Under EU case-law, the burden of proof with respect to the establishment of participation by an undertaking in an infringement and liability for all of its constituent elements is on the Commission. To that end, the Commission has to prove that the undertaking concerned intended to contribute by its own conduct to the common objectives pursued by all the participants and that it was aware of the actual conduct planned or put into effect by other undertakings in pursuit of the same objectives or that it could reasonably have foreseen it and that it was prepared to take the attendant risk.
Before the General Court ("GC"), Icap, a broker, challenged the Commission's finding that it was involved with a number of banks in the Yen interest rate derivatives cartel case as a "facilitator" (T-180/15, Icap and Others). The GC examined whether Icap had knowledge of the collusion, whether Icap had actually contributed to the common objectives pursued by the colluding banks, and whether Icap had intended to contribute. For the reasons explained below, the GC concluded that all three conditions were met, thus confirming the Commission's decision in that regard.
First, Icap argued that it did not have knowledge of, and could not have reasonably foreseen, the conduct planned or put into effect by the banks that were involved in the infringement. In particular, Icap claimed that the requests received from two of the banks, UBS and Citi, could reasonably have been understood to have been unilateral attempts to manipulate the Yen Libor rates, rather than evidence of collusion. The GC agreed that these requests by themselves did not imply collusion, but nonetheless held that other communications between Icap and the banks demonstrated that Icap should have inferred the existence of collusion on the part of the banks.
Second, Icap argued that its conduct was so different from that of the banks that it could not have contributed to the common objectives of the cartel. For example, Icap claimed a distinction had to be made between the conduct of the banks in manipulating their own Libor submissions, and the conduct of Icap in attempting to manipulate the Libor submissions of other banks on the Libor panel. The GC disagreed, holding that the conduct was highly complementary: the facilitation of interest rate manipulation had a higher chance of success due to Icap's role in compiling the various banks' submissions and therefore contributed to the common objectives pursued by all parties to the cartel.
Finally, the GC concluded that Icap intended to contribute to the common objectives of the cartel. The fact that Icap had knowledge of (or could have reasonably foreseen) the collusion between the banks, and the "very high degree of complementarity" between the conduct of Icap, on one hand, and the conduct of the banks, on the other hand, were sufficient to impute intention.
Yen interest rate derivatives cartel case – breach of the principles of presumption of innocence and good administration
The principle of the presumption of innocence is a general principle of EU law enshrined in Article 48(1) of the Charter of Fundamental Rights. It applies to procedures relating to infringements of the competition rules applicable to undertakings that may result in the imposition of fines or periodic penalty payments. The principle of the presumption of innocence implies that every person accused is presumed to be innocent until his/her guilt has been established according to law.
In the Yen interest rate derivatives cartel case, the Commission followed a "hybrid" procedure whereby it first adopted a settlement decision in 2013 against a number of banks (the "Settlement Decision"), and then an infringement decision in 2015 against Icap who had not settled with the Commission (the "Infringement Decision"). Icap submitted that the Commission's Infringement Decision should be annulled because it breached the principle of the presumption of innocence and the principle of good administration as the Commission took a position on Icap's liability for facilitation of the infringement in the Settlement Decision.
In its judgment, the GC noted that the Commission described in the Settlement Decision how Icap had "facilitated" the unlawful conduct imputed to the banks taking part in the settlement procedure, albeit in the part of the decision setting out the facts. The GC stated that, while the Settlement Decision did not make any finding regarding the legal qualification of Icap's liability for its conduct, the Commission's position on that issue could nonetheless be easily inferred from it. Notably, the GC held that the rapidity and efficiency of the settlement procedure do not justify the distortion of the principle of the presumption of innocence, no matter how laudable those objectives may be. The GC considered that the Commission should conduct its settlement procedure in a manner that is compatible with the requirements of Article 48 of the Charter of Fundamental Rights.
The GC also clarified that, in the case of "hybrid" settlements, the Commission is entitled to adopt: (i) under a simplified procedure, a decision addressed to the parties who decide to enter into a settlement and (ii) under the standard infringement procedure, a decision addressed to those who decide not to settle. The GC emphasised that the implementation of this hybrid procedure must be carried out in accordance with the presumption of innocence of the party that has decided not to take part in the settlement.
The GC further explained that, when the Commission is not in a position to determine the liability of settling parties without also taking a view on the participation in the infringement of non-settling parties, the Commission should take "necessary measures". One solution used in the Animal Feed Phosphate cartel case in relation to Timab (see VBB on Competition Law, Volume 2015, No. 5, available at www.vbb.com) was the adoption of simultaneous decisions relating to all undertakings concerned by the cartel on the same date, which enabled the presumption of innocence to be safeguarded.
In addition, under the principle of good administration enshrined in Article 41 of the Charter of Fundamental Rights, every person has the right to have his or her affairs handled impartially by the institutions of the European Union. The GC recalled that the Commission is required to respect this right during the administrative procedure relating to anticompetitive practices.
Finally, the GC examined whether the breach by the Commission of Icap's presumption of innocence and the principle of good administration at the time of the adoption of the Settlement Decision would be capable of vitiating the Infringement Decision. The GC concluded that the irregularity arising from a possible lack of objective impartiality on the part of the Commission could not have had an impact on the substance of the Infringement Decision as the Commission had established Icap's participation in the infringements to the requisite legal standard. The GC therefore dismissed Icap's claim that the Infringement Decision should be annulled on the basis of a breach of the principle of good administration.
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