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The UK’s financial watchdog has warned four asset management companies that they may have broken competition law by colluding on prices they agreed to pay for initial public offerings and a share placement, as the regulator ramps up its use of antitrust powers.
The Financial Conduct Authority issued a “statement of objection” to Artemis Investment Management, Hargreave Hale, Newton Investment Management and River & Mercantile Asset Management on Wednesday. It marks the first case the FCA has brought using competition enforcement powers granted in 2013.
The regulator alleges that the asset managers shared information by “disclosing the price they intended to pay, or accepting such information, or both, in relation to one or more of two initial public offerings”. The businesses could be fined up to 10 per cent of their annual worldwide group turnover, if found to have infringed competition rules.
“The sharing generally occurred on a bilateral basis and allowed firms to know the other’s plans during the IPO or placing process when they should have been competing for shares,” the regulator said.
The case is understood to relate to IPOs that took place is 2014 and 2015 and involved small-cap companies.
The FCA has focused heavily on competition in the asset management industry during the past 18 months. Earlier this year, it called for a radical shake-up of the £7tn sector after its far-reaching study into the asset management industry. In September, it referred investment consultants, which are a main participant in the asset management industry, for a full-blown competition probe.
The FCA said on Wednesday that Newton, which is part of BNY Mellon, the US bank, Hargreave Hale and River & Mercantile disclosed or accepted information on prices relating to one IPO and a placing, while Artemis and Newton shared information on prices they were willing to pay in relation to another offering.
Its findings are provisional and might not necessarily lead to an infringement decision. The “statement of objections” gives the companies notice that the regulator thinks that they have infringed competition law, and the opportunity to respond by making written and oral representations.
“The FCA will carefully consider any representations from the firms before deciding whether the law has been broken. The statement of objections will not be made public, however any final decision taken will be published providing more detail about the case,” the regulator added.
A spokeswoman for Newton said the company could not comment on “any actions with regard to the FCA’s ongoing investigation”, except to say that the asset manager “has been co-operating fully with the FCA and will continue to do so until this matter reaches its conclusion”.
She added: “The FCA’s investigation is focused on a very small number of Newton’s UK equity-focused strategies which can invest in small and mid-cap UK equities. Specifically, it relates to activity surrounding two initial public offerings and a placement in 2014 and 2015.
“There has to date been no loss to any clients/investors as a result of the activity and we do not anticipate any loss in the future.”
Canaccord Genuity Wealth Management, which acquired Hargreave Hale in September, said: “This matter . . . was disclosed to us during our due diligence process. Hargreave Hale has fully co-operated with the FCA and will be making further representations to the FCA for its review.”
Artemis and River & Mercantile did not immediately respond to a request for comment.