On 5 April 2019, the European Commission published a long-awaited report on loan syndication and its impact on competition in credit markets in the EU (the “Report“).
The Report was prepared for the Commission by external consultants and focuses on syndicated loans connected with leveraged buyouts, project finance and infrastructure finance, in a sample of six Member States which account for approximately three quarters of the EU’s syndicated lending in these segments in Europe. It concludes that while market features and safeguards tend to limit the risk of competition law breaches, certain practices could give rise to concerns about collusive behaviour amongst syndicate members and the exertion of bargaining power contrary to the interests of borrowers and sponsors. It therefore makes a number of recommendations for safeguarding competition in syndicated lending and for promoting the development of the markets.
The financial services sector has seen significant enforcement action by competition authorities in recent years, and the Report’s findings may prompt the Commission and/or national competition authorities to focus on syndicated lending by opening sector enquiries, initiating antitrust investigations into specific firms or conduct, proposing regulation or issuing guidance. Financial institutions active in this sector may wish to review their compliance policies and arrangements in respect of syndicated lending in light of the Report’s findings and recommendations.
Read the full briefing here.