The OFT issued an interim measures direction to the London Metal Exchange on 27 February 2006, using its powers under Section 35 of the Competition Act, preventing it from extending its trading hours. The direction followed a complaint from Spectron Group Plc. Following a change in position by Spectron the OFT is considering the issue further.
On 27 February 2006 the OFT issued an interim measure direction to the London Metal Exchange (LME) to prevent it from extending the trading hours of its electronic trading platform, LME Select (from 07.00 – 19.00 London time to 01.00 – 19.00 London time). This is the first time that the OFT has used this power which allows it, in certain circumstances, to give interim measure directions before it has completed its investigation of a suspected infringement. This restriction will remain in place until the OFT completes its investigation under Article 82 of the EC Treaty that LME Select has been pricing below cost, or until the direction is withdrawn.
The direction was issued following the submission of evidence by Spectron Group Plc (Spectron) on 3 February 2006. Spectron argued that an extension of LME Select’s hours to cover morning Asian trading (during Asian business hours) would force Spectron’s eMetal electronic trading platform, which competes with LME Select, out of the market, and requested that interim measures be made. Morning Asian trading is the only segment where Spectron has any significant volumes of trading on its electronic platform.
The OFT considered Spectron to be an effective competitor to LME Select and that an interim measure direction was necessary to prevent irreparable damage to its market position. In addition it considered that an extension to LME Select’s hours would act as a barrier to other potential competitors entering the market. If realised these factors would in turn damage the competitive process and act against the public interest. In issuing the decision the OFT also took the allegations of predatory pricing by LME into consideration.
The OFT is now seeking urgent clarification from Spectron and LME as it understands that on 1 March 2006 Spectron issued a statement to its LME customers to the effect that it had withdrawn its request for interim measures in the light of changed circumstances. While the OFT considers these latest developments and the public interest case, the interim measures direction remains effective.Source: direction given on 27 February 2006 and press releases given on 28 February 2006 and 2 March 2006, available at