Tullet Prebon ‘s take over of ICAP to face scrutiny from CMA

Today the Competition and Markets Authority (CMA) announced that as a result of ‘potential concerns’ over the voice/hybrid broking of oil products, the latest move made by Tullet Prebon plc (LON: TLPR) to take over ICAP plc (LON: IAP) will undergo a phase 2 ‘in-depth’ investigation by a group of independent CMA panel members.

Tullet’s move would see the company become of the world’s largest Inter-Dealer Broking firm where it would act as an intermediary between major dealers to forward inter-dealer trades. The move would see Tullet open to the movement of assets such as foreign exchange markets and crude oil.

The CMA are understood to believe that takeover would create a “substantial lessening of competition” meaning that competition for voice/hybrid oil products will be more limited. The CMA further states that it has received a number of third party complaints.

“Given the potential for this merger to adversely affect customers for voice/hybrid broking of oil products, we think the acquisition warrants an in-depth investigation unless Tullett and ICAP can offer suitable undertakings to address the CMA’s concerns” – Said Andrea Coscelli CMA Executive Director of Markets and Mergers.

Described as a “strong market position” The CMA also noted of its concerns relating to the phase 1 review in accordance to the ‘overlap in voice/hybrid’ sales of oil products, where an estimated revenue of £228 million is thought to be acquired in Europe, the Middle East and Africa.

In Response to the release ICAP said:

“ICAP is confident that clearance from the CMA will be obtained and, together with Tullett Prebon, is in the process of obtaining the necessary remaining regulatory and competition approvals from relevant authorities. The proposed Transaction remains on track to complete later this year”

Tullett and ICAP have until 14 June 2016 to offer undertakings to the CMA.

 

 

07/06/2016

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