The Competition Authority paid surprise visits to Ireland's eight registered stockbrokers last Friday as part of an investigation into whether any of them colluded in setting commission levels for investors buying shares in the flotation of Aer Lingus.
The unannounced visits to the brokers came after a complaint was made to the authority that they had conspired to impose an industry-wide 1 per cent commission level on investors trading in Aer Lingus shares. It is understood the visits found no evidence of wrongdoing in setting the commission ceiling and the authority now views the matter as closed.
After the authority received a complaint alleging collusion, its screening committee carried out a preliminary examination last month of commission charges levied on investors in the Aer Lingus IPO.
Members of the authority's cartel investigation division carried out a field investigation into the allegation over the past fortnight.
The authority initially held discussions on the issue with Aer Lingus management and with Goodbody Stockbrokers, which was the lead broker on the Aer Lingus flotation.
The Competition Authority team doorstepped the remainder of the stockbroking houses last Friday afternoon to carry out interviews with senior staff.
Industry sources said the brokers were questioned by the cartel team about how the commission agreement had been reached and about whether the 1 per cent commission had been applied universally to investors in the Aer Lingus IPO.
It is understood the authority is now satisfied that the 1 per cent commission cap was set as a result of agreements between Aer Lingus, Government and nominated stockbrokers.
The authority is also believed to be satisfied that the commission cap was designed to protect novice small investors punting on the Aer Lingus IPO and that many investors negotiated lower commission rates with their stockbrokers.
One broker described as "laughable" the idea that competitors in the stockbroking industry would collude in setting commission charges.
A survey carried out by the Financial Regulator earlier this year found that 1 per cent was at about the midpoint of the commissions generally levied by Irish stockbrokers.
The survey, which was the first of its kind undertaken by the regulator, found that charges for investing €10,000 in a company listed on the Irish or London stock exchange varied by as much as €100 from broker to broker, ranging from €75 to €175.
The survey found that the minimum charge for investing €10,000 in the US stock exchange was almost €100, compared with €75 for the Irish and London exchanges.
The differential between commissions became bigger when larger sums were invested, with charges for investing €35,000 in a company listed on the US stock exchange varying by more than €350.
