Financial and commodity markets operator Intercontinental Exchange Inc (ICE.N) will have to sell commodities software house Trayport to preserve competition in the energy trading industry, Britain's competition watchdog said on Monday. bit.ly/2elcJZN
ICE, one of the world's biggest exchange operators, closed its deal to buy Trayport in December last year for around $650 million in stock. It beat off arch-rival CME Group Inc (CME.O) to acquire the technology firm and reinforce its position in European energy trading markets.
But Britain's Competition and Markets Authority said on Monday that traders, brokers, exchanges and clearing houses that compete with ICE in the trading and clearing of European utilities, depend on the Trayport platform to carry out these transactions effectively.
The watchdog concluded that the deal needed to be unwound as ICE could use Trayport's platform to reduce competition between itself and its rivals, leading to increased fees for execution and clearing, and a worsening of terms offered to traders.
"ICE is disappointed by the decision, having presented a compelling clearance case, and will now consider its options including the possibility of an appeal," the company told Reuters in an emailed statement.
ICE competes with brokers including ICAP (IAP.L), BGC Partners (BGCP.O), GFI Group, Tradition, Tullett Prebon (TLPR.L) and Griffin.
A forced sale of Trayport could free up cash for ICE to make a bid for Britain's London Stock Exchange Group (LSE.L).
The New York Stock Exchange owner shelved plans in May to make a counterbid for the London exchange, which is already trying to merge with Germany's Deutsche Boerse (DB1Gn.DE).
ICE said then that it still had the right to reconsider and make an offer for LSE Group within the next six months, provided it had approval from the British Panel on Takeovers and Mergers.
A takeover of LSE Group by ICE could create the world's biggest exchange group, spanning the Atlantic and trading and clearing stocks, derivatives, energy and commodities.
(Reporting by Noor Zainab Hussain in Bengaluru and Huw Jones in London; Editing by Adrian Croft)