May 2, 2019 - On May 1st, the LSTA hosted a webinar on the EU’s recently published report on European loan syndication and its impact on competition in credit markets presented by competition law expert, Olivier Antoine of Crowell & Moring. The report was undertaken for the Directorate General for Competition of the European Commission and was written by Europe Economics, an economic consultancy firm, and EUCLID law, a boutique law firm specializing in antitrust matters. Although the Report was prepared for the European Commission, it is not law but rather should be viewed as providing competition-related guidance to loan market professionals. Although there are differences between US and European competition laws, with Europe focusing to a greater (and stricter) degree on the abuse of a dominant position, the Report is useful for loan market participants in both jurisdictions, for it provides a detailed analysis of the competition law risks at each stage of the syndicated loan process and sets out potential safeguards. The Report highlights horizontal information sharing as one of the key risks, cautioning that such sharing may lead to the disclosure of strategic information which could serve to coordinate lenders’ pricing policies thereby facilitating a collusive outcome on the market in terms of price as well as quantity and quality. Market sounding was cited as a market feature that could create the appearance of collusion – or even facilitate collusion – and could be particularly problematic where the sounding crossed the boundaries between generic and deal specific sounding and was with an MLA. Although the Report should not be viewed as a prequel to a sector inquiry or other investigation of loan syndication practices by the European Commission, it does present a good opportunity for compliance officers to review their antitrust compliance policies for syndicated loans, provide training for their colleagues, and possibly conduct internal antitrust audits. Click here for the presentation and here for Report.
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