10 January 2012

FT: Europe set to block DB-NYSE tie-up

European competition officials have recommended blocking the tie-up between Deutsche Börse and NYSE Euronext, setting in motion what could be weeks of frantic lobbying to salvage the deal.

Joaquín Almunia, the European competition commissioner, has told the merger parties that he plans to prohibit the bid to create the world’s biggest exchange group by listings unless they are willing to sell one of the groups’ main derivatives businesses – a step executives refuse to take. The antitrust decision is a serious blow to the chances of the German and US groups being able to complete the deal, and highlights how competition concerns have helped scupper a year-long wave of attempted Exchange consolidation

Mr Almunia’s case team has drafted an official recommendation to disallow the deal because it would create a dominant player in European exchange-traded derivatives markets, stifling competition from potential new entrants, according to two people involved in the process.

The draft decision has been sent to other Brussels departments for their comments before being submitted to a committee of competition experts from European Union Member States, who can offer non-binding advice on the judgement. There is still a possibility of the recommendation being overturned if the exchanges marshal enough political backing for the deal – particularly from Angela Merkel, the German chancellor – to sway opinion in Brussels.

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