Coordination and information exchanges in financial markets. What comes first the chicken or the egg?

Intervention by competition authorities in financial markets is a complex and delicate task, given that financial service providers act not only as competitors but also as counterparties, intermediaries, and cooperation partners. In this context, contacts and information-sharing are necessary to create efficiencies such as the reduction of capital costs and transaction costs, or innovation and risk management.

This paper published on IE Legal Hub – Law Ahead explores the different approaches that have been proposed to tackle illegal coordination without hindering necessary information flows.

For instance, competition authorities in the United Kingdom (UK) have shown more willingness to characterise information exchanges as restrictions by object in themselves without need to identify an overarching agreement but relying on the presumption of causal connection to subsequent conduct.

Contrariwise, the European Commission appears to treat information exchanges as instrumental to broader pre‑existing coordination rather than ascertaining whether they could effectively constitute concerted practices in their own right. This would arguably relax the standard for information exchanges to constitute concerted practices – which might have already resulted in at least one judicial setback in case T-180/15 Icap and others v Commission.

Besides, the Spanish and Portuguese authorities have opted for a more nuanced approach, respectively, by placing the emphasis on the competitive outcome of the joint setting of conditions by competitors, and by accepting commitments in order to preserve potentially efficient information-sharing systems.

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