* Kroes said sector wasn’t working as it should have
* Commissioner did not mention further action
* EU law forces agencies to register, be supervised
* Kroes says may revisit parallel trade in pharma sector
(Adds details)
By Foo Yun Chee
BRUSSELS, Dec 3 (Reuters) - European Union regulators should have looked into the credit rating agencies that assigned top ratings to thousands of financial products during the global credit crisis, the EU’s antitrust chief said on Thursday.
Investors have criticised agencies Moody's Corp MCO.N, Standard & Poor's MHP.N and Fitch Ratings LBCP.PA for giving strong ratings to toxic securities that contributed to the severity of the market meltdown.
Outgoing European Competition Commissioner Kroes’s comments came as she stressed the benefits of investigations into sectors such as retail banking, the energy market and the pharmaceutical industry that have led to cases opened on several companies.
“In hindsight, perhaps we should have investigated credit rating agencies also,” European Competition Commissioner Neelie Kroes told an industry conference. “I was shocked to learn, for example, that in 2008 those agencies gave triple A ratings to a mere 12 companies worldwide, at the same time they gave AAA ratings to 64,000 financial products. It’s clear now that their sector wasn’t working as it should have,” she said.
Kroes did not say whether the Commission would now launch an investigation into the way ratings agencies assign ratings to financial products.
The European Union has adopted a law introducing mandatory registration and direct oversight of ratings agencies by national watchdogs that will take effect next year.
STATE AID
Since the credit crisis deepened in September last year, Kroes has mandated dozens of banks to offload assets, suspend dividend payments and banned acquisitions in return for approving state aid given to bail out the lenders.
The European Commission, the EU competition watchdog, last month charged Standard & Poor’s with unfairly pricing fees it charges for identification numbers on securities, possibly leading to fines for the agency. [ID:nLJ373273]
Kroes, whose department is investigating a number of drugmakers on suspicion of violating EU rules, indicated more cases may come up in the future.
“We will keep pushing on the case front. And we may want to consider revisiting the issue of ‘parallel trade’ in the pharmaceutical sector,” she said.
So-called parallel traders buy drugs in low-priced markets and resell them in countries where prices are higher. Pharmaceutical companies have tried to get around this by setting up a dual pricing system.
The Commission has rejected such measures, saying they restrict price competition.
This prompted GlaxoSmithKline GSK.L to appeal to Europe's top court, which in October ordered the EU executive to review its veto on the company's request to raise its drug prices in Spain to stop wholesalers taking advantage of low prices there.
Kroes is due to move to another Commission portfolio in February. (Editing by Simon Jessop and David Holmes) ((foo.yunchee@thomsonreuters.com; tel +32 2 287 6844; Reuters Messaging: foo.yunchee.reuters.com@reuters.net))