Thomson Reuters Offers EC New Gameplan for ID Codes
It's round two for Thomson Reuters and the European Commission.
The EC says it is market testing a second set of commitments made by Thomson Reuters to settle a longstanding investigation into a potential abuse of anticompetition rules.
The new "remedy" extends the scope of licensing rights to use Reuters Identification Codes (RICs) to real-time data from rivals and reduces fees to address what the EC says were shortcomings in a previous agreement. Customers can use the RICs to retrieve data from rival firms but will still charge customers for the privilege -- at least $750 a month.
The EC provides the following example of how the new policy would work: for a fee of $1,250 a month, a customer will be able to subscribe to 200,000 RICs under the extended RIC license. The Third Party Developer RIC license is similar to the above except that fees are capped at one million RICs and the minimum monthly fee is $250 a month.
If the outcome of the second market test were to show that Thomson Reuters' "substantially revised" proposal the EC's concerns about market competition, the EC could make the new proposal legally binding. Doing so would likely prevent the EC from imposing any fines for violating the EC's regulations on competition. The potential penalty: ten percent of its global annual revenue.
At issue between the EC and Thomson Reuters are Thomson Reuters' licensing practices for RICs which identify securities used by financial institutions. An investigation beginning in late 2009, says the EC, showed Thomson Reuters was far too restrictive and defacto locked customers into licensing its data feeds.
Thomson Reuters had previously offered to allow customers to license additional usage rights for RICs for post-trade processing of transactions and provide them with information needed to cross-reference RICs with other IDs. But implementing that policy in a first market test during the spring didn't go far enough to appease the EC. The Commission was still concerned Thomson Reuters was abusing its dominant market role in issuing RICs leaving the data giant to return to the drawing board.
"The company believes both these separate initiatives will be beneficial to the market and customers," says Thomson Reuters in a statement issued on Thursday. However, the data giant continues to insist it did not violate any competition laws by the European Commission and the EC did not make any "finding of infringement" against the firm.
Written by Chris Kentouris, Editor-in-chief (Chris can be contacted through Chris.Kentouris@hotmail.com)