IntercontinentalExchange's takeover of energy trading technology shop Trayport has been referred for an in-depth investigation by the UK's Competition and Markets Authority.
Describing Trayport as the most widely used price discovery and trade initiation tool for the trading of many types of European energy derivative products, the CMA said it was concerned that ICE could use its position to raise prices and/or reduce the quality of its service to rival exchanges, brokers and clearinghouses.
Andrea Coscelli, CMA executive director of markets and mergers, says: "ICE is the leading exchange for energy trading in the UK, and in Europe, and based on the evidence we’ve gathered, it may have the ability and incentive to increase prices and/or reduce the quality of Trayport’s software products and services - on which its rivals are dependent - in order to divert trading from rival exchanges, OTC brokers and clearinghouses to its own exchange and clearinghouse, and/or in order to protect its market position from increased competition."
He says the merger will be referred for an in-depth phase 2 investigation by an independent group of CMA panel members "unless ICE is able to offer undertakings which address the competition concerns".
ICE's $650 million takeover of Trayport was completed in December.