In the latest fine to be issued by the CMA for breach of an initial enforcement order (an "IEO", sometimes known as a "hold separate") order, the CMA has imposed a penalty of £325,000 on ION Investment Group and ION Trading Technologies Limited.

The penalty relates to ION's failure to abide by the terms of an IEO imposed by the CMA after ION, an Irish software company, acquired a controlling stake in Broadway Technology Holdings, a US software company, in February 2020. If a merger is notified to the CMA or "called in" on the CMA's own initiative, the CMA can (and, where the merger has already completed, almost certainly will) impose an IEO while it considers whether it has jurisdiction and, if so, whether to clear the merger (possibly subject to conditions) or refer it to a full "phase 2" inquiry.

This is to stop the parties from integrating in ways that would make it more difficult or even impossible for the CMA to block the merger and restore the parties to their pre-merger position as competitors. It is intended to maintain the status quo until the CMA can reach a decision. The CMA can give permission to parties to take steps that would otherwise be prohibited by the IEO, though securing such 'derogations' typically requires an onerous process.

ION breached the IEO by collaborating closely with Broadway on a draft response to a contract opportunity which effectively presented the parties as a single "team". For this it was fined £300,000. It was fined a further £25,000 for failing to provide the CMA with information it required to monitor compliance with the IEO.

The timeline set out in the CMA's decision suggests that the 'joint' response was submitted to the prospective customer the day after the IEO was issued by the CMA. This highlights the need for businesses to act immediately to pause the integration of the merging parties if an IEO is issued, and indeed to anticipate the possibility of an order when planning and executing post-completion integration.

The penalty is another reminder of the seriousness with which the CMA takes IEOs, and the importance of merging parties continuing to consider themselves competitors while their merger is under regulatory scrutiny.


Jamie Dunne

Senior Associate