UK Throws Up Potential Obstacle to Ion, Broadway Deal

The UK’s Competition and Markets Authority (CMA) has highlighted concerns over the proposed takeover of Broadway Technology by Ion. The deal was announced in February, however an investigation into the deal by the CMA was extended in April due to Ion failing to provide necessary documentation to the authority.

In its latest statement, the CMA says, “[CMA has] concerns relating to the supply of fixed income electronic trading systems. Based on evidence from the companies’ own documents and feedback received from their customers, the CMA considers that Ion is by far the largest supplier of these systems and Broadway is one of only two significant competitors. The CMA’s initial Phase 1 investigation has found that the deal could therefore leave customers facing a significantly reduced choice of supplier with the potential for higher prices or more onerous terms and conditions on their services.”

Ion now has until July 14 to address the concerns raised by the CMA, failure to do so will see the deal move to a phase 2 investigation, this delaying its completion further. The CMA highlights Bloomberg as “the only competitor to impose a significant constraint” on the parties, but also notes the “more limited constraint” of AxeTrading, smartTrade and TransFICC.

Significantly, the CMA says it also found that following the merger, and prior to the CMA imposing an initial enforcement order on Ion on 2 April 2020, that the merged entity updated the proposed terms and conditions of the provision of services which had been offered to at least one Broadway customer “in a manner which the CMA considers may have been detrimental to the customer”, adding, the available evidence shows that these changes to the terms post-merger may reflect a loss of competition resulting from the deal.

“We’ve examined a wide range of evidence during this investigation, and numerous customers have raised serious concerns,” explains Joel Bamford, senior director at CMA. “We consider Ion to already be the largest provider of these products and they’re buying one of their closest competitors. We are therefore concerned that this merger could damage competition in a market which is critical to trading activities in the UK, leaving the merging companies’ customers with a worse deal.”

Colin Lambert

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