The Intercontinental Exchange (ICE) faced renewed pressure to offload its recently acquired energy trading technology platform Trayport, which it bought for $650 million back in December 2015. A recent edict from the UK’s Competition Appeal Tribunal (CAT) has upheld a ruling for ICE’s obligatory sale of Trayport.
The verdict followed on the heels of a lengthy investigation back in October in which the UK’s Competition and Markets Authority (CMA) ruled that ICE could potentially leverage its ownership of Trayport’s platform to mitigate effective levels competition, ultimately leading to increased fees.
These concerns were so tangible that a sale of the unit was seen as the only viable solution. ICE had previously appealed the decision, though the CAT has backed the CMA, all but assuring a sale will need to be consummated.
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Concerns surrounding the $650 million investment in Trayport leading to an erosion of competition for wholesale European utilities trades were initially brought up following an assessment of Trayport’s software reflecting a nearly 85 percent share of activities.
Moreover, other market players such as Nasdaq, EEX, Tradition and ICAP have all voiced their opposition to the CMA, portending that over-the-counter (OTC) gas and power markets could be subject to the mandatory clearing provisions that are being applied to other commodity markets.
Citing the CMA, third party submissions universally felt that the sale of the Trayport business was the only comprehensive solution to all aspects of its competition concerns. The independent group rejected alternative remedial actions, such as forcing Trayport to offer better terms to customers, concluding that it would not be effective.
According to a recent ICE statement on the verdict: “We will review the CAT’s judgment and consider our options, including the possibility of a further appeal to the Court of Appeal.”