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The UK’s Competition and Markets Authority (CMA) has decided that Intercontinental Exchange (ICE) should sell Trayport to preserve competition in wholesale energy trading.
As Banking Technology reported in August, the CMA “provisionally” found ICE’s acquisition of Trayport may give rise to competition concerns.
ICE is the largest operator of exchanges and clearing houses in the trading of wholesale European utilities. Trayport’s software products form an integrated platform which underpins around 85% of European utilities trading.
The CMA’s latest investigation (17 October) found that traders, and the brokers, exchanges and clearing houses that compete with ICE in the trading and clearing of European utilities, depend on the Trayport platform to carry out these activities effectively.
The CMA also found that ICE could use its ownership of Trayport’s platform to reduce competition between itself and its rivals which could lead to increased fees for execution and clearing, and worse terms offered to traders. The CMA adds that the merger would likely result in a loss of competition between ICE and its rivals to launch new products and enter markets with new offerings.
Simon Polito, inquiry chair, says the deal could lead to “less innovative trading solutions”.
Since provisionally ruling in August that the merger could lead to a substantial lessening of competition (SLC), all the third party submissions supported the CMA’s provisional findings and the majority agreed that the sale of the Trayport business was the only effective remedy in response. The CMA rejected alternative remedial action proposed by the companies, concluding that it would not be effective.
The group has therefore decided that ICE will have to sell Trayport to a new owner, to be approved by the CMA, in order to preserve competition.
