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EC blocks proposed merger between Deutsche Börse and NYSE Euronext

The European Commission on Wednesday blocked the proposed merger between Deutsche Börse and NYSE Euronext, as it would have resulted in a quasi-monopoly in the area of European financial derivatives traded globally on exchanges.

"Together, the two exchanges control more than 90% of global trade in these products. The Commission's investigation showed that new competitors would be unlikely to enter the market successfully enough to pose a credible competitive threat to the merged company. The companies offered, in particular, to sell certain assets and to provide access to their clearinghouse for some categories of new contracts, but overall, the commitments were inadequate to solve the identified competition concerns", said the Commission in a press release.

"The merger between Deutsche Börse and NYSE Euronext would have led to a near-monopoly in European financial derivatives worldwide. These markets are at the heart of the financial system and it is crucial for the whole European economy that they remain competitive. We tried to find a solution, but the remedies offered fell far short of resolving the concerns", said Joaquín Almunia, Commission Vice President in charge of competition policy.  

"Eurex, operated by Deutsche Börse, and Liffe, operated by NYSE Euronext, are the two largest exchanges in the world for financial derivatives based on European underlyings. They compete head-to-head and are each other's closest competitors", said the Commission.

"The proposed merger would have eliminated this global competition and created a quasi-monopoly in a number of asset classes, leading to significant harm to derivatives users and the European economy as a whole. With no effective competitive constraint left in the market, the benefits of price competition would be taken away from customers. There would also be less innovation in an area where a competitive market is vital for both SMEs and larger firms", it said.

Source: European Commission