The European Commission has cleared under the EU Merger Regulation the proposed acquisition of NYSE Euronext ("NYX") by the InterContinental Exchange ("ICE"). NYX and ICE operate exchanges providing trading and clearing services, particularly in the field of derivatives.
The Commission's investigation confirmed that the proposed transaction would not raise competition concerns as NYX and ICE are not direct competitors in the markets concerned and would continue to face competition from a number of other competitors.
The Commission examined in particular the effects of the proposed acquisition on competition in the markets for the provision of trading and clearing services for certain exchange traded derivatives ("ETDs"), in particular agricultural (canola and rapeseed) and soft commodities (cocoa, coffee, sugar) derivatives and US equity index derivatives.
The Commission's investigation found that the proposed transaction would not raise competition concerns in any of these fields, as NYX and ICE are offering contracts belonging to different product markets so their activities do not overlap. Moreover, the market investigation revealed that they do not exert a greater potential competitive threat on each other compared to other exchanges. Any anti-competitive effects can therefore be excluded.
The Commission also examined minor overlaps of the activities of the two companies in the fields of agricultural ETDs (barley, corn and milling wheat), foreign exchange derivatives and bond trading. The Commission concluded that no competition concerns would arise in view of the limited presence of NYX and ICE in these markets and/or the existence of other strong players.
Finally, as regards the vertical relationship between trading and clearing of derivatives, the Commission did not identify any competition concerns arising from the proposed acquisition. The Commission did not identify any vertical competition concerns also with respect to the provision of exchange connectivity services and front-end trade execution services. The Commission therefore concluded that the transaction would not raise competition concerns.
The transaction was notified to the Commission on 17 May, 2013.
Companies and products
ICE operates futures exchanges, over-the-counter ("OTC") derivatives trading platforms and derivatives clearing houses in the US, Canada and Europe. ICE also provides exchange connectivity services (i.e. the provision of physical infrastructure allowing market participants to be connected to a trading venue) with respect to its own platforms and front-end trade execution services (i.e. the provision to market participants of trade execution functionality which help market participants to assess trading opportunities and execute trades) also to third party platforms. Exchange connectivity is an input for the provision of front-end trade execution services.
NYX is active in the sector of cash listing services, cash trading and post trading services, derivatives trading and clearing services, information services, and technology solutions in the US and Europe. NYX also provides exchange connectivity services with respect to its own platforms, but licences front-end trade execution services to third party providers.
Merger control rules and procedures
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).
Press release
Jeffrey C Sprecher, ICE Chairman and CEO, said: "We welcome the decision by the European Commission. We will continue to work with the relevant national regulators during the process of reviewing and completing the transaction." Press release
“We welcome the European Commission’s decision”, said Duncan L Niederauer, CEO of NYSE Euronext. “This is obviously a significant step forward in completing our compelling combination, and we now look forward to working with our regulators to obtain the final approvals necessary to close the transaction.” Completion of the combination is subject to final approval from the US Securities and Exchange Commission, the College of Regulators and other national regulators. Press release
© European Commission
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