BERN, SWITZERLAND – Comco, Switzerland’s competition commission, has opened an investigation into more than 10 international banks and companies and the country’s two largest, UBS and Credit Suisse, for possible “collusion between derivative traders [that] might have influenced the reference rates Libor and Tibor. Furthermore, market conditions regarding derivative products based on these reference rates might have been manipulated, too.”
The investigation follows what Comco calls an application to its leniancy programme, or self-denunciation, without providing details of who provided the information. The investigation could take several months. The banks targeted by the investigation include: Bank of Tokyo-Mitsubishi UFJ, Citigroup Inc., Deutsche Bank Aktiengesellschaft, HSBC Holdings plc, JP Morgan Chase & Co., Mizuho Financial Group Inc., Rabobank Groep N.V., Royal Bank of Scotland Group plc, Société Générale SA and Sumitomo Mitsui Banking Corporation.
Libor, the London interbank lending rate and Tibor, in Japan, are rates set daily based on bank data, which serve as underlying lending rates. The Swiss National Bank defines Libor as:
“The Libor (London Interbank Offered Rate) refers to the interest rate for unsecured money market loans to prime banks. Each bank business day, specific banks report to the British Bankers’ Association (BBA) the interest rate at which they would be able borrow unsecured funds of a reasonable market size on the London interbank market shortly prior to 11 a.m. The relevant top and bottom-quartile interest rates are disregarded when fixing the Libor. An average is calculated on the basis of the remaining interest rates, and the figure obtained in this manner is fixed and published as the Libor for the day in question. Libor rates are fixed in different currencies and with varying maturities.”
The investigation comes three weeks after European Union anti-trust boss Joaquin Almina said the EU is stepping up its efforts to ensure that derivatives markets remain free and competitive. Antoine Colombani, spokesperson for the European Commission is cited by Bloomberg as stating in January that “Last October we carried out unannounced inspections at the premises of a number of undertakings active in the sector of euro interest rate derivatives based on Euribor benchmark rates,” but that it had not opened a formal investigation.
“Regulators in the US, UK and European Union have been examining how Libor is set, while Japan’s securities watchdog has probed Tibor,” according to Bloomberg.
Comco’s statement notes:
“The London Interbank Offered Rate (Libor) and the Tokyo Interbank Offered Rate (Tibor) are reference rates which are aimed at reflecting the interest rate level in the interbank deposit market. The British Bankers’ Association (for Libor) and the Japanese Bankers’ Association (for Tibor) calculate these reference rates on a daily basis, for a range of currencies, based on submissions by respective panel banks. Derivative traders working for a number of financial institutions might have manipulated these submissions by coordinating their behaviour, thereby influencing these reference rates in their favour. Moreover, derivative traders might have colluded to manipulate the difference between the ask price and the bid price (spread) of derivatives based on these reference rates to the detriment of their clients.”
Comco says that assessing ‘the effects of the alleged practises on Swiss clients and companies is one of the aims of the investigation”.
The Swiss Federal Council spent the day out of the office, instead holding their official meeting at the Chateau Mercier in Sierre
Update 20:00 BERN, SWITZERLAND – The Swiss franc rose yet again Wednesday 17 August, turning around after a dip at the start of the week against most major currencies. The shift comes in the wake of a Franco-German meeting that left investors lukewarm and efforts by the Swiss National Bank to reduce its strength that appear to have been viewed as not too onerous.
The currency developments were accompanied by the news late Wednesday that Switzerland could well have a 2011 budget surplus, rather than the deficit earlier predicted.
The franc finished the day in Switzerland at CHF.78 for the dollar, from a dollar high of CHF.80. The euro was trading at CHF1.1394 from a euro high of CHF1.1554 (figures, Reuters).
Tougher mortgage rules part of Swiss franc fallout
An undesirable side effect of the measures taken to rein in the Swiss franc is that banks are loaning out money for mortgages too easily, with very low interest rates, says the Federal Council. Strict rules about mortgage deposits are not being observed as much as they should, argues the council, so starting in January 2012 banks will face tougher restrictions and will be required to ask for larger deposits. The announcement was one of several linked to news of the federal surplus.
Central bank expands supply of liquidity to Swiss franc money market
The SNB announced early in the day that it was taking three steps, effective immediately, to “expand again significantly the supply of liquidity to the Swiss franc money market. In so doing, it is increasing the downward pressure on money market interest rates with a view to further weakening the Swiss franc exchange rate”:
- it aims to expand banks’ sight deposits at the SNB, from CHF 120 billion to CHF 200 billion
- to achieve this new target level as quickly as possible, it will continue to repurchase outstanding SNB bill
- for the same reason it will continue to employ foreign exchange swaps.
