Law firms have warned fund managers that launching preferential share classes for individual platforms could breach competition laws.
Pinsent Masons competition partner Alan Davis says if certain platforms are given access to a fund at a discounted price it could be in breach of competition laws because it could discriminate against those platforms that are declined the lower price.
Davis says: “It could be viewed that the fund managers are saying they will make sure other competitors are excluded from the market and that could be a form of an agreement to discriminate.”
He adds any collusion between platforms to ensure they collectively receive clean share classes from fund managers at a lower rate than other competitors could breach competition rules. In this situation, the platforms would have to hold a combined market share of over 50 per cent to be in breach of the laws.
Eversheds partner Michael Wainwright says: “Fund managers and platforms need to be mindful of their duties under competition law, as well as the FCA’s new mandate to promote effective competition in the interests of consumers.”
Following HM Revenue & Customs’ announcement last month that platform rebates are to be taxed, both Skandia and Standard Life said they will seek preferential terms with fund managers.
Money Marketing understands a number of platforms have contacted their legal teams to look at how they could challenge any moves by other platforms to set up preferential deals.
Avalon director Harry Kerr says: “It is a sign of desperation that big platforms are looking for better rates. Such deals could be seen as a kind of cartel because you are restricting access to trade.”