Deutsche Börse merger plan is vetoed by EU

EUROPEAN UNION regulators vetoed a plan by Deutsche Börse and NYSE Euronext to create the world’s biggest exchange after concluding that the merger would hurt competition.

The deal would have led to a “near-monopoly” in European exchange-traded derivatives, the EC said in an emailed statement yesterday. “Any efficiencies would not be substantial enough to outweigh the harm to customers caused by the merger.”

Deutsche Börse agreed to acquire its New York rival in a deal valued at $9.5 billion when it was announced last February. Since then, the value has plummeted to about $7.3 billion as Deutsche Börse’s shares fell.

The companies appealed directly to commission president Jose Barroso last month to try to salvage their merger, arguing that a ban would harm European exchanges and drive business to other parts of the world.

“The EU Commission’s decision is based on an unrealistically narrow definition of the market that does no justice to the global nature of competition in the market for derivatives. We therefore regard the decision as wrong,” Deutsche Börse said in an emailed statement.

The rejection of the merger is the commission’s fourth since 2004, when it overhauled its rules for reviewing deals. Antitrust concerns have thwarted other exchange tie-ups around the world. Nasdaq OMX Group and IntercontinentalExchange abandoned an unsolicited bid for NYSE Euronext after the US Justice Department threatened to sue. Singapore Exchange’s $8.8 billion bid for ASX collapsed after Australian treasurer Wayne Swan said the deal wasn’t in the national interest.

Deutsche Börse’s acquisition of NYSE Euronext would have put more than 90 per cent of Europe’s exchange-traded derivatives market and about 30 per cent of stock trading in the hands of one company. Deutsche Börse’s Eurex is the region’s biggest derivatives exchange, while NYSE’s Liffe is the second-largest.

NYSE Euronext and Deutsche Börse had offered to sell overlapping businesses and give rivals access to post-trade services as they struggled to convince regulators that the merger wouldn’t stifle competition in derivatives and clearing. – (Bloomberg)