In Ohio Carpenters’ Pension Fund v. Deutsche Bank AG, no. 22-cv-10462-ER (S.D.N.Y. Aug. 26, 2024), the U.S. District Court for the Southern District of New York dismissed an antitrust class action alleging a conspiracy between Deutsche Bank and Rabobank to manipulate prices of European government bonds. Plaintiffs, certain U.S.-based pension funds, alleged that the defendants manipulated the prices they offered to investors to buy or sell EGBs in order to widen the resulting “bid-ask spread” between those prices and increase their profits.
The Court found that Plaintiffs’ complaint pleaded no direct evidence that Deutsche Bank and Rabobank had agreed to fix EGB prices or spreads, nor was either defendant accused by the European Commission of having violated EU law. Instead, plaintiffs’ complaint relied principally on a statistical analysis that allegedly showed that defendants’ bid-ask spreads had narrowed significantly after the end of the alleged conspiracy, relative to the spreads offered by a control group of nondefendants. Plaintiffs supplemented that statistical analysis by alleging that the banks engaged in a “high number of interfirm communications” and had a “common motive to conspire,” which Plaintiffs claimed could have facilitated a price-fixing conspiracy in EGBs.
The court determined that plaintiffs failed to state an antitrust conspiracy claim under Section 1 of the Sherman Act. The court held that, under Twombly, a plaintiff lacking direct evidence of a conspiracy must allege both (i) that defendants engaged in parallel conduct and (ii) various “plus factors” that make drawing an inference of conspiracy from that parallel conduct “plausible.” Plaintiffs failed at the first step because their complaint did not plead parallel conduct during the alleged conspiracy period. Plaintiffs’ statistical model only showed that defendants’ collective bid-ask spread tightened the year after the supposed conspiracy ended. But these post-class period statistics, the court held, did not sufficiently plead that Deutsche Bank and Rabobank acted in parallel while the alleged conspiracy was ongoing. Nor could plaintiffs salvage their deficient allegations of parallel conduct by pleading only “plus factors” such as “interfirm communications” or a “common motive to conspire.” Accordingly, the court dismissed plaintiffs’ complaint.
This decision reconfirms that antitrust plaintiffs that lack direct evidence must plead parallel conduct within the class period, whether through statistical evidence or otherwise, and that pleading “plus factors” alone cannot state a claim under § 1 of the Sherman Act.