EU blocks stock exchange merger amid 'monopoly' fears

By Muhammed Ali Gurtas

ANKARA

The European Commission on Wednesday blocked a merger deal worth around £22.5 billion ($28 billion) between Deutsche Borse AG (DBAG) and the London Stock Exchange Group (LSEG), due to what it said was the risk of creating a monopoly.

Commissioner Margrethe Vestager, who is in charge of competition policy, underlined the necessity of "well-functioning financial markets" and competition in terms of providing benefits for the whole economy.

"The merger between Deutsche Borse and the London Stock Exchange would have significantly reduced competition by creating a de facto monopoly in the crucial area of clearing of fixed income instruments," Vestager said, adding:

"As the parties failed to offer the remedies required to address our competition concerns, the Commission has decided to prohibit the merger."

The European Commission pointed to "fixed income instruments" and "single stock equity derivatives" as two principal concerns about the merger.

"The merger would have led to a de facto monopoly in clearing of fixed income instruments (bonds and repurchase agreements) in Europe, where the parties are the only relevant providers of these services," the statement read.

"In addition, the merger would have removed horizontal competition for the trading and clearing of single stock equity derivatives based on stocks of Belgian, Dutch and French companies," the Commission said.

The LSEG said in a statement it regretted the Commission's decision to prohibit the proposed merger and looked forward to reviewing the decision in due course.

"This was an opportunity to create a world-leading market infrastructure group anchored in Europe, which would have supported Europe's 23 million SMEs [small and medium-sized enterprises] and the development of a deeper Capital Markets Union," the LSEG added.

LSEG and DBAG run major stock exchanges in the United Kingdom, Germany and Italy.