Budget surplus won’t have an impact on 2012 budget
The Swiss Federal Council, after a special summer session at the Chateau Mercier in Sierre Wednesday, announced that the 2011 budget is likely to have a CHF2.5 billion surplus instead of the CHF600 million deficit predicted earlier. The turnaround is due mainly to higher than forecast revenues, with companies’ profits higher than predicted in 2010 as the economic recovery proved to be stronger than expected. Government spending was also lower than predicted.
The new figures are based on accounts at the end of June 2011.
The 2012 budget was approved in May, at which point it was already clear that revenues for 2010 would be higher than expected, so the Federal Council says the new, mid-year predictions, will have no impact on the 2012 budget.
CHF2 billion industrial aid programme set up to avoid sending jobs abroad, reduce price fixing
The cabinet announced Wednesday it is setting aside CHF2 billion to rapidly boost industry, which is suffering from the role of the Swiss franc as a safe haven for foreign investors. The fund, the Federal Council acknowledges, is “large” and will be used to “strengthen industries that have been hit hard by the negative foreign exchange situation and to prevent jobs from going abroad”, including tourism.
The council will also seek a rapid change in the laws covering competition that would touch a number of price-fixing areas and it plans to provide Comco, the competition commission, with four additional posts for two years, to better enforce existing legislation.
Federal Council press release, details of the CHF2 billion industrial aid fund (Fre)
Online sales of Swiss home appliances given a boost by Comco
BERN, SWITZERLAND – Comco, the Swiss competition commission, has ruled that Swiss manufacturers of home appliances such as refrigerators cannot tell their distributors not to sell the material online.
The decision argues that Electrolux AG and V-Zug AG acted illegally and conspired to stop competition when the first ordered its retailers not to sell online and the second limited online sales.
The two companies agreed at the outset of Comco’s investigation to find a solution and have since adapted their sales system, Comco notes.
The ruling has broader implications, with Comco stating that “Comco considers the Internet to be a very important sales outlet. Its decision therefore includes the remark that restricting online sales is allowed only under very exceptional circumstances and with very strict conditions. And even in the cases where this applies, manufacturers are not permitted to impose retail prices.”
Swisscom not guilty says the high court
Bern, Switzerland (GenevaLunch) – A Swiss high court has decided in favour of Swisscom in a case brought by ComCo, the country’s competition commission.
In 2002 the commission began investigating what it ultimately decided was an abuse of the telecom’s dominant position, and it fined the company CHF333 million.
Swisscom took the case to court, but at the same time prices began to fall, and ComCo, in a press release (Fr) Wednesday 20 April, argued that while the court ruling might be seen as a setback, Comco had achieved its goal of seeing Swiss prices fall until they were in line with European termination fees.
These were 33.5 centimes in May 2005 and today they are 10 centimes, with Swisscom having undertaken a first price cut to 20 centimes in June 2005, shortly after ComCo released the results of its investigation
Swisscom was accused of overcharging for the “last mile”, or mobile phone termination fees, the fees charged by a mobile phone operator to other providers for terminating calls on its network.
The company has been targeted by ComCo in other cases, including one in 2009 where Swisscom was fined CHF219m for abusing its dominant position by squeezing out DSL competitors.
Switzerland has been making changes to its laws on cartels and regulations covering companies with dominant positions, in a bid to increase competition in the country.
Links to other sites: Dow Jones on Fox News, Global Competition Review
Bern, Switzerland (GenevaLunch) – Comco, Switzerland’s competition commission, has opened an investigation into possible cartel activity that restricts online home appliance sales. Specifically, the six to 12 month investigation, in cooperation with the two companies in question, will look into Electrolux’s and V-Zug’s refusal to allow distributors to sell their products via the Internet. The two are not liable for fines, since there is no question of horizontal or vertical price-fixing, but Comco’s decision is expected to have a wide-reaching impact on Swiss online sales in general.
The two companies argue that their online sales restriction is part of very selective marketing programmes that protect the quality of their brands.
