25 Jan 2018

Claire Cross comments on the FCA tightening its antitrust rules in Behavox

FCA’s anti-competitive scrutiny is here to stay

Asset managers must tighten monitoring of communications with rival firms, lawyers warned, after the UK Financial Conduct Authority accused four firms of collusion as it flexes its antitrust muscles for the first time.

Claire Cross, Of Counsel, commented:

“In this case, the FCA is flexing its relatively new Competition Act powers.  Traditionally, Competition Act breaches are generally taken by the CMA (although other bodies such as the Payment Systems Regulator also have Competition Act powers).  However, promoting effective competition has been one of the FCA’s three operational objectives since its inception in 2013.

In April 2015, the FCA was given powers to enforce against breaches of Competition law by those involved in financial services generally. The FCA holds these powers concurrently with the CMA. The term “financial services” is not defined, but the FCA has made it clear that it considers that it extends beyond the regulated sector.  This means that those involved in financial services that are not currently regulated can still be pursued by the FCA for competition law breaches.  In spite of this, it is probably fair to presume that the FCA are, on the whole, more likely to be focussed on the regulated sector.

The behaviour that has led to the investigation in this matter relates to alleged collusion between a number of asset management firms in circumstances where they should have been competing for shares.  Sharing information with your competitors, and knowing how they are going to bid for shares, means that you can tailor your position accordingly, saving you money.  It is the very antithesis of competition, and behaviour which, if proved, will undoubtedly cause further concern to an already jaded public who continue to be disillusioned with the industry.   Based on the limited public information available, this would indeed seem to be a plum case for the FCA to use its Competition Act powers.

It is inevitable that we will see more action over the next few years in this area.  The FCA has ploughed a great deal of money and time into ensuring it has suitable resources to be able to investigate breaches of Competition law.  A successful outcome will only further strengthen the resolve of the FCA to crack down on anticompetitive behaviour.

Those who do work in the regulated sector should of course remember that the FCA expects their regulated firms to bring any real or perceived contraventions to the FCA’s attention, in line with their positive obligation to do so under Principle 11.”

Read the full article in Behavox, here.