The Competition & Markets Authority (CMA) is concerned that Intercontinental Exchange’s (ICE’s) takeover of Trayport could to lead to a “substantial lessening of competition” in the energy trading sector.

The watchdog began its investigation into the $650 million (£495m) acquisition in January and stepped up its probe in May.

The regulator found that not only traders, but also the brokers, exchanges and clearing houses that compete with ICE depend on Trayport’s software platform to carry out their energy trading activities effectively.

The CMA is concerned about the risk of increased fees for execution and clearing, and worse terms offered to traders.

Less innovation

Simon Polito, Inquiry Chair, said: “We examined the merger’s competition risks and given the high level of dependence of market participants on Trayport’s integrated software offering, we provisionally concluded that the merged entity would have the ability and incentive to harm ICE’s main rivals’ ability to compete effectively.

“This could lead to higher prices, a general worsening of terms and less innovative trading solutions offered to traders in wholesale energy markets.

“We are now inviting responses to our provisional findings and remedies notice, and will continue to assess all the evidence before we make our final decision.”

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