Regulators in the European Union have levied a hefty fine on Barclays, Royal Bank of Scotland, Citigroup, JPMorgan and Japan's MUFG over collusion in currency trading.
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The European Commission on Thursday fined five major banks €1.07 billion ($1.2 billion) for collusion in the foreign currency market.
The fines would normally have been 10% higher, but they were reduced after the banks admitted their involvement.
What was revealed
EU antitrust authorities uncovered two separate cartels:
Barclays, Royal Bank of Scotland, Citigroup and JPMorgan were fined €811 million for trading within the "Forex — Three Way Banana Split" cartel.
Barclays, RBS and MUFG Bank were fined €257 million over the "Forex-Essex Express" cartel.
The cartels involved 11 currencies, including the US dollar, the British pound sterling, the euro and the Japanese yen.
Activities started in 2007 and 2009 respectively and ended in 2012 and 2013 respectively.
Swiss bank UBS does not have to pay a fine as it informed the authorities of the cartels.
Zero tolerance
Competition Commissioner Margrethe Vestager stressed that markets offering spot foreign exchange trading are some of the world's largest and that "these cartel decisions send a clear message that the Commission will not tolerate collusive behavior in any sector of the financial markets," she said in a statement.
The behavior of these banks "undermined the integrity of the sector at the expense of the European economy and consumers," she added.
What are Spot Exchanges? Companies changing large amounts of currency will often use a forex (foreign exchange) trader. Same-day spot order transactions are carried out at that day's exchange rate.
How did the collusion work? The traders involved in the cartels, who were direct competitors, used chatrooms on a daily basis to exchange sensitive information. The Commission said this allowed the traders "to make informed market decisions on whether to sell or buy the currencies they had in their portfolios and when."
Not over yet: A Commission spokesperson confirmed that further investigations into the spot trading market are still ongoing, but declined to give details.
Billions in cartel penalties
Five German carmakers have been accused of collusion. If the allegations turn out to be true, they could face massive penalties. Here are some of the EU's most spectacular cartel fines from the past.
Image: picture alliance/dpa
The biggest cartel punishment ...
was imposed on four truckmakers for price collusion by the European Commission in 2016. The total fine was 2.93 billion euros. The lion's share of around one billion euros was paid by Germany's Daimler group. The others involved were Italy's Iveco, Volvo/Renault and DAF, a Dutch manufacturer. Since MAN, a subsidiary of Volkswagen, was the whistle-blower in this case it escaped without a penalty.
Image: picture alliance/dpa
Not a cartel ...
but this year the EU Commission ruled that Alphabet subsidiary Google massively abused its market power. The company was accused of having used its dominant market position to the detriment of competitors in the so-called shopping search for product advertisements. That's why the internet giant was fined a record-breaking 2.42 billion euros.
Image: Picture alliance/dpa/O.Spata
Libor interest rate manipulation ...
became a disaster for eight major banks in 2013. Secret and illegal agreements on fixing the Libor's daily rate (the interest rate at which banks borrow money) led to a fine of 1.71 billion euros for Deutsche Bank, Société Générale, Royal Bank of Scotland, JPMorgan, Citigroup, RP Martin, Barclays and UBS.
Image: picture-alliance/dpa/A. Rain
The television tube cartel ...
was a "textbook" case for the European Commission in 2012. Seven manufacturers of televisions (Samsung SDI, Thomson, Philips, LG Electronics, Panasonic, Toshiba and MTPD) had to pay a penalty of 1.47 billion euros. For almost a decade, the group colluded to divide up the market. Another company, Chunghwa, was granted leniency after helping the prosecution and got away without paying a fine.
Image: DW / Manfred Böhm
A repeat offender ...
was involved in the so-called car glass cartel in 2008. The EU imposed a fine of 1.3 billion euros on four manufacturers of car glass panes due to illegal price fixing. Saint-Gobain from France, Asahi from Japan, Pilkington from Great Britain and Soliver from Belgium were the conspirators. As a repeat offender Saint-Gobain had to pay 896 million euros.
Image: picture-alliance/Sven Simon
A classic regional cartel ...
was uncovered by the EU in 2009: the gas utilities Eon and Gaz de France. The two had agreed not to sell gas in the home market of the other as part of a deal to build a pipeline - thus preventing proper pricing competition. The penalty: 553 million euros - for each company.
Image: picture-alliance/dpa/B. Marks
The largest chip producer ...
bribed distributors in order to insure that only Intel processors were used. In May 2009, the EU imposed a billion euro penalty because Intel had abused its dominant market position. The company used illegal rebates and direct payments to manufacturers and dealers, which disadvantaged rival AMD, the second-largest chip maker after Intel.
Image: picture-alliance/dpa
Even elevators and escalators ...
between 1995 and 2004, five producers fixed prices, divided markets and exchanged confidential information. ThyssenKrupp Elevator from Germany, Otis from America, Schindler from Switzerland, Kone from Finland and Mitsubishi Elevator Europe had to pay a total fine of 992 million euros in 2007.
