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UK's CMA requires ICE to sell Trayport energy trading platform

Highlights

* ICE acquired Trayport from brokers in 2015
* Merger under CMA review since January
* Trayport underpins 85% of European utility trading, CMA says

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UK watchdog the Competition and Markets Authority (CMA) has decided that Intercontinental Exchange (ICE) should sell Trayport to preserve competition in wholesale energy trading, it said Monday in a ruling after reviewing the merger since January.

In December last year, ICE acquired Trayport, whose software products form an integrated platform which underpins around 85% of European utility trading, CMA said in a statement.

The CMA group of independent panel members investigating the merger found that traders, brokers, exchanges and clearing houses that compete with ICE in the trading and clearing of European wholesale energy, depend on the Trayport platform to carry out these activities effectively, it said.

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"Participants in this market have a high level of dependence on Trayport's integrated software offering, alternatives are weak and barriers to entry in this market are high," the CMA's inquiry chair Simon Polito said in a statement.

"We found that the merged company would have the ability and incentive to use its ownership of Trayport to restrict the competitiveness of ICE's rivals. This could lead to a range of adverse consequences for traders and venues in the vitally important wholesale energy markets including higher prices, a general worsening of terms and quality and less innovative trading solutions," the CMA's inquire chair added.

Since provisionally ruling in August that the merger could lead to a substantial lessening of competition, 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, it said.

Atlanta-based ICE, which also owns the New York Stock Exchange (NYSE), acquired Trayport for $650 million from broker BGC, when the latter put the unit up for sale after acquiring rival GFI Group.

ICE rival CME Group unsuccessfully tried to acquire Trayport as part of its failed bid for GFI back in 2014.

--Andreas Franke, andreas.franke@spglobal.com
--Edited by James Leech, james.leech@spglobal.com