In our October 4, 2019, post we noted several news reports on the dismissal of an antitrust lawsuit alleging a conspiracy to inflate the price of Mexican government bonds. The original allegations of that suit are detailed in our post here.
Specifically, Judge Oetken’s September 30, 2019, decision (found here) found that Plaintiffs’ complaint failed to allege facts that “plausibly suggest that the particular defendants named in this suit were part of . . . [the alleged] conspiracy.” In other words, the court found that the Complaint lacked individualized allegations as to each defendant, and instead treated all defendants as one by relying on impermissible “group pleading.” For example, the Court found that the participation by one of the defendant banks (left unnamed in the complaint) in the leniency program of Mexico’s antitrust regulator, the Comisión Federal de Competencia Económica (“COFECE”) and public reports that COFECE was investigating the banks as each insufficient to plausibly suggest wrongdoing by the particular defendants named in the complaint.
Judge Oetken’s order gave Plaintiffs 21 days to file a letter to inform the Court “whether they intend to move for leave to file a Second Consolidated Amended Complaint and, if so, explaining why leave should be granted.” Yesterday, Plaintiffs filed that letter (found here).
In their letter, Plaintiffs request 45 days for leave to amend the complaint. Plaintiffs argue that there have been several recent developments that would allow them to add allegations to the complaint which would allow them to plausibly suggest that the particular defendants named in the suit are part of the conspiracy in compliance with the Court’s September 30, Order.
Specifically, Plaintiffs report that they have reached agreements in principal with two Defendants, in which one or both Defendants would provide “(a) transcripts of communications between Defendants; (b) a copy of COFECE’s 600-page Statement of Objections summarizing the results of its investigation; and (c) transaction-level data reflecting their MGB trades.” Plaintiffs state that the chatroom transcripts will show traders from at least BBVABancomer, Bank of America Mexico, Barclays Mexico, Citibanamex, Deutsche Bank Mexico, HSBC México, S.A., Institución De Banca Múltiple, Grupo Financiero HSBC (“HSBC Mexico”), JPMorgan Mexico, and Santander Mexico “sharing highly sensitive pricing information, engaging in coordinated trading, and restricting MGB [Mexican Government Bond] supply.” Citing a recent case from an antitrust suit involving allegations of price-fixing of precious metals, Plaintiffs argue that these chats are direct evidence of a conspiracy, as it is not rational for competitors to share pricing information absent the existence of an anticompetitive agreement.
Plaintiffs also report that they have “learned that COFECE has formally charged seven Defendants with engaging in ‘absolute monopolistic practices’1 in the MGB market: BBVABancomer, Bank of America Mexico, Barclays Mexico, Citibanamex, Deutsche Bank Mexico, JPMorgan Mexico, and Santander Mexico.” Plaintiffs distinguish this new development from allegations regarding COFECE’s investigation in the original complaint, which the Court’s September 30, Order found to be insufficjent, as none of the banks “ha[d] been accused of wrongdoing . . .” by COFECE.
Finally, Plaintiffs report that they are preparing a new economic analysis using “new, non-aggregated transaction-level MGB pricing data” in light of the Court’s September 30 ruling that aggregated data is insufficient to link Defendants to the conspiracy.
In a footnote, Plaintiffs note that Defendants do not consent to leave for Plaintiffs’ requested motion to amend.
Please stay tuned to this blog for updates regarding the Court’s ruling on Plaintiffs’ request.
1The article relied upon by Plaintiffs (published by Bloomberg and available here notes that Mexican publication El Financiero has reported that “Banco Bilbao Vizcaya Argentaria SA, Citigroup Inc., Banco Santander SA, Bank of America Corporation, Barclays Plc, Deutsche Bank AG and JPMorgan Chase & Co. were notified of probable violations of Mexico’s antitrust laws . . .” but that COFECE is still unable to name banks alleged to have participated in wrongdoing to otherwise comment on the case.
This post was written by John F. Whelan.