International legal practice Norton Rose has advised Citibank International Plc (CIP), a subsidiary of Citigroup Inc., on regulatory law aspects in regard to their acquisition of a minority stake in iSwap. The inter-dealer platform for the trading of interest rate derivatives, iSWAP was launched in 2010 by ICAP as an electronic trading platform for over the counter (OTC) derivatives. It was one of the first electronic inter-dealer Euro interest rate swap trading platforms.
The complex acquisition structure, which foresees CIP initially subscribing for 2.5 per cent of shares in iSwap and subsequently acquiring up to five per cent by way of exercising three different options, was notifiable to the German Federal Cartel Office (FCO) as it led to CIP potentially acquiring a competitively significant influence over iSwap. The FCO can assert jurisdiction over relatively minority shareholdings of less than 25 per cent if such shareholdings confer “competitively significant influence” over the target company.
Such influence is deemed to exist where the acquirer will be in a position to influence the target’s decision making process and market behaviour on a lasting basis and the minority shareholding can therefore be said to empower the acquirer to promote its own competitive interests. In the present case, CIP did not gain voting rights as a result of its minority shareholdings, but it has the right to appoint one person as an “observer” to board meetings.
Therefore, by way of precaution, Norton Rose filed a merger notification on behalf of CIP to the German Federal Cartel Office.
The Antitrust and Competition team was led by Brussels partner Michael Jürgen Werner.
Regulatory and tax advise to CIP was provided by partners Jonathan Herbst (Corporate, London) and Dominic Stuttaford (Corporate Tax, London).
Assistance was provided by Caspar Ebrecht, Raluca Marian (both Competition, Brussels) and Andrew Storey, Josie Collyer, Jonathan Ritson-Candler, Kennedy Wicks, Will Ingram (all Corporate London).
ICAP was represented by Freshfields.
The German Federal Cartel Office cleared the transaction.
