CRA acted for one of the main complainants in the first prohibition of a merger by the CMA since its inception. The CMA ordered Intercontinental Exchange’s (ICE) to divest Trayport, the energy and commodities trading platform it purchased in December last year, to preserve competition in wholesale energy trading. This is also the first full divestment ever in a vertical merger by UK competition authorities.
The CMA found that ICE could use its ownership of Trayport to foreclose competing trading venues and clearing houses. The CMA believed that the loss of rivalry resulting from this foreclosure would lead to a degradation in service offering and liquidity shifting away from competitors towards ICE both where ICE is currently strong and where it is not present. The CMA also found that there would be a long term impact on innovation.
CRA provided economic support showing that, despite Trayport having an annual turnover of only around £50 million, it played a critical role in enabling competing trading venues to access liquidity. Evidence was provided showing the importance of network effects, the incentives of ICE to foreclose competitors, and the impact of the merger on both current and potential competition, and the longer-term impact on innovation.
The CRA team was led by Simon Chisholm. A more detailed summary of the case is available here.