBS 2008 infringement’ between UBS and RBS, […];






—


UBS: 7 May 2008 – 3 November 2008










—


RBS: 7 May 2008 – 3 November 2008














(d)


‘UBS/DB 2008-09 infringement’ between UBS and Deutsche Bank, facilitated by […] RP Martin;






—


UBS: 18 September 2008 – 10 August 2009










—


Deutsche Bank: 18 September 2008 – 10 August 2009










—


RP Martin: 29 June 2009 – 10 August 2009














(e)


‘Citi/RBS 2010 infringement’ between Citigroup and RBS, […];






—


Citigroup: 3 March 2010 – 22 June 2010










—


RBS: 3 March 2010 – 22 June 2010














(f)


‘Citi/DB 2010 infringement’ between Citigroup and Deutsche Bank, […];






—


Citigroup: 26 March 2010 – 18 June 2010










—


Deutsche Bank: 26 March 2010 – 18 June 2010














(g)


Citi/UBS 2010 infringement:






—


Citigroup: 28 April 2010 – 3 June 2010










—


UBS: 28 April 2010 – 3 June 2010




















(12)


ICAP is not an addressee of the Decision, which is based on matters of fact as accepted only by the addressees of this Decision. Therefore, the Decision does not establish any liability of ICAP for any participation in an infringement of EU competition law in this case (3).




2.3.   Summary of the infringements

2.3.1.   The anticompetitive practices of the participating banks









(13)


The parties (banks) to the respective infringements engaged in the following anticompetitive practices:






(a)


Traders of the banks participating in the respective infringements on certain occasions discussed directly […] the JPY LIBOR submissions for certain tenors of at least one of the respective banks, in the understanding that this might be beneficial to the YIRD trading positions of at least of one of the traders involved in the communications. To this end, at least one of the traders approached, or indicated a willingness to approach, the JPY LIBOR submitters at his respective bank to request a submission to the BBA towards a certain direction or on a few occasions at a specific level.










(b)


Traders of the banks participating in the respective infringements communicated and/or received from each other […], on certain occasions, commercially sensitive information relating either to trading positions or to the future JPY LIBOR submissions of at least one of their respective banks. In the Citi/UBS 2010 infringement, this communication and/or receipt of information related also to certain future Euroyen TIBOR submissions of at least one of the respective banks.
















(14)


In the UBS/DB 2008-09 infringement UBS and Deutsche Bank, in order to facilitate the anticompetitive practices described in above, also explored the possibility of executing trades designed to align their YIRD trading interests, and may on a few occasions have entered into such trades.




2.3.2.   Facilitation of the different infringements […]









(15)


RP Martin facilitated the UBS/DB 2008-09 infringement in the period from 29 June 2009 until 10 August 2009, whereby at the request of UBS, RP Martin promised to, and at least on a few occasions did, contact a number of JPY LIBOR panel banks that did not participate in the infringement, with the aim of influencing their JPY LIBOR submissions. Deutsche Bank was not aware of this circumstance.












(16)


[…].












(17)


[…].












(18)


[…].












(19)


[…].




2.3.3.   Geographic scope









(20)


The geographic scope of each of the seven infringements and for all the respective participants therein covered the entire EEA.




2.4.   Remedies









(21)


The Decision applies the 2006 Guidelines on Fines (4). The Commission imposes fines on the undertakings to which this Decision is addressed.




2.4.1.   Basic amount of the Fine









(22)


The basic amount of the fine to be imposed on UBS, JPMorgan, RBS, Citigroup and Deutsche Bank is to be set by reference to the value of sales, the fact that each of the seven infringements is, by its very nature, among the most harmful restrictions of competition, the duration and geographic scope of each of the seven infringements, the fact that the collusive activities related to financial benchmarks and an additional amount to deter undertakings from entering into such illegal practices.












(23)


The Commission normally takes the sales made by the undertakings during the last full business year of their participation in the infringement (5). It may however depart from this practice, should another reference period be more appropriate in view of the characteristics of the case (6).












(24)


With respect to each of the seven infringements, the Commission calculates the annual value of sales for UBS, JPMorgan, RBS, Citigroup and Deutsche Bank, on the basis of the cash received on the products covered by the respective infringements from EEA counterparties in the months covered by the respective infringements, which are subsequently annualized. In the case of UBS the amounts calculated on this basis are reduced by an appropriate factor to take account of the partial temporal overlaps of some infringements, which otherwise relate to the same product and geographic scope. Similarly, in the case of Citigroup, the amounts calculated are reduced for the same reasons.