Appeal time too short, new plans not likely to be profitable enough
Zurich, Switzerland (GenevaLunch) – Orange and Sunrise have dropped their plans to merge, despite having filed an appeal only two weeks ago (20 May) to the ruling by Comco, the competition commission, against the merger. The two telecoms announced Thursday evening 3 June that after lengthy discussions with Comco and a review of their options, a new proposal does not appear to be sufficiently profitable. Both say they have ambitious plans, nevetheless, for Switzerland, which Geneva newspaper Le Temps calls bad news for Swisscom.
Links to other sites: Le Temps (Fre), Orange Switzerland, TSR (Fre)
Won't be getting a new, shared logo in Switzerland
Bern, Switzerland (GenevaLunch) – The Swiss federal competition commission, Comco, will not allow a merger between France Telecom (Orange) and Sunrise to go ahead, it announced Thursday 22 April. The commission’s investigation into the cell phone market concluded that even though customers would benefit in some ways from a merger, the fact that Orange will soon become part of France Telecom means that Switzerland would be left with only two large cell phone companies that would dominate the market. Another large competitor would increase competition for Swisscom, the commission noted, but a third company would be highly unlikely to gain a foothold, so the positive impact on competition would be offset by having just two operators.
This one wasn't at the Hallenstadion
Bern, Switzerland (GenevaLunch) - Switzerland’s competition watchdog Comco is to investigate the five-year agreement, which came into force early 2009, between the country’s largest ticket-seller, Ticketron, and the Hallenstadion Zurich (AGH), one of its biggest concert venues. Comco will look into the details of the agreement which obliges the organizers of events at the Hallenstadion to offer least 50 percent of the tickets for sale through Ticketcorner.
Ticketcorner has been in the sights of the Federal Competition Commission before. In 2006, after an appeal, it was absolved of monopolistic behaviour.
Bern, Switzerland (GenevaLunch) – Switzerland’s Competition Commission (ComCo) wants credit card companies to reduce interchange fees in the hope that overall fees will come down for users. The provisional measure is set to bring Swiss fees in line with those in European Union, and comes into force in February, Comco announced 28 January.
The interchange fee is paid to the card issuer by the acquirer, generally a bank that concludes a contract with a business that accepts credit cards from its customers. The fees are included in the merchant’s overall fees, and passed on to the customer.
Comco Chairman to step down
© 2009 Swisscom
Bern, Switzerland (GenevaLunch) – Swisscom has been handed a fine for CHF 219 million for alleged anti-competitive behaviour in its DSL business until 2007. The company says it will appeal the decision by the federal Competition Commission (ComCo) 5 November, arguing that Swiss consumers have ample choice in the supply of DSL service.
ComCo had argued that Swisscom, the dominant market operator and owner of most of the infrastructure, set the price it charged to its competitors too close to what it charged its customers, thus squeezing out its competitors.
Links to other sites: Romandie News, Swisscom, TSR
Biel/Bienne, Switzerland (GenevaLunch) – Swatch Group, which owns the parts-making company ETA Manufacture Horlogère SA, has responded publicly with dismay to news of a new Comco investigation into the impact of its dominant position in the market.
Bern, Switzerland (GenevaLunch) – Comco, the Swiss Competition Commission, has agreed to look into the price discussions held by Ascopa, the main cosmetics and perfume industry association, whose members include Chanel SA Geneva, Clarins SA, L’Oréal Produits de Luxe Suisse SA, Parfums Christian Dior AG and Coty (Schweiz) AG.
A complaint was filed about price discussions held within the association and Comco will now investigate to see if the discussions have resulted in price-fixing.
Bern, Switzerland (Le Temps, Fre) – Patrick Krauskopf, vice-director of the Comco, Switzerland’s competition commission, has told his associates he will be leaving the post he’s held for the past 10 years, according to Willy Boder of Le Temps, who interviewed him Wednesday evening about how the commission works.
Swisscom, which announced 20 March it was buying The Phone House‘s Swiss branches, has been told to slow down by Comco, the competition watchdog, reversing an earlier decision. The government has concluded that since The Phone House also sells Swisscom products, such as DSL subscriptions, Comco should take a closer look. Swisscom has been notified that it must suspend all activity linked to the deal. The telecommunications giant says it plans to submit its plans to Comco in the next few days.
Photo reproduced by permission, Swisscom
Bern, Switzerland (TSR, Fre) – Comco, the competition watchdog in Switzerland, is taking a closer look at supermarket chain Migros‘s purchase of Denner in January . A preliminary study raised questions about suppliers but also about whether the disappearance of the country’s third supermarket chain will create hurdles that are too high for any other company trying to enter the market.
