ICE, Trayport data-sharing deal at risk after merger collapse

26 May 2017. By Simon Zekaria.

A data-sharing deal between Intercontinental Exchange and Trayport is in jeopardy after the marketplace owner's merger plans collapsed under regulatory scrutiny.

The UK's antitrust authority has already once vetoed the data deal, and the companies might struggle to convince the regulator to come to a different conclusion.

ICE, a US-based international network of exchanges and clearinghouses, bought UK's Trayport — an energy-trading software platform — for $650 million in 2015. But a two-year wrangle with regulators and judges sank the proposed merger.

Last year, the UK's Competition and Markets Authority decided that it should be undone and Trayport sold off. It was the first time since the CMA's formation in 2014 that it had ordered a company to sell an acquired asset.

The antitrust agency said the tie-up could push traders away from rival exchanges and restrict competition across Europe's energy trading market.

ICE challenged the CMA order, but the specialized Competition Appeal Tribunal in London upheld the decision in March.

This week, any chance of the merger surviving ended when a UK appeals court denied ICE a challenge to the CAT's ruling.

Commercial deal

When the CMA ruled against the merger, it also told ICE to sever a data-sharing contract penned while the competition inquiry was ongoing. The deal would put ICE data on Trayport trading screens and provide its customers with a link to ICE's clearing house.

In its March ruling, the CAT asked the CMA to reconsider that part of its decision. In a strongly-worded judgment, the tribunal said the CMA didn't have grounds to terminate the deal and that its decision was "too cursory and too conclusory."

But in April, the CMA stuck to its guns and provisionally found that the deal should be terminated.

It said the arrangement between ICE, the leading European energy-market exchange, and Trayport, whose software underpins over 85 percent of European energy-market trading, represents a "significant step-change" for companies that have "historically not cooperated" with each other.

It also said the deal could make it harder to sell Trayport and could benefit ICE in the future while disadvantaging a new owner.

A final ruling by the CMA on the data-sharing deal was earmarked for May, but a decision is now likely to be pushed back until early June, MLex has learned.

This would further delay the sale of Trayport, because the divestiture order is suspended until the CMA's final decision.

It is understood that the CMA wouldn't object to the commercial deal if it were struck after ICE divests Trayport.

ICE says the agreement complements the business and expands consumer choice through the provision of data. Without it, ICE argues, it can't compete with other exchanges, such as CME Group and Deutsche Börse-owned European Energy Exchange, which it claims benefits from additional connectivity.

The companies say the agreement doesn't confer an advantage on ICE or restrict Trayport's ability to operate its business and deal effectively with third parties, including ICE's competitors.

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