The European Commission has blocked the London Stock Exchange-Deutsche Börse deal, as London Stock Exchange failed to proceed with the the remedies needed.
Competition commissioner Margrethe Vestager said today: “As London Stock Exchange and Deutsche Boerse failed to offer remedies to solve competition concerns, the merger of the two has been prohibited.”
London Stock Exchange Group and Deutsche Börse’s merger cancelled by the EU’s watchdog, just hours before the UK’s formal notification to leave the EU. Merger plans were unveiled to shareholders a year ago.
However, Competition Commissioner Margrethe Vestager had a different opinion on the merger, as according to the Commissioner, it would have “e significantly reduced competition by creating a de facto monopoly in the crucial area of clearing of fixed income instruments”.
Clearing services monopoly
Vestager focused on the issues that the merger would cause as regards clearing services, as the proposed merger would have combined the Frankfurt-based group’s Eurex clearing house with the LSE’s LCH.Clearnet, which includes London-based and Paris-based businesses, and Rome-based CC&G.
LSE’s remedy rejected
As London Stock Exchange refused to sell its LSEG’s fixed income trading platform MTS, the European Commission decided to ditch merger deal. Ahead of this decision, another agreement involving the LSE has fallen through. The LSE had agreed to sell French clearing house LCH SA to Euronext for €510 million as a condition of its merger with Deutsche Börse.
Vestager appeared proud of the European Commission screening procedures, as its market testing had shown that LCH SA’s fixed income clearing business was dependent on trading feeds from MTS. The Commission said it wasn’t possible to know whether LCH SA would have been a “viable competitor in fixed income clearing going forward”.
“We still have preference for structural over behavioural remedies,” admitted Vestager on the deal, as “behavioural remedies need constant monitoring.”