Bailed-out lender Royal Bank of Scotland
The OFT said it had imposed the fine, the first it has ever levied on a bank, because RBS executives gave their counterparts at Barclays information on how they priced loans to firms such as accountants and lawyers.
There is evidence Barclays used the information to set its own prices, but the bank escaped a fine because it reported the matter to the OFT, the watchdog said.
Any company that discloses confidential future pricing information to its competitors risks a substantial penalty, said Ali Nikpay, the OFT's senior director of cartels and criminal enforcement.
It is important that companies operating in the UK understand the seriousness of such conduct and ensure effective competition compliance throughout their organization.
RBS and Barclays are the leading providers of loans to professional services firms in Britain.
RBS, 84 percent state-owned after receiving a taxpayer-funded bailout at the height of the banking crisis, said the price sharing was a deeply regrettable and isolated case.
We have cooperated fully with the OFT throughout and have introduced stringent additional competition law training to ensure that this unacceptable behavior does not happen again, RBS said, adding that of the two employees involved, one had left the bank, while the other faced suspension.
The OFT said the price-sharing took place between October 2007 and February or March 2008, 10 months before the British government was forced effectively to nationalize RBS in order to prop it up in the wake of the credit crunch.
The timing of the infringement in the early months of the credit crunch demonstrates the heightened danger of cartel practices during difficult trading times, said Dr Andreas Stephan, an expert in competition law at the University of East Anglia.
The OFT is absolutely right to impose a significant, if not unprecedented fine on an apparently serious breach of competition law.
Barclays said it called in the OFT in March 2008 after it discovered that some executives in its professional services banking team had been unilaterally approached from outside Barclays in a manner which we regarded as inappropriate.
The OFT's investigation did not go beyond the professional services banking division, Barclays added.
The fine from the OFT, tasked with protecting consumers from anti-competitive corporate behavior, comes as Britain's financial regulator, the FSA, is conducting its biggest ever investigation into insider trading on the stock market.
RBS's fine was reduced from 33.6 million pounds because the bank admitted breaking the law and agreed to cooperate with investigators, the OFT said.
The watchdog has the power to fine companies up to 10 percent of their turnover for breaches of competition law, but has a policy of showing leniency toward companies who report their wrongdoing.
The biggest fine the OFT has ever applied to a single company is the 121.5 million pound penalty it slapped on British Airways
Two years ago, it imposed a 132.3 million pound fine on tobacco company Gallaher
At 1450 GMT, shares in Barclays were down 2.5 percent and RBS shares were 3.3 percent lower, while the FTSE 100 share index was flat.
(Editing by Rupert Winchester)