Lessons for Multinational Companies from the LIBOR Investigations: Observations from an Antitrust Perspective

Grant Murray, Douglas Tween, Nov 28, 2012

Hordes of enforcers across the world, including financial regulators, fraud investigators, and antitrust authorities, are looking into the alleged manipulation of LIBOR and other benchmark interest rates. Because a large number of well-known banks have been embroiled in the investigations, and because of the potential impact of manipulating indices used for trillions of dollars worth of derivative transactions and as a reference point for consumer lending products all over the world, the investigations have attracted enormous media and public interest.

So far little has been said of the antitrust issues. Recognizing that the full facts are yet to come to light, and so it would be premature to draw any conclusions, this article explores the lessons that might be learned from an antitrust perspective. These lessons apply far beyond banks and financial institutions and are relevant for any multinational company.

First, there is the phenomenon of “cascading cartels,” described in detail below. Second, there are the technical challenges of coordinating applications for leniency and “leniency plus” in multiple jurisdictions with different rules and practices. Third, there is the warning that enforcers are cooperating and coordinating, not only across jurisdictions, but now across disciplines as well. Fourth, there is the reality that benchmarking and exchanging information with competitors can bear substantial antitrust risks if not carried out in compliance with applicable laws and monitored closely. Finally, there are the lessons that intent is objective and that working in concert with regulators provides no defense in cartel cases.

The article concludes with suggestions for multinational companies to improve their compliance efforts by improving risk assessment, targeting training at appropriate employees, and considering the use of screens to detect collusion.

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