Federal Court Imposes Penalties on ANZ and Macquarie Bank for Attempted Cartel Conduct

Thursday 15 December 2016 @ 9.48 a.m. | Trade & Commerce

The Federal Court has handed down multi-million dollar penalties for Australia and New Zealand Banking Group Limited (ANZ) and Macquarie Bank Ltd (Macquarie) for attempted Cartel Conduct after action by the Australian Competition and Consumer Commission (ACCC).

Following the filing of joint statements of facts and submissions by the parties, Justice Wigney imposed penalties of:

  • $9 m against ANZ in respect of its admission that it engaged in 10 instances of attempted cartel conduct in contravention of the Competition and Consumer Act 2010 (Cth) (the Act); and
  • $6 m against Macquarie in respect of its admission that it engaged in eight instances of attempted cartel conduct in contravention of the Act.

Both banks must also pay a lump sum of $200,000 each in respect of the ACCC's costs.

Background to the Case

As previously reported by TimeBase, during November 2016, the two banks admitted to attempted cartel conduct and it was alleged that traders employed by a number of banks in Singapore communicated via online chatrooms about daily submissions to be made to the Association of Banks in Singapore (ABS) in relation to the benchmark rate for the Malaysian ringgit (ABS MYR Fixing Rate) and that during 2011, ANZ and Macquarie traders attempted to make arrangements with other banks to make high or low submissions to the ABS MYR Fixing Rate. During the relevant period, the ABS MYR Fixing Rate was derived from submissions made each day by a panel of banks.

The rate would ultimately affect settlement payments for MYR denominated non-deliverable forward contracts (NDFs). The banks agreed that three ANZ traders – Wei Ewen Chew, Wai Theng Hooi and Joo Heng Tan – and one Macquarie trader – Istvan Loh based in based in Singapore – tried to manipulate the benchmark rate using the Bloomberg and Reuters chat rooms.

Justice Wigney used the opportunity to set the penalties in line with those proposed by the ACCC and the banks, which have co-operated with the investigation.

The Judgment

In his judgment, His Honour stated:

“There could be little doubt that the attempted contraventions … were very serious ... The conduct of the traders in question was deliberate and systematic. Attempts by banks and other market participants to fix prices or financial benchmarks in the financial system should be regarded as particularly serious contravening conduct. It is essential that market participants and the public generally have confidence in the integrity and efficacy of the financial system.”

His Honour said the fines proposed by the ACCC and banks were "towards the very bottom of the permissible range of appropriate penalties." However, he agreed to the fines proposed partly because the banks had cooperated with the ACCC's investigation, had shown contrition, and could generally be considered "good corporate citizens."

The ACCC’s Response

The ACCC Chairman Rod Sims, said in an ACCC Media Release:

“These penalties underline the seriousness of the conduct involved in these proceedings. Two significant Australian banks have admitted that on several occasions their traders communicated with other banks in an attempt to influence the ABS MYR Fixing Rate. This conduct had the potential to undermine the integrity of foreign exchange markets and undermine healthy economic growth. Australia’s strong cartel laws apply equally across the economy, including in the banking sector.”

TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products.

Sources:

Federal Court imposes multi-million dollar penalties on ANZ and Macquarie Bank for attempted cartel conduct - ACCC Media Release

Federal Court fines ANZ, Macquarie Bank $15m over Malaysian cartel conduct - afr.com.au

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