Kensington Antitrust Advisors Group

In In re: Libor-Based Financial Instruments Antitrust Litigation, Southern District of New York Judge Naomi Riece Buchwald allowed three groups of plaintiffs to move to revive their allegations that Bank of America Corp., JPMorgan Chase & Co., and other top banks violated the Sherman Act and cost plaintiffs billions of dollars by rigging the London Interbank Offered Rate (Libor).  In this multidistrict litigation, over-the-counter plaintiffs, exchange-based plaintiffs, and bondholder plaintiffs accused the banks of submitting information to the British Bankers Association (BBA) in an attempt to lower Libor.  Libor is used as a reference in setting rates on a range of financial products, from consumer loans to complex derivatives.

The court originally dismissed plaintiffs’ antitrust claims with prejudice, holding that plaintiffs couldn’t point to any actual competition-related injuries because the BBA-rate submission process was not designed to be competitive.  But the court later conceded that the stakes were high enough to let the plaintiffs try again.  In allowing plaintiffs leave to amend their complaints, the court held that although the proposed antitrust injury allegations that plaintiffs intend to add would probably not change the outcome, given the magnitude of this litigation, the court will proceed deliberately in evaluating plaintiffs’ request.  As a result, the judge gave the plaintiffs two weeks to move for leave to amend their complaints to add antitrust injury allegations.

In the same order, the judge instructed The Bank of Tokyo-Mitsubishi, Credit Suisse Group AG and The Norinchukin Bank to try to resolve their concerns about whether the exchange-based plaintiffs’ claims under the Commodities Exchange Act, that the court initially refused to dismiss, should continue on their own.

The court also denied the exchange-based plaintiffs’ request for an interlocutory appeal of whether Libor could be considered a “commodity underlying” certain Eurodollar futures contracts under the CEA, but agreed to let the plaintiffs brief the issue.