(25)


These values of sales are discounted by a uniform factor to take account of the particularities of the YIRD industry, such as the netting inherent in this industry, meaning that banks both sell and buy derivatives so that the incoming payments are netted against outgoing payments.












(26)


The Guidelines on fines provide only limited guidance on the calculation of the fines which can be imposed on facilitators like RP Martin. As a result, the basic amount for RP Martin is determined in accordance with the requirements of Regulation (EC) No 1/2003, the case-law and paragraph 37 of the 2006 Guidelines on fines, reflecting the gravity, duration and nature of its involvement (as a facilitator), as well as the need to ensure that fines have a sufficiently deterrent effect.




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









(27)


The Commission does not apply any aggravating circumstances.












(28)


The Commission takes Deutsche Bank's lack of awareness of […] possible participation and RP Martin's participation as facilitators in the UBS/DB 2008-09 infringement and […] possible participation in the Citi/DB 2010 infringement, as described above, as a mitigating circumstance. Therefore, the fine to be imposed on Deutsche Bank for each of these infringements is reduced by 10 %.












(29)


Similarly, the Commission takes RBS's lack of awareness of […] possible participation as a facilitator in the UBS/RBS 2007 and UBS/RBS 2008 infringements, as described above, as a mitigating circumstance. Therefore, the fine to be imposed on RBS for each of these infringements is reduced by 10 %.












(30)


Finally, the Commission similarly takes UBS's lack of awareness of […] possible participation as a facilitator in the Citi/UBS 2010 infringement, as described above, as a mitigating circumstance. Therefore, the fine to be imposed on UBS for this infringement is reduced by 10 %.




2.4.3.   Application of the 10 % turnover limit









(31)


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.












(32)


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.




2.4.4.   Application of the Leniency Notice









(33)


The Commission granted full immunity from fines to UBS for each of the infringements in which it participated. The Commission also granted immunity from fines to Citigroup for the Citi/DB 2010 infringement.












(34)


For their cooperation in the investigation, the Commission also granted the following reductions of fines:






—


Citigroup: a 40 % reduction of the fine for the Citi/RBS 2010 infringement and a 35 % reduction for the Citi/UBS 2010 infringement;










—


Deutsche Bank: a 35 % reduction of the fine for the UBS/DB 2008-09 infringement and a 30 % reduction for the Citi/DB 2010 infringement;










—


RP Martin: a 25 % reduction for the UBS/DB 2008-09 infringement;










—


RBS: a 25 % reduction of the fine for the Citi/RBS 2010 infringement.








2.4.5.   Application of the Settlement Notice









(35)


As a result of the application of the Settlement Notice, the amount of the fines to be imposed on UBS, RBS, Deutsche Bank, Citigroup, JPMorgan, and RP Martin is reduced by 10 % and this reduction is added to their leniency reward.




3.   CONCLUSION

3.1.   Conclusion: final amount of individual fines to be imposed in this Decision









(36)


The following fines are imposed pursuant to Article 23(2) of Regulation (EC) No 1/2003:
UBS/JPM 2007 infringement






Undertaking


Fines (in EUR)




UBS


0




JPMorgan


79 897 000 







UBS/RBS 2007 infringement






Undertaking


Fines (in EUR)




UBS


0




RBS


24 154 000 







UBS/RBS 2008 infringement






Undertaking


Fines (in EUR)




UBS


0




RBS


38 452 000 







UBS/DB 2008-09 infringement






Undertaking


Fines (in EUR)




UBS


0




Deutsche Bank


195 031 000 




RP Martin


247 000 







Citi/RBS 2010 infringement






Undertaking


Fines (in EUR)




Citigroup


47 795 000 




RBS


197 450 000 







Citi/DB 2010 infringement






Undertaking


Fines (in EUR)




Citigroup


0




Deutsche Bank


64 468 000 







Citi/UBS 2010 infringement






Undertaking


Fines (in EUR)




Citigroup


22 225 000 




UBS


0










(1)  OJ L 1, 4.1.2003, p. 1.

(2)  Council 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 Treaty establishing the European Community (OJ L 123, 27.4.2004, p. 18).

(3)  […].

(4)  OJ C 210, 1.9.2006, p. 2.

(5)  Point 13 of the Guidelines on fines.

(6)  Case T-76/06, Plasticos Españoles (ASPLA) v Commission, not yet reported, paragraphs 111-113.