The FCA has found three asset management firms in breach of competition law and imposed fines on two of them. Hargreave Hale Ltd was fined £306,300 and River and Mercantile Asset Management LLP (RAMAM) fined £108,600, whilst Newton Investment Management Limited also in breach was given immunity under the competition leniency programme. The difference in penalty levels reflects Hargreave Hale's and RAMAM's respective turnovers in the relevant market.
The FCA found all three firms to be in contravention of competition law through undertaking bilateral exchanges of strategic information in relation to their bidding intentions during one IPO and one placing which took place shortly before the prices were set. This resulted in each firm's knowledge of one another's confidential plans of buying at a particular price and the volume that it intended to acquire, when they should have been competing for shares. The FCA stated that this could undermine the price setting process by reducing pressure to make bids that reflect asset managers' valuations of the company, reducing the share price and raising the cost of equity capital for the issuing company or making them unviable.
The FCA published a press release rather than a copy of the decision itself. The decision marks the FCA's first formal decision under its competition law enforcement powers, which it received in 2015. One point particularly worthy of note is that the immunity from penalty given to Newton under the FCA's competition leniency programme.
The decision on all three asset management firms follows shortly after the FCA's decision to fine a former fund manager of Newton Investment Management Limited in relation to some of the same facts. (read more in this edition of enforcement watch here).