Competition & Markets Authority
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Energy trading software merger faces in-depth investigation

Intercontinental Exchange’s completed acquisition of Trayport faces being referred for an in-depth investigation by the CMA.

Intercontinental Exchange Inc (ICE) is a global operator of exchanges and clearinghouses. It has its own proprietary software which facilitates trading of energy commodity and utility derivatives on its exchanges.

Trayport is a provider of software which facilitates the trading of energy commodity and utility derivatives. Trayport’s Trading Gateway, configured with its desktop screen ‘Joule’, enables trading across multiple energy and commodity markets on a single screen, and it is the most widely used price discovery and trade initiation tool for the trading of many types of European and UK energy derivative products.

The CMA is concerned that ICE could use its ownership of Trayport’s software to raise prices and/or reduce the quality of its service to rival exchanges, brokers and clearinghouses in order to divert its rivals’ trades to ICE’s exchange and clearinghouse and/or to protect its market position from increased competition.

The merger will therefore 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 (see notes).

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

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.

Given these concerns and their potential effect on those providers that currently compete with ICE, along with extensive third party concerns, we think the merger warrants an in-depth investigation unless ICE can offer suitable undertakings.

All information relating to the investigation is available on the case page.

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. ICE has until 5 May 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 information on the CMA see our homepage, or follow us on Twitter @CMAgovuk, Flickr and LinkedIn. Sign up to our email alerts to receive updates on merger cases.
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