Jon StojanBased in Washington DC, Thomas Willcox is the founder of an independent legal practice, a member of the Antitrust Section of the American Bar Association and the Antitrust and Consumer Section of the District of Columbia Bar Association. With an extensive background in antitrust law, Thomas Willcox wrote a recent article in the Antitrust Bulletin alleging that Wall Street Banks engage in unfair and nontransparent practices in arranging the borrowing of money by large corporations.
Thomas Willcox
Antitrust law is defined by the regulation of the concentration of economic power, particularly concerning monopolies and other anti-competitive practices. Laws are comprised of governmental statutes, designed to protect consumers from predatory business practices that inhibit fair competition. Such legislation is formed to caveat questionable business activities, like price fixing and market allocation.
In the past year, Thomas launched a comprehensive antitrust course to provide a primer on joint ventures and their potentially catastrophic effects on contemporary systems. By presenting a case study examining relevant statutes, agency guidelines, and case law, Thomas outlines the antitrust implications that arise from common malpractice among specific banking institutions; drawing distinct lines where malpractice crosses over into illegality.
Significantly, the course discusses in part undisclosed underwriting fees that are partially redacted or entirely concealed within debtor-in-possession financings (DIPs). The course alleges in the modern economic context, that US banks collude in the nondisclosure of such fees – fostering an environment where a small oligopoly of commercial and investment banks dominate the underwriting of loans of more than one hundred million dollars for publicly traded companies. Typically, underwriting is performed by a syndicate constituted by a joint venture of competitors, requiring borrowers to sign binding agreements that inhibit the sharing of fee amounts. Thomas Willcox reveals how this impacts the market by preventing customers from the fair right to compare fees and participate in fee negotiation with competitors. This prevents borrowers from using fees from other competitors to negotiate the best fee from what otherwise might be their favorite syndicate. Part of the confidentiality process is instructing the borrowers not to file the fee letters and related documents publicly when the terms of the loan are agreed upon.
From a legal perspective, banks are successful in these methods as they minimize reference to fees in motions to approve DIP financing. Alternatively, a motion is filed to keep the fee letter under seal, claiming the fee is ‘proprietary’ and therefore it is ‘custom and practice’ within the industry to keep such fees confidential.
Having reviewed Mr. Willcox’s Antitrust Bulletin article, the authors of an article published in 2020 by The University of Chicago titled Collusion in Markets with Syndication commented on the allegations Mr. Willcox made: “It seems like fees are known internally through the network of banks, so they can monitor compliance with the collusive agreement, but not known externally – so it is hard for a new entrant to figure out the best way to undercut the collusive agreement.”
Blowing the whistle on this common malpractice, Thomas reflects his passionate commitment to bridging the gap between the average US consumer and some of the largest banking corporations in the world. Amongst the many examples of his work within this space, the particular course discussed in this article was published by Celesq, a legal education platform providing programs for attorneys throughout the United States.
Today, Thomas continues his inquiries into this sector, releasing another study in July of 2024, detailing the filing of an antitrust class action lawsuit against one of the world’s leading technology corporations. The study can be found on the Thomas Willcox blog site where he shares his extensive and explorative works that seek to make long-lasting impacts on the current competition law landscape.