The Competition watchdog has thrown into doubt Intercontinental Exchange's takeover of commodities trading software company Trayport.
The Competition and Markets Authority said today that the $650m deal could result in less competition for wholesale European utilities trades. It issued a list of possible remedies, which includes a forced sale.
The CMA is worried about higher fees for executing and clearing trades, as well as worse terms for traders. The deal could discourage ICE and its rivals from launching new products and trading solutions, it added.
Today's announcement is part of the CMA's ongoing probe into the merger, which was completed in December 2015. It also found Trayport's software helps facilitate 85 per cent of a key European utilities trading market.
Simon Polito, inquiry chair at the CMA, said: "We examined the merger's competition risks and given the high level of dependence of market participants on Trayport's integrated software offering, we provisionally concluded that the merged entity would have the ability and incentive to harm ICE's main rivals' ability to compete effectively."
He continued: "This could lead to higher prices, a general worsening of terms and less innovative trading solutions offered to traders in wholesale energy markets."
The CMA is accepting responses to its plans from interested parties by 30 August, before it makes a final decision in October.
"If remedies are ultimately required, ICE is confident that they will be in line with how ICE intends to operate Trayport as an open and autonomous software provider," ICE said in a statement.