The Office of Fair Trading (OFT) has issued a £28.59m fine to Royal Bank of Scotland – a bank 84 per cent owned by the taxpayer – for breaking competition law.
The fine was announced yesterday after RBS admitted revealing details of its loan pricing plans for professional services firms, such as lawyers and accountants, to its rival Barclays. The OFT reduced the fine from £33.6m to reflect RBS's admission and agreement to co-operate.
The regulator said that Barclays took the information into account to determine its own pricing. However, Barclays is unlikely to face any fine for its part in the matter because it blew the whistle on the affair, contacting the OFT in March 2008.
An RBS spokeswoman said "stringent" new competition-law training had been introduced to avoid similar breaches happening again. She said: "This is a deeply regrettable and isolated case from nearly two years ago, involving only two members of staff, one of whom has left the bank and one other who faces suspension and further investigation now the case has been settled."
According to the OFT, individuals in RBS's professional practices coverage unit disclosed information about their pricing plans to counterparts at Barclays on the fringes of social, client and industry events and in telephone conversations. Barclays and RBS are the main providers of loans to large professional services firms, such as solicitors, estate agents and accountants.
Ali Nikpay, the OFT's senior director of cartels and criminal enforcement, said: "Any company that discloses confidential future pricing information to its competitors risks a substantial penalty. It is important that companies operating in the UK understand the seriousness of such conduct and ensure effective competition compliance throughout their organisation."
Mr Nikpay added: "This case underlines the OFT's commitment to protecting competition in the financial services sector. It also highlights the strong benefits of acting promptly to report anti-competitive conduct to the OFT and of co-operating with such investigations."
This fine for competition offences comes at a time when the banks already face public anger for their role in the recession, while investment bankers continue to collect bumper payouts.
Under the Competition Act 1998, the OFT has the power to impose penalties on companies of up to 10 per cent of their worldwide turnover for breaches of competition law. However, the regulator can grant immunity from penalties or a significant reduction in fines if an organisation reports breaches of the Competition Act and then assists with any investigation.
A statement from Barclays stressed it had voluntarily notified the OFT of the breach. It said: "Barclays has been co-operating throughout. The investigation operated solely within the confines of the professional services banking team in Barclays's commercial banking unit."
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September 2009 The building company Kier Regional Ltd is fined £17.89m, as part of £129.5m in fines issued to 103 construction firms for price-rigging.
September 2009 The recruitment specialist Hays is fined £30.36m for price-fixing with five other firms to drive out an emerging competitor. The six were fined a total of £39.27m.
December 2007 Sainsbury's is fined £26m after it admits being part of a dairy price-fixing cartel with rivals Morrisons, Asda and other dairy firms.
August 2007 British Airways is fined £121.5m for price-fixing with Virgin Atlantic on long-haul routes.
February 2003 Argos is fined £17.28m for fixing prices of Hasbro toys and games such as Action Man with Littlewoods – which was fined £5.4m.