2019:675 HSBC Holdings plc and Others v European Commission

Court General Court
Date of ruling 24 September 2019
Case name (short version) HSBC Holdings plc and Others v European Commission
Case Citation T-105/17

ECLI:EU:T:2019:675

Key words Competition — Agreements, decisions and concerted practices — Euro Interest Rate Derivatives sector — Decision establishing an infringement of Article 101 TFEU and Article 53 of the EEA Agreement — Manipulation of the Euribor interbank reference rates — Exchange of confidential information — Restriction of competition by object — Single and continuous infringement — Fines — Basic amount — Value of sales — Article 23(2) of Regulation (EC) No 1/2003 — Obligation to state reasons
Basic context In its judgment in Case T-105/17 HSBC Holdings and Others v Commission, delivered on 24 September 2019, the Tribunal partially annulled the Commission’s decision finding that HSBC Holdings and other undertakings active on the market for euro-denominated interest rate derivatives (the ‚EIRDs‘) had infringed Article 101 TFEU and Article 53 of the Agreement on the European Economic Area (EEA) by having participated in a single and continuous infringement. In the Commission’s view, this infringement consisted of a complex of agreements and/or practices consisting of exchanges between their traders relating, firstly, to the manipulation of Euribor bids, secondly, to trading positions with respect to the EIRD and, thirdly, to detailed non-publicly available information on the EIRDs‘ pricing intentions and strategy. The Commission has accordingly imposed a fine on them.

The applicants brought an action before the Tribunal under Article 263 TFEU seeking, principally, the partial annulment of the contested decision and, in the alternative, a review of the fine.

Points arising – admissibility
Points arising – substance Agreements – Concerted practice – Concept – Exchange of information between competitors – Infringement of competition – Assessment having regard to the nature of the infringement – Information liable to distort the normal course of price components in the relevant sector – Infringement by object – Conditions

Agreements – Infringement of competition – Ancillary restriction – Concept – Restriction necessary to carry out a main transaction not of an anti-competitive nature – Main transaction constituting a restriction of competition by object – Proof of the need for an exchange of information

Agreements – Infringement of competition – Criteria for assessment – Content and objective of an agreement as well as the economic and legal context of its development – Distinction between infringements by object and by effect – Intention of the parties to an agreement to restrict competition – Criterion not necessary – Infringement by object – Sufficient degree of harmfulness – Criteria for assessment – Obligation to state reasons – Scope

Agreements – Prohibition – Offences – Agreements and concerted practices constituting a single offence – Imposition of liability on a company for the entire offence – Conditions – Offending practices and conduct forming part of an overall plan – Assessment

Cartels – Concerted practice – Concept – Exchange of information between competitors – Infringement of competition – Assessment having regard to the nature of the infringement – Information liable to distort the normal course of price components in the relevant sector – Infringement by object – Conditions

Competition – Administrative procedure – Commission decision finding an infringement – Proof of the infringement and its duration to be borne by the Commission – Scope of the burden of proof – Degree of precision required of the evidence accepted by the Commission – Bundle of evidence – Judicial review – Scope – Decision leaving a doubt in the mind of the judge – Respect for the principle of the presumption of innocence

Competition – Administrative procedure – Settlement procedure – Procedure not involving all participants in a cartel – Applicability of the principle of the presumption of innocence – Scope

Action for annulment – Judgment of annulment – Scope – Partial annulment of an act of Union law – Partial annulment of a Commission decision classifying various anti-competitive conduct as a single and continuous infringement and imposing a fine – Insufficient characterisation of the object of the contacts restricting competition – Insufficient evidence to attribute specific conduct to the undertaking – No impact on the legality of the finding of infringement.

Competition – Fines – Decision imposing fines – Obligation to state reasons – Scope – Possibility for the Commission to depart from the Guidelines on Fines – All the more stringent requirements to state reasons

Competition – Fines – Amount – Determination – Fixing of the basic amount – Non-application of the methodology provided for in the Guidelines – Eligibility – Conditions – Replacement value derived from cash receipts subject to a reduction factor – Insufficient reasoning in relation to the determination of the reduction factor

The Tribunal first examined the classification of the various categories of conduct complained of by the Commission as restrictions by object. It noted, first, that the Commission’s reasoning does not contain any error of law or of assessment as regards the conduct relating to the manipulation of bids for Euribor. The same conclusion applied, secondly, to the exchanges concerning the intentions and pricing strategy of the EIRD.

On the other hand, the Tribunal noted, thirdly, that certain discussions during which traders exchanged information on their trading positions did not have the restrictive object of competition accepted by the Commission, since such discussions did not reduce or remove the degree of uncertainty on the market in such a way that the Commission could infer an impact on the normal course of the components of prices in the EIRD sector, without having to examine their effects. The Tribunal therefore held that the contested decision is vitiated by an error of law on that point.

In that regard, however, the Tribunal stated that that error does not affect the legality of the finding that the applicants participated in the infringement at issue, as set out in the contested decision. On the other hand, the Court pointed out that the number and intensity of the infringing conduct characterises, among other factors, the gravity of the infringement on which the amount of the fine depends

In the context of the assessment of the amount of the fine, the Tribunal was called upon to rule on the Commission’s choice to adapt the methodology set out in the 2006 Guidelines{2} as regards the determination of the basic amount by reference to the value of sales, since EIRDs do not generate sales in the usual sense of the term. In the context of its examination, the Tribunal found that the Commission relied on a replacement value calculated on the basis of the cash receipts received from the EIRDs to which a reduction factor of 98.849% was applied, intended to take account of the compensation inherent in the EIRD sector linked to the payments made. However, the Tribunal stressed that the reduction factor plays a key role because of the particularly high amount of cash receipts to which it is intended to apply.

The Tribunal concluded that, in view of the essential role played by the reduction factor in the context of the method followed by the Commission, the statement of reasons for the contested decision must enable the undertakings concerned to understand how the Commission arrived at a reduction factor set precisely at 98.849 % and enable the Tribunal to exercise a detailed review, in law and in fact, of that element of the contested decision. However, the various justifications put forward by the Commission in the contested decision did not satisfy those requirements. The Tribunal therefore annulled the contested decision in so far as it imposed a fine of EUR 33 606 000 on the applicants on the ground of inadequate reasoning.

{1 Decision C(2016) 8530 final of 7 December 2016 relating to a proceeding under Article 101 [TFEU] and Article 53 of the [EEA] Agreement (Case AT.39914 – Euro Interest Rate Derivatives (EIRD)).

{2 Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003 (OJ 2006 C 210, p. 2, hereinafter the ‚2006 Guidelines‘).

Intervention
Interim measures
Order
  1. Annuls Article 2(b) of Commission Decision C(2016) 8530 final of 7 December 2016 relating to a proceeding under Article 101 TFEU and Article 53 of the EEA Agreement (Case AT.39914 — Euro Interest Rate Derivatives (EIRD));
  2. Dismisses the action as to the remainder;
  3. Orders HSBC Holdings plc, HSBC Bank plc and HSBC France to bear their own costs;
  4. Orders the European Commission to bear its own costs.
Fine changed
Case duration 2 years 7 months
Judge-rapporteur Prek
Notes on academic writings

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