US markets giant InterContinental Exchange (ICE) has been told it must sell its new energy trading platform Trayport less than a year after it sealed a deal to buy the London-based firm.
ICE, which owns the New York Stock Exchange, beat arch-rival CME Group in the auction to buy Trayport last November. The group spent $650m (£534m) on the deal, hoping Trayport would boost its energy trading arm.
However, the UK’s Competition and Markets Authority has now said that the tie-up risks higher prices and worse terms for traders who use the platform, and lessened pressure on ICE or its rivals to improve their systems.
“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,” said Simon Polito, who chaired the competition inquiry.
The CMA said the deal would place 85pc of European utilities trading on Trayport’s platforms. The company’s software handles trading in energy-related goods including carbon emissions credits, freight transport and wholesale electricity supplies.
It said the majority of respondents in the industry felt that forcing a sale was the only effective remedy.
“ICE is disappointed by the decision, having presented a compelling clearance case, and will now consider its options including the possibility of an appeal,” said a spokesman.
The CMA has been assessing a series of large transactions between financial markets firms this year. The watchdog allowed Icap to sell its voice-broking arm to Tullett Prebon after they agreed to sell off Tullett’s oil desk.
Meanwhile, the planned £20bn merger between the London Stock Exchange and Deutsche Boerse is facing scrutiny from the European competition authorities, which opened a full investigation last month. ICE was considering a rival bid for the LSE shortly after this deal was unveiled last year, but stepped back in May.
Under UK takeover rules, ICE would be free to make another approach for the LSE in November, having served its six-month time-out.