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Antitrust Litigation

Antitrust Litigation

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Published by: Foreclosure Fraud on Apr 01, 2013
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investors.” OTC Compl. ¶ 5.

In this respect, the present case contrasts with more

traditional antitrust conspiracies, such as a conspiracy among

sellers to raise prices. Whereas in such a scenario, the

sellers’ supracompetitive prices could exist only where the

sellers conspired not to compete, here, each defendant, acting

independently, could rationally have submitted false LIBOR

quotes to the BBA. The reason why it would have been

sustainable for each defendant individually to submit an

artificial LIBOR quote is that, as discussed above, the LIBOR

submission process is not competitive. A misreporting bank,

therefore, would not have been concerned about being forced out

of business by competition fromother banks. In other words,

precisely because the process of setting LIBOR is not

competitive, collusion among defendants would not have allowed

themto do anything that they could not have done otherwise.

This analysis would not change if we were to accept

plaintiffs’ argument that defendants could not, absent

Case 1:11-md-02262-NRB Document 286 Filed 03/29/13 Page 37 of 161


collusion, have submitted the “clustered” rates that they

submitted during the Class Period. The question is not whether

defendants could have submitted independently the exact quotes

that they in fact submitted, but rather whether they could have

caused plaintiffs the same injury had they acted independently.

As discussed above, the answer is yes: each defendant could have

submitted, independently, a LIBOR quote that was artificially

low. Further, whether the quotes would have formed a “cluster”

or not is irrelevant: plaintiffs’ injury resulted not fromthe

clustering of LIBOR quotes, but rather fromthe quotes’ alleged


In short, just as the bowling center operators in

Brunswick could have suffered the same injury had the failing

bowling centers remained open for legitimate reasons, and just

as the gas dealers in ARCO could have suffered the same injury

had defendant’s prices been set through normal competition, the

plaintiffs here could have suffered the same injury had each

bank decided independently to submit an artificially low LIBOR


Moreover, Brunswick and ARCO, which each held that

plaintiffs did not suffer antitrust injury, involved more harm

to competition than was present here. In Brunswick, defendant’s


Indeed, given that a bank’s LIBOR quote represents the bank’s expectation
of its own costs of borrowing, and that different banks based in different
countries could sensibly face significantly different borrowing costs, it
would not be surprising for banks to submit LIBOR quotes that differed
persistently over the course of several years.

Case 1:11-md-02262-NRB Document 286 Filed 03/29/13 Page 38 of 161


conduct brought “a ‘deep pocket’ parent into a market of

‘pygmies,’” altering the positions of competitors in the bowling

center market in a manner that was potentially harmful to

competition. In ARCO, similarly, the prices set by defendants’

conspiracy displaced prices set through free competition and

thereby gave defendants’ dealers a competitive advantage over

other dealers in the retail gas market. Here, by contrast,

there is no allegation of harmto competition. For one, LIBOR

was never set through competition, even under normal

circumstances. While it is true that the prices of LIBOR-based

financial instruments are set through competition, and that a

change in LIBOR may have altered the baseline fromwhich market

actors competed to set the price of LIBOR-based instruments,

competition proceeded unabated and plaintiffs have alleged no

sense in which it was displaced.

Additionally, there is no allegation that defendants’

conduct changed their position vis-à-vis their competitors. At

any given time, there is only one LIBOR, used by all actors

throughout the relevant market. Although defendants’ alleged

manipulation of the level of LIBOR might have had the

distributive effect of transferring wealth between the buyers

and sellers of LIBOR-based financial instruments, including

between defendants and their customers, plaintiffs have not

alleged any structural effect wherein defendants improved their

Case 1:11-md-02262-NRB Document 286 Filed 03/29/13 Page 39 of 161


position relative to their competitors. Because Brunswick and

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