The watchdog said the trio shared information during an initial public offering and a share placement, restricting competition as a result.

The Financial Conduct Authority has found that three investment firms – Newton, River & Mercantile and Hargreave Hale – have broken competition laws. This is the first such competition case the FCA has brought.

The watchdog has fined Hargreave Hale £306,300 and River and Mercantile Asset Management £108,600. The FCA has not imposed a fine on Newton Investment Management because it was given immunity under the competition leniency programme.

“The infringements consisted of the sharing of strategic information, on a bilateral basis, between competing asset management firms during one initial public offering and one placing, shortly before the share prices were set,” the FCA said.

“The firms disclosed and/or accepted otherwise confidential bidding intentions, in the form of the price they were willing to pay and sometimes the volume they wished to acquire. This allowed one firm to know another's plans during the IPO or placing process when they should have been competing for shares,” it continued. 

The FCA said that if asset managers share detailed and otherwise confidential information about their bids with each other, they “undermine the process by which prices are set”.

'This is our first case using our competition law powers and demonstrates our commitment to taking enforcement action to protect competition. Asset management firms must take care to avoid undermining how prices are properly set for shares in both IPOs and placings. Failure to do so risks them acting illegally,” Christopher Woolard, executive director of strategy and competition at the FCA, said.

The FCA has also decided that there are no grounds for action in respect of conduct between Artemis Investment Management LLP and Newton that took place between April and May 2014 in relation to an IPO.

Separately, on 5 February 2019, the FCA said it had fined an individual under the Financial Services and Markets Act 2000 (FSMA) for conduct related to some of the same facts investigated under the Competition Act.

The regulator criticised what it said were anti-competitive practices in the UK's asset management sector several years ago. The industry has been squeezed by the rise of low-fee, "passive" products over the past decade, encouraged also by regulatory reforms, such as the Retail Distribution Review (2013), which have encouraged advisors to go for more low-cost investment options.