Competition & Markets Authority
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Broker merger faces an in-depth investigation

Tullett’s anticipated acquisition of ICAP’s voice/hybrid broking business faces being referred for an in-depth investigation by the CMA.

Tullett Prebon plc (Tullett) and ICAP plc (ICAP) are leading global interdealer brokers, companies that typically sit between investment banks helping to find buyers and sellers of large securities. ICAP is selling its voice/hybrid broking and information businesses to Tullett.

After considering in detail the 20 overlapping product categories (eg Spot FX, Equity Derivatives, Interest Rate Swaps, etc) in which the parties’ voice/hybrid broking services overlap, the Competition and Markets Authority (CMA) believes that for all but one of these overlapping product categories there is no realistic prospect of a substantial lessening of competition as a result of the merger.

However, the CMA believes that the merger does give rise to a realistic prospect of a substantial lessening of competition for the voice/hybrid broking of oil products where competition from other brokers is more limited, there is a lesser constraint from electronic platforms and exchanges, and the CMA received a number of third party concerns.

The CMA did not find any competition concerns in relation to the provision of data sales and electronic platforms, nor the supply of risk mitigation services in which the parties’ activities will overlap as a result of the acquisition by ICAP of a minority stake in the newly enlarged Tullett.

The merger will therefore be referred for an in-depth phase 2 investigation by an independent group of CMA panel members unless Tullet and ICAP are able to offer undertakings which address the CMA’s competition concerns in relation to broking of oil products (see notes).

Andrea Coscelli, CMA Executive Director of Markets and Mergers, and decision-maker in the phase 1 investigation, said:

In the context of declining voice/hybrid broker revenues over the last few years as a result of regulatory changes, the CMA did not find significant competition concerns in relation to 19 of the 20 overlap product categories for voice/hybrid broking services. The CMA’s concerns following its phase 1 review are limited to the overlap in voice/hybrid broking of oil products where approximately £228 million in annual industry-wide revenues in Europe, the Middle East and Africa are generated. In this area, the parties have a strong market position, there is more limited competition from brokers and other electronic platforms, and the CMA has heard a number of third party concerns. Given the potential for this merger to adversely affect customers for voice/hybrid broking of oil products, we think the acquisition warrants an in-depth investigation unless Tullett and ICAP can offer suitable undertakings to address the CMA’s concerns.

Notes for editors

  1. The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law.
  2. The Reference Test: under the Enterprise Act 2002 (the Act) the CMA has a duty to make a reference to phase 2 if the CMA believes that it is or may be the case that a relevant merger situation has been created, or arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.
  3. Under the Act a relevant merger situation is created if 2 or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million (‘the turnover test’) or as a result of the transaction, in relation to the supply of goods or services of any description, a 25% share of supply in the United Kingdom (or a substantial part thereof) is created or enhanced (‘the share of supply test’).
  4. The CMA’s duty to refer the merger for a phase 2 investigation under the Act is not exercised whilst the CMA is considering whether to accept undertakings (if offered) in lieu of a reference. Tullett and ICAP have until 14 June 2016 to offer undertakings to the CMA that might be accepted by the CMA. If no undertakings are offered and accepted, then the CMA will refer the merger.
  5. All the CMA’s functions in phase 2 merger inquiries are performed by inquiry groups chosen from the CMA’s panel members. The appointed inquiry group are the decision-makers on phase 2 inquiries. The CMA’s panel members come from a variety of backgrounds, including economics, law, accountancy and/or business. The membership of an inquiry group usually reflects a mix of expertise and experience (including industry experience).
  6. The full text of this decision will be placed on the merger case page as soon as is reasonably practicable.
  7. Enquiries should be directed to Siobhan Allen (, 020 3738 6798).
  8. For more information on the CMA see our homepage, or follow us on Twitter @CMAgovukFlickr and LinkedIn. Sign up to our email alertsto receive updates on merger cases.
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