Italian competition authority investigates Italian Stock Exchange practices

By Gabriele Accardo

On 14 April 2015, the Italian Competition Authority (“ICA”) launched an investigation (only available in Italian) against London Stock Exchange Holdings Italia (“LSEHI”) and its subsidiaries Borsa Italiana (“BI”, which manages stock trading platforms and infrastructure) and BIt Market Services (“BIMS”, which provides financial news services to traders in the downstream market) for an alleged abuse of dominant position in the financial information services market, in breach of Article 102 of the Treaty on the Functioning of the European Union.

BI manages stock trading platforms and infrastructure, and sells financial data regarding the transactions executed through its trading platforms to financial intermediaries or information providers, such as BIMS and eClass. In turn, BI and eClass are “vendors” of such data, which they use to carry on their own activities in the downstream markets for the provision of financial information.

The investigation was launched following the complaint by eClass in respect to:

  • BI’s contractual terms which required each vendor to provide BI with a detailed list of their customers and the type of data purchased by each customer, on a monthly basis; and
  • BI’s charging BlMS less than its competitors for the supply of market data, thereby allowing its sister company to submit better offers to the clients of its competitors.

According to the ICA, LSEHI and its subsidiaries may have engaged in an exclusionary strategy whereby BIMS used the information obtained by BI to win clients from the competition by designing packages that competitors could not match, especially in terms of price. This exclusionary conduct may have been facilitated by the frequent audits that BI carried out at the premises of the vendors’ customers, allegedly in order to determine the quantity and type of data accessed, and ultimately the fees to be paid.

Interestingly, the ICA considers the financial information supplied by BI an essential input for information providers, so that BI’s conduct may be subject to the essential facilities doctrine. In short, dominant companies should grant access to such “facility” on fair and non-discriminatory conditions in order not to hamper the development of the downstream market for the provision of financial information. The ICA argues that this is a specific requirement of the MiFID directive, which requires the manager of trading platforms to grant access to the data generated by the platforms on reasonable commercial terms.

The issue of the provision of critical data used in financial markets has been recently addressed by the European Commission, albeit in quite different cases, against Thomson Reuters and Standard & Poor’s (see, Newsletter 6/2012 Newsletter 4-5/2012, Newsletter 1/2012, Newsletter  3/2011, and Newsletter 6/2009 for additional background). In both instances, the two companies decided to offer commitments (see Standard & Poor’s and Thomson Reuters) to the Commission in order to close the investigations.

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