On 5 April 2019, the European Commission (Commission) published its massively detailed report on EU loan syndication and its impact on competition in credit markets. This long anticipated report focussed on two areas of syndicated lending (i.e. leveraged buy-outs and project/infrastructure finance) in six EU Member States.
The report has identified several competition law risks arising across the different stages of the loan syndication process. The risks identified are among others:
- the unlawful exchange of information during market sounding;
- the abuse of market power by consortia during the formation of the lead banking group;
- the risk around the provision of ancillary services (such as hedging);
- potential conflicts of interest when relying on debt advisors; and
- coordination between underwriting banks in the secondary loan market.
The risks differ based on the structure of the deal. Not only lenders but also sponsors and providers of ancillary services should take the findings into account.
Over the years it has been an established practice from the Commission to launch in-depth investigations into allegedly anti-competitive practices following its publication of an industry report (e.g. Commission launched three investigations into suspected anti-competitive practices in e-commerce shortly after its publication of its final report on the e-commerce sector inquiry).