UK CMA Opens Antitrust Investigation Into ‘Bond Trading’

What has happened?

On 16 November 2018, the UK Competition & Markets Authority (CMA) announced that it had opened an investigation into suspected anti-competitive arrangements in the financial services sector that may infringe Chapter I (CA 1998) or Article 101 (TFEU). 

The CMA’s decision to open an investigation indicates that it has “reasonable grounds” for suspecting a competition law infringement. The CMA has not yet publicly described the nature of its concerns, the products or services affected, or the undertakings under investigation. However, according to press reports, the investigation is focused on the trading of bonds. 

The CMA has indicated that its initial investigation, which will involve the collection and review of evidence, will run until August 2019, which is after the UK is due to leave the EU.

Why does this matter?

The investigation was first heralded on 19 October 2018 by Andrea Gomes da Silva, the CMA’s recently appointed Executive Director, Markets & Mergers. At a conference in Lisbon, Portugal, Gomes noted that the investigation would be the first of its kind for the CMA in the financial services sector – such investigations having to date been conducted by the European Commission, the pan-EU competition authority. 

The CMA’s decision to conduct this investigation, and the Commission’s decision to let it do so, is likely influenced by the UK’s pending departure from the EU, and is an example of the CMA gearing up for its post-Brexit role as a stand-alone competition authority. It also demonstrates the CMA’s intention to conduct investigations in this sector, notwithstanding the UK Financial Conduct Authority’s (FCA) concurrent competition law powers. 

The undertakings under investigation will urgently be assessing the veracity of the CMA’s concerns, and the extent of any such misconduct. The results will determine whether they are obliged to notify the FCA under Principle 11, and if so whether they should also apply to the CMA for leniency.

What happens next?

The CMA will already have sent case initiation letters to the undertakings under investigation, setting out brief details of the suspected misconduct. At the same time, it may have issued requests for information relating to its concerns, in order to gather evidence and to encourage applications for leniency. 

Undertakings under investigation will no doubt be conducting internal investigations and targeted document reviews to determine their response and, if appropriate, defence strategies.

How can Cadwalader help?

Cadwalader’s antitrust team is one of only a few to focus on the financial services sector. We regularly represent companies before the EU, UK and US antitrust authorities, and are specialists in offering ‘end-to-end’ advice on antitrust investigations and related litigation in this sector, working closely with our financial regulatory and white collar colleagues. 

If you would like to discuss the issues arising in this alert, or how we can help you more generally, please contact Tom Bainbridge.


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