EU accuses S&P ratings of abusing position
Thursday, 19 November 2009 15:11The EU's competition watchdog today announced that it has formally accused ratings agency Standard & Poor's of abusing its dominant position in the market for securities codes.
'The commission takes the preliminary view that this behaviour amounts to unfair pricing and constitutes an infringement,' of European law, the EU's competition watchdog said, opening a process that could end up with a substantial fine imposed.
The International Securities Identification Number (ISIN) is a standard for banks and investment funds that provides unique cross-border identification for securities such as shares and bonds issued throughout the world.
Brussels said these codes appear to be the only common system for US securities and that they are essential to the daily business of financial institutions, including those in the European Union.
US ratings agency S&P is the sole-appointed numbering agency for US securities, the commission noted.
In its assessment it concluded that 'S&P is abusing this monopoly position by enforcing the payment of licence fees for the use of US ISINs by banks and other financial services providers in the European Economic Area.'
The commission said it had sent a formal Statement of Objections to the ratings agency on Monday. The company now has eight weeks to reply and will then have the right to an oral hearing. That fine could be up to 10% of the company's annual turnover.
