DB - EU antitrust watchdog slaps Deutsche Bank Rabobank with bond cartel probe

Deutsche Bank ( NYSE: DB ) and Rabobank are being hit with a complaint by European Union antitrust regulators for allegedly taking part in a cartel for euro-denominated government bonds, according to a release dated Tuesday.

The European Commission said it has sent the lenders a statement of objections over concerns that the banks allegedly colluded to "distort competition when trading euro-denominated sovereign between 2005 and 2016," including SSA (supra-sovereign, foreign sovereign, sub-sovereign/agency), covered and government guaranteed bonds.

During that time, the two banks were suspected of exchanging "commercially sensitive information and coordinated their pricing and trading strategies when trading these bonds in the secondary market in the European Economic Area," the EU antitrust watchdog said.

Note that the European Commission can charge firms up to 10% of their revenues for breaching antitrust rules. This particular probe is the third one involving cartels impacting the market for bond trading. The Commission said it fined three investment banks in April 2021 a total of EUR 28M (.4M) for taking part in a U.S. dollar-denominated SSA bonds trading cartel. A month later, it found that seven investment banks participated in an EGB trading cartel and imposed fines totaling EUR 371M.

"For effective competition to function, it is fundamental that economic operators determine their prices independently. Citizens need to be able to trust that financial institutions do not implement practices that restrict competition in bonds trading markets," Margrethe Vestager, Executive Vice-President in charge of competition policy, said in a statement.

In 2019, Bank of America and RBS were reportedly sued by U.S. investors over alleged euro bond cartel .

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