On May 23, 2016, the Second Circuit breathed new life into the class action case against 16 banks belonging to the British Bankers’ Association (the Banks), vacating the Southern District of New York’s dismissal of the case for lack of antitrust injury and remanding the case on the portion of antitrust standing that requires the plaintiffs to be “efficient enforcers of the antitrust laws.” In re: LIBOR-Based Financial Instruments Antitrust Litigation (No. 13-3565). The plaintiffs’ revived opportunity to pursue their case, however, may last only as long as it takes the district court to consider the factors laid out by the Second Circuit, because it identified several troubling issues raised by the peculiar nature of the case.
The Claims
The plaintiffs, purchasers of financial instruments that carried a rate of return indexed to the London Interbank Offered Rate (“LIBOR”), alleged that the Banks colluded to depress LIBOR by violating rate-setting rules. As a result, the payout for the instruments was lower than it would have been without the collusion.
The District Court Opinion
The Southern District determined that there could not have been anticompetitive harm, because the LIBOR-setting process was collaborative rather than competitive. At most, the lower court concluded, the plaintiffs might have a fraud claim based on misrepresentation, but they had no antitrust claim.