Many readers will know that the US Supreme Court has agreed to hear an appeal by Plaintiffs whose antitrust claims over LIBOR manipulation were dismissed last year by New York Southern District Judge Naomi Buchwald.
Even if the appeal fails, as we reported at the time, the Buchwald decision would not be mirrored in England because of differences between European and US antitrust laws.
This was confirmed last December when the European Commission fined a group of banks €1.71 billion for infringement of antitrust laws in their manipulation of LIBOR and another interest rate benchmark, EURIBOR.
In England (although not elsewhere in Europe) such decisions by antitrust regulators are binding on the Courts, so “follow-on” damages actions can bypass the liability phase of trial, jumping straight to questions of causation and quantification of damage.
Last December’s fines were the result of a settlement, but the antitrust settlement regime requires admission, so it still provides a basis for follow-on actions. That said, settling parties get to co-draft the decision, so they are able to weed out material that would assist such actions. The LIBOR and EURIBOR decisions are, as yet, still unavailable.
Also, the LIBOR decision concerned manipulation only of Yen LIBOR – not Sterling, Euro or Dollar – and in limited chronological periods. Some suspect Yen LIBOR was chosen as a comparatively unpopular benchmark to allow the Commission to flex its regulatory muscle whilst permitting the banks to settle with limited risk of follow-on claims.
Still, one alleged infringer, ICAP, has not settled. The scope of the investigation has not been published. It could be wider than Yen and, if ICAP is found to have infringed, the Commission will have a free rein in drafting its decision. The outgoing Competition Commissioner has said he wants the investigation concluded by the time he leaves office in October.
To assist antitrust claims in England, a US-style opt-out class actions regime is being introduced. The Court which will hear such claims is having its jurisdiction expanded. Presently it can only hear follow-on claims, but it will be able to hear standalone claims, or hybrid claims, so Claimants who piggyback a regulator’s decision will not find themselves stymied if their case strays outside the four corners of that decision.
It is unclear if the decision against the LIBOR settling parties will permit any meaningful follow-on claim but, if nothing else, the decision shows that the problem encountered by Plaintiffs before Judge Buchwald – that manipulation did not, as a matter of law, permit antitrust damages – is not a problem that would be encountered in a standalone action in England.