Antitrust Law Daily Wrap Up, ANTITRUST NEWS: The Swedish Competition Authority takes action against Nasdaq OMX for abuse of dominant market position, (May 28, 2015)
Organizations Mentioned:NASDAQ OMX Group, Inc. | OM London Exchange | Omx AB
By Michael Menzhuber, J.D., LL.M.
The Swedish Competition Authority (SCA) has charged that The Stockholm Stock Exchange/Nasdaq OMX abused a dominant market position when they prevented the trading platform Burgundy from using a vital data center. In a summons application submitted to Stockholm City Court, the SCA is seeking a joint sanction of SEK 30,968,000 in penalties and administrative fines against Nasdaq OMX Stockholm AB, OMX AB and OMX Technology AB.
The trading facility Burgundy, after it was established as a multilateral trading platform, wanted to place their matching engine in direct connection with the trading equipment of their trading customers, which is in line with market practice. However, as a result of coercive methods used by Nasdaq OMX to exclude Burgundy from the data center in Lunda, Stockholm, where the matching engine of Nasdaq OMX's Nordic marketplaces is located, along with the equipment of a large number of traders, Burgandy was forced to place their matching engine in another data center. This weakened their competitive position in relation to Nasdaq OMX.
The Swedish Competition Authority, after receiving a complaint from Burgandy, opened an investigation and carried out an unannounced inspection, also referred to as a dawn raid, in June 2011 to secure evidence, after which an extensive investigation was conducted.
Prior to 2007, when the European Union markets were deregulated, the Nasdaq OMX Nordic marketplaces used to have a near monopoly. However, former monopolies still hold a very strong position on the market and, in 2010, when the infringement occurred, the Nasdaq OMX Nordic Stock Exchanges had between 73 and 86 per cent of the market for trading Swedish, Finnish and Danish equities.
According to Competition Authority Director-General Dan Sjöblom, “Abuse of a dominant position by foreclosing a new entrant from the market is a very serious violation of the competition rules.”
News: Antitrust