Whish expects DG Comp not to stagger hybrid settlements

Janith Aranze

09 July 2018

Whish expects DG Comp not to stagger hybrid settlements

Photo Credit: Ridhiin Pancchmatia

In the wake of having a fine voided for breach of defence rights, the European Commission is unlikely “for the time being” to adopt staggered hybrid settlements, a leading expert has said. Janith Aranze at GCR Live Brussels

King’s College London emeritus professor Richard Whish said today that the European Union’s Directorate-General for Competition finds itself in an interesting situation on staggered hybrid settlements after the ICAP ruling. He said he doubts the commission will continue to engage in such settlements, in which some defendants reach an agreement with the enforcer and it then issues infringement decisions against other defendants.

“My expectation is [DG Comp], for the time being, will not do a staggered hybrid settlement,” Whish said.

The commission settled allegations of manipulation of the London Interbank Offered Rate on interest rate derivatives denominated in yen with seven banks and broker RP Martin for €1.7 billion in 2013. However, the broker ICAP – accused of facilitating the alleged manipulation –  refused to settle and DG Comp issued an infringement decision against it in 2015.

The broker argued on appeal that DG Comp sent it a statement of objections asking it to detail its position after the enforcer had already issued a settlement decision outlining how ICAP allegedly had facilitated illegal conduct. The commission breached the company’s presumption of innocence when it inferred the broker facilitated the infringement in its 2013 settlement decision, ICAP said.

Last year, the EU’s General Court agreed that ICAP’s liability could easily be inferred from a reading of the 2013 decision, and held that hybrid settlements must respect non-settling defendants. The court quashed €14.9 million fines on ICAP.

The General Court explicitly said DG Comp needs to address this issue, and do what it did in Animal Phosphates, where it adopted simultaneous settlement and infringement decisions, Whish noted today. He said the court did not need to go as far as it did, and “in a sense it seems slightly gratuitous, but they did say it.”

Whish noted that truck maker Scania, in appealing against its €880.5 million fine for its involvement in the trucks cartel, also raises a breach of presumption of innocence. Scania was fined 14 months after five other truck manufacturers settled with DG Comp for €2.93 million.

“Presumably [the commission] has to make a policy decision” whether to still pursue staggered hybrid settlements, said Whish, or think to itself “is the suggestion of the General Court so clear that we really ought to abandon staggered hybrid cases.”

He said the abandonment of staggered hybrid settlements could be “frustrating” for companies that wish to close the file on a case by settling, but one of the accused refuses to do so.

“The case will have to go on for maybe a couple more years so you can have contemporaneous decisions. I think it is all a rather intriguing situation,” Whish said.

Asked if publishing infringement and settlement decisions simultaneously is a “cosmetic way” of dealing with the problem, Whish questioned if the commission could have written the yen Libor settlement decision in a way that didn’t refer to ICAP.

“The court is very emphatic. Maybe the answer is to adopt on the same date all the decisions, that is what the court says,” he said.

Whish gave the keynote address at GCR Live: Big Brussels today; the conference concludes tomorrow.

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