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Competition Law

Analysis - debate - current awareness

01 FEB 2012

Deutsche Börse and NYSE Euronext merger blocked

Under the EU Merger Regulation, the European Commission has prohibited the proposed merger between Deutsche Börse and NYSE Euronext, having identified significant competition concerns in relation to derivatives. The Commission found that the transaction would result in the establishment of a quasi-monopoly in European financial derivatives worldwide, markets which are at the heart of the financial system and for which it is crucial for the whole European economy that they remain competitive, according to Joaquín Almunia, Commission Vice President in charge of competition policy.
The Commission was particularly concerned that, due to the removal of an important competitor, the merger would have had a negative impact on innovation in derivatives products and technology solutions. In addition, it was concerned that it may be difficult for competitors to enter the market. In the absence of access to the merged company's enlarged post-trade clearing facilities, entry by rival derivatives platforms would be made more difficult in a market already characterised by high barriers to entry. There was concern that this could have affected customers such as pension funds, mutual funds and retail banks, as well as professional brokers and investment banks.
The Commission rejected the parties claims that the merger would benefit customers through greater liquidity and decided that their proposed remedy, to sell certain assets and to provide access to their clearinghouse for some categories of new contracts, was insufficient to satisfy the competition concerns.

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