Société Générale gets refund of over €200 million on Euribor fine

Société Générale gets refund of over €200 million on Euribor fine

The European Commission has taken the unprecedented move of reducing the fine imposed on Société Générale for its involvement in a cartel relating to Euro interest rate derivatives.

In the original 2013 infringement decision the Commission found that Barclays, Deutsche Bank, RBS and Société Générale participated in a cartel for varying periods between September 2005 and May 2008.  Barclays received full immunity as the leniency applicant.  Each of the fines on the remaining parties included a 10% reduction under the Commission’s cartel settlement procedure.

The Commission has reduced the original €446 million fine imposed on Société Générale by more than 50%, apparently due to errors in the value of sales originally submitted by Société Générale.  The amended fine has been calculated according to the same methodology in the Commission’s 2013 infringement decision and the corrected amount is now approximately €228 million.  The reason for the apparent error in Société Générale’s data was that it had omitted to net cash flows on over-the-counter derivatives, which was permitted by the Commission’s request for information.

The case has raised questions about the robustness of the Commission’s cartel settlement procedure and approach to calculating fines.  The Commission’s move to reduce the fine through an administrative decision rather than take its chances on appeal to the General Court is illuminating.  This rather extraordinary step is also difficult to reconcile with the mantra that there is limited administrative discretion in setting the fine within the Commission’s methodology. 

The case illustrates the scope for mistakes to be made, although it is not entirely clear how such a fundamental error and with such significant financial consequences could have been made and not come to light until after the fining decision. 

The case may embolden settling parties to appeal their fines to the General Court once the levels of fine visited on other companies are revealed in the infringement decision and which may reveal inconsistencies.  The last thing that the Commission wants is a challenge based on discriminatory treatment as in Air Cargo, albeit not a settlement case.

European Commission announcement, 6 April (MEX/16/1281)