Brussels accuses Deutsche Bank and Rabobank of acting like a cartel in the bond market

The European Commission has today accused the banks Deutsche Bank and Rabobank of forming a cartel to distort competition in the euro-denominated sovereign debt market, through the exchange of sensitive information and other practices contrary to the rules of the European Union between the 2005 and 2016.

Thomas Osborne
Thomas Osborne
06 December 2022 Tuesday 08:40
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Brussels accuses Deutsche Bank and Rabobank of acting like a cartel in the bond market

The European Commission has today accused the banks Deutsche Bank and Rabobank of forming a cartel to distort competition in the euro-denominated sovereign debt market, through the exchange of sensitive information and other practices contrary to the rules of the European Union between the 2005 and 2016.

In the statement of objections sent to the two entities, the Community Executive informs them of its suspicions regarding the fact that during those years they used intermediaries to exchange "sensitive" commercial information and coordinated their pricing and negotiation strategies for the negotiations in the Secondary sovereign debt market in the European economic area.

The contacts occurred mainly by mail and by messages in different discussion forums, according to the community services, which are now opening the period for the indicated parties to respond to the accusations. The Community Executive initially tried to reach an agreement with the two financial entities but the lack of progress led it to resume the formal procedure and continue with the case, the community institution itself reported in a statement.

"In order to guarantee effective competition, it is essential that economic operators determine their prices independently. Citizens must be able to be sure that financial institutions do not employ practices that restrict competition in bond trading markets," said the Vice President of the European Commission responsible for Competition, Margrethe Vestager.

After this formal communication, the period opens for Deutsche Bank and Rabobank to present their allegations, although Brussels does not have a set deadline to examine their responses and make a decision. This is the third investigation opened by community services for anti-competitive practices in the debt market. In the event that the file concludes in a decision contrary to the companies, the Community Executive has the margin to impose a fine of up to 10% of the annual worldwide turnover of those sanctioned.

This is the third EU investigation involving cartels affecting the trading market of the gigantic bond market, which moves billions of euros annually. In April 2021, the Commission fined three investment banks a total of €28 million for participating in a US dollar-denominated bond trading cartel. In May 2021, the Community Executive discovered that seven investment banks participated in a European government bond trading cartel and imposed fines totaling 371 million euros.