NEW YORK, March 30 (UPI) -- A federal judge in New York has ruled that banks manipulating the Libor benchmark lending rate could not have breached antitrust business laws.
Antitrust laws are designed to ensure companies compete with each other and do not collude to fix prices or manipulate markets. Setting the London interbank offered rate, or Libor, was not a competitive process to begin with, U.S. District Judge Naomi Reice Buchwald has ruled.
The Libor rate is an average rate banks charge each other for loans and it is used as a benchmark to set the rate on trillions of dollars of private and business loans.
Buchwald ruled setting the Libor was a "cooperative endeavor" that was "never intended to be competitive."
The ruling has pulled the rug out from under class-action lawsuits filed against several big banks on behalf of consumers, as penalties imposed on the banks could triple if their behavior was also ruled to breach antitrust provisions, The Wall Street Journal reported Saturday.
Several large banks have agreed to huge settlements with regulators to have Libor manipulation claims against them dropped.
The civil lawsuits filed against the banks can proceed, the judge ruled. However, dismissal of the antitrust portion of the complaints is a setback that could discourage others from joining in the lawsuits, the Journal said.
Plaintiffs can still pursue claims of "misrepresentation," the judge wrote, but "not from harm to competition."