EU Probes Standard & Poor for Monopoly Abuse

The European Commission said on Monday it had launched a probe into U.S credit rating agency Standard & Poor for alleged abuse of its monopoly position by forcing financial institutions to pay for using its identification codes.

The commission believes that S&P may abuse its monopoly position as the U.S. national numbering agency by forcing financial institutions to pay licensing fees for the use of U.S. ISIN codes in their own databases, the European Union (EU)'s antitrust watchdog said in a statement.

ISIN, or the International Securities Identification Number, is a standard developed by the International Organization for Standardization (ISO) to provide unique cross-border identification for securities issued throughout the world.

ISINs are attributed by the National Numbering Agency (NNA) of the country of issuance. S&P runs the CUSIP Service Bureau on behalf of the American Bankers Association and is the only U.S. ISIN issuer and the only operator to receive first-hand information from all U.S. securities issuers.

S&P then licensed the information to information services providers such as Bloomberg, Reuters, etc.

It appears at this stage that US ISINs are the only universal or common identifier for U.S. securities and that they are essential for the day-to-day business of financial institutions, including those located in the EU.

The alleged infringement consists of an abuse by S&P of its monopoly position by requesting licensing fees from financial institutions located in the EU for the use of U.S. ISINs and certain descriptive elements attached to these numbers each time.

Allegedly financial institutions are obliged to pay for a service that they are not interested in and do not actually use, i.e. the S&P's ISIN database as such.

Moreover, it is alleged that S&P forces its contractual partners, the information services providers, to cut off financial institutions from data feeds on U.S. securities unless the latter enter into licensing agreements with S&P for the use of U.S. ISINs.

Source: CRIEnglish