On 15 July 2021, the Japanese bank Mitsubishi UFJ Financial Group (formerly Bank of Tokyo-Mitsubishi) told a UK judge during the last day of a five-day hearing at the UK’s specialised competition court that the allegation of “tacit coordination” was erroneous and detrimental to the mass antitrust claim lodged by former inquiry group chairman of the Competition and Markets Authority Phillip Evans.[1]

MUFG was fined nearly 70 million euros ($83 million) by the European Commission in May 2019 for being involved in one of two cartels in the spot forex market, which are agreements to exchange a specific amount of one currency against another.

Evans is one of two class representatives seeking, on behalf of thousands of investment firms, to sue MUFG and others for billions of pounds in damages over the cartel activity. He argued that the sharing of information within the cartel facilitated tacit, or inexplicit, coordination between traders to widen “bid-ask” spreads. Further, he said that due to their market power, the cartelist banks had the ability and incentive to “engage” in tacit coordination on spreads.

MUFG told the UK judge that this was a flawed allegation and that the tacit coordination is just a theory. It is unfeasible for a few participating traders to tacitly control the market and cause this alleged widespread coordination of spreads. Moreover, the banks were not in a position to engage in tacit coordination as their market shares fluctuated over time.

It was the Commission’s investigation that revealed that some individual traders in charge of forex spot trading, on behalf of banks, exchanged sensitive information and trading plans, and occasionally coordinated their trading strategies.[2] It said that activity, resulting from a “tacit understanding” between traders, enabled informed market decisions.

MUFG said about this investigation that they contest the notion that you can go from incidental spread exchanged between a handful of traders to tacit coordination of all spreads by those traders, and then to tacit coordination of all spreads by those banks.

[1] According to MLex, “Banks didn’t and couldn’t use ‘tacit coordination’ to rig forex prices, MUFG tells UK judge,” 15 July 2021.

[2] European Commission, “Antitrust: Commission fines Barclays, RBS, Citigroup, JPMorgan and MUFG €1.07 billion for participating in foreign exchange spot trading cartel,” 16 March 2019, https://ec.europa.eu/commission/presscorner/detail/it/IP_19_2568.