Money Talks – but the FCA shows that it is listening…and acting
Since April 2015, the Financial Conduct Authority (FCA) has had powers (under Part 1 of the Competition Act 1998 and Part 4 of the Enterprise Act 2002) to enforce competition law in the financial sector. At the end of November, the FCA announced its first statement of objections since it received those competition enforcement powers, against four asset management firms who have allegedly breached UK and EU competition law.
The FCA and Competition Law
On 1st April 2015, the FCA gained concurrent competition enforcement powers with the Competition and Markets Authority (CMA), allowing them to police competition law adherence in the financial services sector. This brought the FCA up to date with regulators in other markets such as Ofgem and Ofcom, who have had similar powers for over ten years.
The FCA was given concurrent enforcement powers to allow the regulator to engage more effectively and police the financial services market and ensure that such markets are operating efficiently and for the good of the consumer. However, since being granted competition law enforcement powers back in 2015, the FCA has not used them – until now!
Statement of Objections
On 29th November 2017, the FCA sent a statement of objections to four asset management companies alleging they had breached Chapter 1 of the Competition Act 1998 (which replicates Article 101 of the TFEU). The four companies involved were:
- Artemis Investment Management LLP;
- Hargreave Hale Ltd;
- Newton Investment Management Limited (subsidiary) and The Bank of New York Mellon Corporation (parent); and
- River and Mercantile Asset Management LLP (subsidiary) and River and Mercantile Group plc (parent).
All four companies are alleged to have breached competition law by sharing information and disclosing prices they were to pay for Initial Public Offerings (IPO’s) and shares, before the prices were set. Sharing such information allowed both companies involved to know how the other would act during the IPO or placing process, instead of competing for shares. Sharing commercially sensitive information is a breach of the Chapter 1 prohibition in the Competition Act 1998.
The parties now have a chance to respond to the allegations by the FCA before a final infringement decision is made.
Approach to Competition
Following on from the statement of objections the FCA have released “Our Approach to Competition” which sets out how the FCA operates in relation to promoting effective competition within the financial services sector.
The FCA mission document seeks to clarify to stakeholders the powers and actions the FCA can take in relation to competition issues within the financial services market, and seeks input from stakeholders as to how such investigations could be improved.
The FCA ask:
- Do you have a clear understanding of the FCA’s statutory remit, competition powers and aims in advancing its competition objective? If no, what more could we do to explain our competition remit and powers?
- Are there any other indicators of potential harm that we should consider in our preliminary assessments of competition?
- Are there other tools we could consider when designing remedy packages?
- Has this documents set out the FCA’s approach to competition clearly? Are there other issues relating to our approach to competition that could benefit from further clarification?
The FCA are open to responses to the consultation before 12 March 2018.
This article was co-written by Rebecca Ferguson.