PODCAST: Compliance considerations for antitrust enforcement

The Thomson Reuters Regulatory Intelligence podcast series “Compliance Clarified” covers a wide range of topics that are relevant to compliance officers in financial services firms.

Antitrust enforcement actions against technology companies have raised numerous compliance challenges, especially where digital transformation is involved. In this episode of Compliance Clarified, Susannah Hammond is joined by Todd Ehret and Helen Chan to discuss recent trends in antitrust enforcement around the world and their implications for the financial services sector.

Antitrust rules and requirements around the world are all aimed at preventing anti-competitive behavior and possible abuse of a dominant market position. Antitrust can impact financial services firms in several different ways – an obvious direct impact is when financial services firms themselves act as a cartel or abuse their position and are then sanctioned often with large fines.

Financial services firms can also be impacted when technology firms face antitrust enforcement action. Digital transformation in financial services is closely tied to the technology sector and financial institutions themselves are increasingly reliant on technology. Market dominance, concentration risk and misuse of data in the technology sector ultimately has ripple effects in the risk landscape for financial institutions as well.

Recent enforcement trends

Businesses practices long deployed by technology companies to stave off competitors have become the subject of high-profile enforcement actions in China and the United States.

In China, recent updates to the Anti-Monopoly Law have resulted in increased enforcement on unfair competition in the platform economy. The reforms have also prompted regulators to focus heavily on abuse of dominant market position by digital service providers. Business practices such as exclusivity agreements and walling off product ecosystems are increasingly regarded as anti-competitive by Chinese regulators. An array of companies, ranging from large enterprises such as Alibaba and Tencent, to smaller companies, have been fined for anti-monopoly violations in recent months.

In the U.S., enforcement actions and civil lawsuits have ensnared the largest names in the U.S. tech sector. Epic Games, the creator of the popular online game “Fortnite” is suing Apple and Google over claims that their app store payments systems, which require developers to hand over a portion of their sales, are anti-competitive and in violation of U.S. antitrust laws. Apple’s app-store commission is also under scrutiny by the European Commission (EC), which has issued antitrust charges against the tech company following a complaint from Spotify, a music-streaming service provider. In addition to the issue of commission, the EC is also looking into whether Apple abused its dominant market position.

The financial services sector has also found itself the subject of high-profile antitrust enforcement actions, particularly concerning price-fixing and trading cartels. The EC fined seven banks a total of 371 million euros for participating in a trading cartel for European government bonds during the global financial crisis. In the U.S., eight banks are facing enforcement action over allegations of municipal bond collusion from 2008 to 2016.

Concentration, data risks in tech sector

In addition to active enforcement against anti-competitive behavior, financial firms also have some exposure to concentration risk and antitrust enforcement action related to the misuse of data in the tech sector.

Recent cyber incidents such as ransomware attacks and IT service provider-related outages have alerted regulators to concentration risk in IT infrastructure in sectors that provide critical services. Cloud concentration risk, in particular, is becoming a greater concern for financial regulators and is an area ripe for regulatory reform.

Separately, antitrust risks from dataset combinations in M&A in the finance and tech sectors are also gaining attention from regulators. Data use between large technology companies and the businesses that they invest in, as well as in mergers between market dominant players is increasingly being scrutinized. Regulatory restrictions on data combinations, as applied by antitrust regulators in Singapore to the merger of Grab and Uber in 2018, are an emerging trend.

Compliance considerations

Recent trends in antitrust enforcement have numerous implications for compliance functions at financial services firms. Firms should be cognizant of how their business decisions and investments could be impacted by antitrust regulatory regimes in different jurisdictions. Moreover, financial institutions should expect that concentration risk in IT infrastructure to become more of a regulatory focus.

Following high-profile enforcement action by the EC against bond trading cartels, financial institutions need to ensure that they maintain effective oversight of conduct risk from traders. Widespread remote working arrangements implemented during the pandemic pose new challenges to compliance monitoring off off-site communications. Nonetheless, the increasing levels of regulatory scrutiny over anti-competitive practices beget careful compliance planning from financial institutions.

Episode 5 of the second series of Compliance Clarified can be found at:

Thomson Reuters, a worldwide trusted provider of answers, helps professionals make confident decisions, run better businesses and gain competitive advantage in complex arenas – law, tax, compliance, government and media.

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