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[Alpha Biz=(Chicago) Reporter Kim Jisun] The Supreme Court judged that Citibank and JP Morgan Chase colluded in the currency swap bidding process, and said the Fair Trade Commission's fine of 1.321 billion won was legitimate.
According to the Fair Trade Commission on the 13th, the Supreme Court on the 31st of last month overturned and remanded the Seoul High Court ruling, which the Fair Trade Commission lost in connection with sanctions on Citibank and JPMO for currency swap bidding. A currency swap is a financial contract in which the principal expressed in different currencies and the interest on the principal are exchanged. It is used to reduce the cost of financing and to reduce the risk of exchange rate fluctuations.
The FTC imposed a correction order and a fine of 1.321 billion won in March 2020, saying four foreign banks, including Citibank, JP Morgan, Hong Kong Shanghai Bank and Credit Agricole, colluded in four currency swap bids conducted by Korea Hydro & Nuclear Power Co. and Korea Highway Corp.
Citibank and JP Morgan filed an administrative lawsuit with the Seoul High Court in May 2020. At that time, the Seoul High Court ruled in favor of both banks. The key point is that each orderer, including the Korea Hydro & Nuclear Power Co., has virtually signed a private contract by verbally agreeing to make currency swap transactions with certain banks. In fact, it was not a competitive bid. Even though they agreed in advance, they judged that the submission of a bid proposal from another bank was only to leave evidence that they had gone through the bidding process.
But the Supreme Court's ruling was different. "The currency swap bidding in this case is like pretending to have made a competitive bid by using a bridesmaid while actually bidding alone," the Supreme Court said. "The structure and form are similar to the case in which the bidding was actually carried out." "The pre-signed private contract was only binding between the parties," he said. "We cannot rule out the possibility that other banks that did not participate in the collusion participated in the bidding on the premise of a valid competitive relationship."
AlphaBIZ 김지선(stockmk2020@alphabiz.co.kr)
