European Commissions's Antitrust Concerns Lead To Syndicated Loans Market Study

The Situation: The European Commission has launched a tender offer to conduct a comprehensive assessment of the competitive aspects of the EU market for syndicated loans.

The Impact: While not a formal investigation by the Commission, the action could lead to a sector inquiry and enforcement actions.

Looking Ahead: The Study will involve telephone interviews and questionnaires sent to lenders and borrowers. Companies should use caution when responding to inquiries.

In April 2017, the European Commission ("Commission") published a tender offer seeking an assessment of the EU market for loan syndication and possible implications under EU competition rules. The successful candidate will draft a report providing an overview of the market and the relevant elements that the Commission may use for assessing the competitive environment ("Study"). While this is not a formal investigation, the Study could lead to enforcement actions.

A syndicated loan is the joint lending of large loans by several banks and institutional investors. These loans are provided to public or private borrowers for projects with large financing needs (e.g., mergers or acquisitions). Loan syndication reduces risks borne by a single bank and plays a crucial role in providing capital for large investments.

In the past, national competition authorities have shown an interest in this market. In 2010, the Dutch Competition Authority assessed the syndicated loan market, and the European Commission informed the Organisation for Economic Co-operation and Development ("OECD") that a close scrutiny of syndicated loans may be warranted. In 2016, the UK Financial Conduct Authority sent "on notice" letters to a number of syndicated lenders after reviewing evidence suggesting that they may have infringed competition law by disclosing or exchanging information on terms and conditions of loans. Finally, the Spanish competition authority is currently investigating whether four Spanish banks fixed prices and exchanged commercially sensitive information when offering syndicated loans.

In the past, national competition authorities have shown an interest in this (syndicated loan) market.

Potential Antitrust Issues

Article 101(1) of the Treaty on the Functioning of the European Union prohibits agreements between undertakings that restrict competition in the EU. This provision covers the exchange of commercially sensitive information between competitors.

According to the Commission, syndicated...