FC: DoJ antitrust division now investigating online bond trading

[Declan McCullagh <declan () well com>]

http://www.thestandard.com/article/display/0,1151,20464,00.html

   November 29, 2000, 2:05 PM PST

   Top U.S. Investment Banks Under Antitrust Microscope
   By Anya Schiffrin

   The Justice Department is investigating possible antitrust
   violations by a number of major U.S. investment banks involved in
   online bond-trading systems.

   According to several people working for the banks under investigation,
   Merrill (MER) Lynch, Morgan Stanley and Goldman Sachs and others all
   have received detailed questionnaires from the Justice Department
   inquiring about the workings of their online bond consortia. These
   trading systems include Bond Book and Market Axxess.

   The letters are known as "Civil Investigative Demands" and are the
   opening salvo of a DOJ investigation. "All the banks got one,"
   confirmed one bank spokesman who did not want to be identified.

   Goldman Sachs said it never comments on legal proceedings. A spokesman
   for Merrill Lynch said, "We can confirm we have received the inquiry
   and we are fully cooperating." Morgan Stanley said, "We can confirm we
   have received a letter and we are cooperating fully with the
   Department of Justice."

   The DOJ had no immediate comment on its investigation.

   Antitrust experts say the DOJ is worried that close communication
   between buyers and buyers, and sellers and sellers could increase the
   possibilities of price-fixing.

   "If you increase transparency between buyers and buyers or sellers and
   sellers you reduce the fear factor, which is what induces competition
   - the fear you will be beaten out by the other guy," says Joe Sims,
   antitrust partner at Jones, Day, Reavis & Pogue in Washington, D.C.

   [...]




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